The grade of a stamp is central to buying and selling them on eBay. The condition of a stamp, in part, should and usually does, determine the price asked and paid. Determining a stamp's condition has two straight-forward objective parts and one more difficult subjective part.
First, a stamp is either sound, faulty or defective. A sound stamp has no faults or defects. Faults are minor imperfections such as a short perforation or two, a very tiny shallow thin (not to be confused with a watermark), a very light corner crease and the like. Defects are major imperfections such as many short perforations, missing perforations, large deep thins, heavy creases, pin-holes, stains, surface abrasions, very heavy smeared cancellations on used stamps, badly disturbed gum on mint stamps and the like. The stamp Seller might minimize the significance of faults and defects in the stamps they have for sale. The stamp Buyer might maximize the significance of faults and defects in deciding what to bid or pay for a stamp. In a perfect world stamp Sellers will accurately describe all faults and defects to prospective stamp Buyers and stamp Buyers will always confirm the condition of a stamp if the stamp Seller has not described the stamp as sound.
Second, and to some the most important factor in stamp grading and price is the centering of the stamp design. A perfectly centered stamp should be listed as Superb (S). A stamp perfectly centered side to side but slightly off to the top or bottom should be listed as Extra Fine (XF). A stamp perfectly centered top to bottom but off slightly side to side should be listed as Very Fine (VF). A stamp slightly off in two direction should be listed as Fine-Very Fine (F-VF). Stamps that are more than slightly off center to the point that the frame of the design almost touches the perforation holes should be listed a Fine (F). When the perforations cut into the stamp's design it should be listed as Average (A). There are many exceptions to the system outlined above. Some stamps, especially early Classics, were printed so close together on the sheet that the perforations almost always cut into the design.
S (Superb) XF (Extra Fine) VF (Very Fine)
F-VF (Fine-Very Fine) F (Fine) A (Average)
Imperforate stamps are graded on margin width and margin balance. Full margins for a single stamp are 1/2 the distance to the next stamp on the sheet. The full distance is called the gutter. (Figure 1) shows the full gutter at the bottom. The top of the next stamp below on the sheet is visible. Measure the with of the gutter and divide by 2. Balance is the centering of the stamp within the margins. (Figure 1) is a four margin copy but is grossly out of balance. (Figure 2) is a four margin copy and beautifully balanced but has less than full margins. It would be described as cut close. (Figure 3) is a full margin copy and well balanced. It's appearance could be improved by trimming the right margin slightly to achieve near perfect balance. This can be complex so I suggest referring to the grading section of the Scott Catalogue for more details. The width of full margins is usually given after the listing of specific imperforate issues.
SYDNEY HARBOUR VIEWS
Figure 1 Figure 2 Figure 3
Third, and my personal favorite, is eye-appeal. Unless you are just trying to fill a space eye-appeal can be the most satisfying part of philately. All of the above doesn't mean much unless you love the look of the stamps you are considering for your collection. Consider all of the above and establish your personal grading criteria but purchase stamps that look really good to you! Wait to fill your space until a gorgeous stamp that meets your personal grading criteria comes along. I passed up 15 or 20 copies of the following stamp until this one popped up on eBay. This issue is notorious for poor centering.
VF-XF Sound with APS Cert.
In conclusion, what I have written above is not hammered in stone. Other countries have different grading systems and many philatelists might disagree with portions of the above but I hope that most of you who read it will find it useful.