I have collected coins for over 35 years. In that time, the hobby has changed significantly. eBay has allowed collectors to swap coins and significantly add to their collection without relying on chance encounters at the local coin shop. I am writing this guide because I have read a few guides by eBay members, and they have been obviously self-serving (i.e. advising to only buy from sellers that have a rating equal to or better than their own, with ratings over 5000 and 99.9% positive, for example). I wanted to write a guide to help people that are new to buying coins on eBay and offer what I have learned from my personal experience as a collector. My intent with this guide is not to teach you about coins or coin collecting. That is an immense subject about which many books have been written. My hope is that you can gain from the information here to help you purchase coins more effectively on eBay.
Buying on eBay:
1. The eBay feedback ratings mean almost nothing since many buyers are reluctant to give negative feedback. What is important is the content of the feedback comments. Read feedback comments carefully before making a purchase, especially looking for negative comments. Usually just looking through one or two pages of buyer feedback is sufficient. If there are negative comments like "coin was cleaned" or "coin was not BU as stated", etc., even if the comment is marked as positive, this is a sign that you should avoid that seller. One or two negative comments don't necessarily mean much, but if you find this to be a consistent theme, it is a bad sign. Also read the sellers responses to negative comments. If the seller responds that they are sorry and offer a refund, this usually means that this is an unusual occurence and probably an honest error. Seller ratings are also individualized for several categories with anonymous feedback.
2. "Power Seller" status means absolutely nothing. All this means is that they have sold a lot of stuff on eBay. And it usually means that they are moving large volumes and don't know their inventory well. Since each coin is different, knowing what you are buying and selling is very important in regards to coins. I actually try to avoid "Power Sellers". They usually have more bids on their items, really over-hype their coins, describe them as much better than they are, and the chance of finding a true bargain is extremely low. I have also had my worst experiences with sellers who have some of the highest ratings - poor shipping, misrepresented items, refusal to give refunds, etc. I look for sellers that are fairly new, but that have some feedback as a seller, and I sometimes take chances on completely new sellers. I have gotten my best bargains this way.
3. Look for coins sold in Lots. If an individual is trying to just make a fast buck off of his coins, many times he will sell them together in a Lot. If you are looking for a specific coin, often you can find it as one of the coins in a Lot, and get the coin much cheaper. I have bought coins in Lots, and have purchased the entire Lot for the value of the single coin that I was searching for, then I kept the coin I wanted and put the other coins in the Lot up for sale and have gotten my entire purchase price back.
4. Never pay more for a coin than what you would pay for that same coin in AU58 condition, no matter how good the picture looks or how good the seller's reputation is, unless the coin is graded and encapsulated by a reputable company (I will include information about coin grading companies below). Pictures are unreliable, they can be doctored, and there is no way to tell the difference between an MS65 coin and an AU58 coin from a photo - no matter how good you are at grading. If a coin is really valuable, it will have been sent to a grading company to be encapsulated. That is not to say that I haven't found some true gems on eBay that were worth many times what I paid for them, just that you can't tell from the photo what you are getting.
5. That being said, you probably have photo editing software on your computer. If you don't, get one and learn to use it well. This is your best friend when trying to grade coins from a photo. You can increase the resolution and zoom in on the photos. Something lacking with most eBay postings. Even those postings with the ability to enlarge the photos sometimes need enhancement.
6. Buy coins, not slabs. Despite the quality of the grading of the better grading and authentication services, one coin in a particular grade is not the same as another. The only evidence you need of this is to search selling prices of coins on major online coin auction sites, like Heritage. Different coins in the same grade sell for vastly different amounts. A grade is a reflection of damage that has occurred to a coin since minting, and in very high grades, a reflection of how well struck the coin was during minting. It is NOT a reflection of the aesthetics of a coin. Attractive toning, for example, will not lower a grade. However, it does not raise the grade either, but it will make an enormous difference in selling price.
Coin Grading Companies:
The three best known companies are ANACS, PCGS, and NGC. These are all solid and reliable companies. I have dealt with all three of these companies, and I will include specifics of each company from my personal experience below. Two other companies that I have not dealt with, but that are good companies are ICG and PCI. Avoid any other companies unless you have personal knowledge of their quality. There are a lot of grading companies that over-grade coins just for the price of putting it in a holder, and even highly damaged circulated coins may get a high uncirculated grade from these companies.
ANACS: This was the first company to grade coins. It originated as a part of the ANA, thus its similarity in name, but later branched off into a separate company. Beginning in 1972, it originally issued a "Photograde", which described both sides of the coin and issued an individual grade for each side, along with a photo of the coin. After PCGS began encapsulating coins in 1986, ANACS followed suit. The new ANACS holders are by far the most attractive of the three companies. They are the only one of the three companies to grade "problem coins" (e.g. cleaned, holed, whizzed, etc.), and they place them in a different type of holder that is labelled with a description of the problem. This means that if you send a coin in for grading, you are going to get it back graded and encapsulated, unlike PCGS and NGC, which will take your money and send you back a un-graded coin with little explanation. ANACS also seems to me to have the highest grading standards of the three companies, and in my experience, the most consistent grading. This fact can be very profitable, as I will explain in "Helpful Hints" below.
