CGC & Conflict of Interest

[Hedge Collector]

I was wondering has CGC pricing always had the 2.5% FMV for high valued books?

 

It just seems like such a conflict of interest especially now more than ever since the difference in value for books is so great between 9.6 and 9.8, etc.

 

For a book that would be $5k in 9.6 or $20k in 9.8, CGC would earn 300% more if graded higher. And simply because any book over $3k, the higher they grade the more they earn. I've seen conflicts of interest in other industries, and they can persist for some time but eventually they always cross the breaking point.

 

This has probably been discussed, but I'm curious since I haven't follow CGC pricing since the beginning, have they always had the 2.5% FMV?

[Scrooge]

This has probably been discussed, but I'm curious since I haven't follow CGC pricing since the beginning, have they always had the 2.5% FMV?

 

Yep, there was always a % of FMV on higher priced books. I also believe that over time the cut-off value to apply the % has been going down.

[the blob]

well, if tht conflict causes them to bump up more books then it is likely going to be a wash in the medium and long term as supply will tend to lower the premium pricing those books receive (and lower the value of the 9.6ses while they're at it).

 

in the short-term yes, but eventually thr market will adjust.

 

in theory.

 

what about the theoretical conflict in heritage selling their own CGC books, which have been slabbed by their subsidiary? of course, it's only hypothetical, as the fine folks at CGC would not factor that into their grading, but if we were talking about another company.....

 

 

of course, the whole pricing scheme doesn't make any sense to me. if value is an issue because they're taking more risks with an expensive book, charge a flat fee for grading the book and a separate insurance fee at cost (or roughly cost -- i guess they need to cover their overhead for the person handling the insuranc documentation). they shouldn't charge more because the owner might make more money on the book. when i got my home inspected it was based on the size of the home and how much work the guy had to do to inspect it, not what neighborhood I was buying in, which might make the home worth 3X as much as the same home 2 miles away. so yeah, a 64 pager should cost more to grade than the 24 pager..i got no problem with that.

[Hedge Collector]

This has probably been discussed, but I'm curious since I haven't follow CGC pricing since the beginning, have they always had the 2.5% FMV?

 

Yep, there was always a % of FMV on higher priced books. I also believe that over time the cut-off value to apply the % has been going down.

 

That the cut-off value has been going down is interesting.

[Ares]

well, if tht conflict causes them to bump up more books then it is likely going to be a wash in the medium and long term as supply will tend to lower the premium pricing those books receive (and lower the value of the 9.6ses while they're at it).

 

in the short-term yes, but eventually thr market will adjust.

 

in theory.

 

what about the theoretical conflict in heritage selling their own CGC books, which have been slabbed by their subsidiary? of course, it's only hypothetical, as the fine folks at CGC would not factor that into their grading, but if we were talking about another company.....

 

 

of course, the whole pricing scheme doesn't make any sense to me. if value is an issue because they're taking more risks with an expensive book, charge a flat fee for grading the book and a separate insurance fee at cost (or roughly cost -- i guess they need to cover their overhead for the person handling the insuranc documentation). they shouldn't charge more because the owner might make more money on the book. when i got my home inspected it was based on the size of the home and how much work the guy had to do to inspect it, not what neighborhood I was buying in, which might make the home worth 3X as much as the same home 2 miles away. so yeah, a 64 pager should cost more to grade than the 24 pager..i got no problem with that.

 

What are you talking about?

CGC is not a subsidiary of Heritage.

 

OR did I read your post wrong?

[DiceX]

Don't take the FMV as such a strict rule. Unless it's an *extreme* case, they let the book slide through without a mark up in the charge. They're not fleecing you out of every penny possible, and they're not marking up grades to get extra money.

 

Nice thought, but ridiculous to anyone that has experience submitting books to CGC.

 

 

[Flaming_Telepath]

well, if tht conflict causes them to bump up more books then it is likely going to be a wash in the medium and long term as supply will tend to lower the premium pricing those books receive (and lower the value of the 9.6ses while they're at it).

 

in the short-term yes, but eventually thr market will adjust.

 

in theory.

 

what about the theoretical conflict in heritage selling their own CGC books, which have been slabbed by their subsidiary? of course, it's only hypothetical, as the fine folks at CGC would not factor that into their grading, but if we were talking about another company.....

 

 

of course, the whole pricing scheme doesn't make any sense to me. if value is an issue because they're taking more risks with an expensive book, charge a flat fee for grading the book and a separate insurance fee at cost (or roughly