PCGS: This is the best known of the three big name companies, and their coins sell for the most money. PCGS began in 1986 as a guarantee to coin dealers that they were selling coins with equal grades. To submit coins to PCGS, you still either have to go through a network dealer or pay a huge fee for the privilege of submitting coins directly to them. Basically, PCGS is an insurance company for dealers that the quality of their coins is the same as another dealer's of the same grade. They have a strong guarantee of authenticity, and will reimburse the purchaser for any coin that has been graded by them but later found to not be authentic. What this means to the submitter is that they reject any coin that has even the slightest hint that it might be a "problem coin". From my personal experience, they will reject about many of the coins you send them without an explanation and keep your money. If you want an explanation as to why it was rejected, you have to go through the time and expense of re-submitting the coin and pay an additional fee for the explanation. But, again from my personal experience, if you feel that nothing is wrong with the coin, it is better to re-submit the coin for grading de novo, and you will have a 50% chance that it will be graded the second time around. This was the first grading company that I used because it had the best reputation. I stopped using them because I got frustrated with having to submit coins multiple times to get them graded, and this is very expensive. I cracked all my coins out of their PCGS holders and sent some to NGC and some to ANACS. To my surprise, about 30% of the coins I sent to ANACS came back with a LOWER GRADE!! And I never once got a higher grade on a coin! Apparently, PCGS's grading standards are slightly lower than ANACS's, despite their better reputation, a fact that can be enormously profitable, as I will explain in "Helpful Hints" below. I am still a Platinum member of PCGS, but I only use them if I intend to sell the coin. Their holders are also hideously ugly in my opinion, and they have the absolute worst customer service of any company I have dealt with.
**UPDATE: PCGS has just recently begun encapsulating coins that are "problem coins" and certifying them as simply "authentic" (if they are, that is) without issuing a grade. Therefore, if your coin is sent in, it will now be encapsulated before being returned to you. No more body bags!
NGC: This is the official coin grading service of the ANA. They are in most respects a carbon copy of PCGS. Their grading standards are roughly the same as PCGS, you have to submit coins through a dealer or pay a fee for the privilege of submitting directly to them, and they reject any coin they suspect might be a "problem coin" and keep your money (they even rejected one of mine that had been previously graded by PCGS). Their holders are generally boring and non-descript.
All three of these companies (ANACS, PCGS, and NGC) have horrible customer service from my experience. My experience with ANACS is the most satisfying of the three companies, but I still have had a difficult time getting answers to simple questions. I have seldom gotten responses to emails, and the customer service representatives who answer the phone are unable to answer any questions of a technical nature (e.g. what is their qualification for Full Split Bands, etc.), and you cannot talk to anyone that is able to answer these questions. I have also never gotten a return phone call when one has been promised. At least the people at ANACS who answer the phones are friendly and polite most of the time, unlike my experience with PCGS and NGC.
ICG: This is the official grading company of CONECA (an "organization devoted to the education of error and variety coin collectors"). It is an extremely good company, with a reputation for quality on par with any of the three big names above, but not as well known so they usually sell for less. This can be to your advantage since you can buy coins graded by ICG, and get them crossed to PCGS and resell them for a profit, similar to ANACS as I will explain in "Helpful Hints" below, although I don't know how their standards compare to the other companies.
PCI: This company has had some problems in the past, although they have been a fairly reliable company, but with some minor problems with their reputation. J.T. Stanton, a renowned numismatist and, along with Bill Fivaz, is author of the "Cherrypicker's Guide", was appointed CEO of PCI in Nov. 2006, and he has told me that he intends to make some very positive changes at the company. Unfortunately, he has not indicated that he has any intention of changing the holders at this time, so it would be impossible to differentiate between coins graded before or after these changes have taken place. Still, I think his appointment is a signal that this company has made a giant leap forward.
1. As stated above, buy coins, not coin holders. You will have to a pay a premium for coins graded by PCGS, and you can buy a better coin for less money that has been graded by ANACS, ICG or PCI. Although all coin grading companies use the 70 point Sheldon scale in grading coins, they use their own standards with regards to this scale. In my personal experience with using these companies, I have found that PCGS's standards are slightly lower than ANACS' (meaning that a coin graded MS64 by ANACS may get a grade of MS65 by PCGS). Since some coins sell for much more in an MS65 grade than what you would pay for a coin in MS64 grade, you could potentially make thousands off of just one purchase if you buy an ANACS MS64 coin, crack it, and send it to PCGS and get an MS65 grade. Also, even if the coin doesn't get a higher grade, it will at least cross for the same grade. Coins in a PCGS holder sell for 10-20% more than in an ANACS holder. So even if you are one of the fanatics that just has to have all your coins graded by PCGS, it would be cheaper to purchase an ANACS graded coin and have it crossed to PCGS.
2. You can get terrific bargains on coins graded by ICG and PCI since these companies aren't very well known and their reputation isn't well established. These are high quality companies, but the coins graded by them sell for much less, often 50% or more under the value of a PCGS coin.
3. If you're willing to gamble a little, coins with really bad pictures (blurry, hard to see), can be great bargains because few people want to risk buying them. I've gotten terrific deals on some coins this way. Also, if a coin looks like it has great detail, and is described as "brilliant" or "shiny" or as having "great cartwheel", something to that effect, but looks extremely dull and lackluster in the picture, it is probably a scan instead of a photo. Scans accentuate defects, and often defects will appear in a scan that is not even visible to the naked eye. These coins can be a real bargain too because they are much nicer coins than they appear to be. However, bad pictures can hide polishing and other damage so be cautious.
5. Get a Bid Sniper software. This allows you to put in your maximum buying price and it will automatically place a bid for you at the last few seconds so nobody can outbid you one increment at a time. This does two things: 1) it prevents someone from increasing their bid until they outbid you, and 2) it keeps you from getting caught up in the excitement of the bidding or competitiveness and over-spending for the coin. Believe me, if you want a certain date/mint mark coin, another one will come along if someone is outbidding you for this one. Let it go and look for another one.
I hope you have found this guide helpful. If there are any questions or comments about what I have said here, please feel free to email me.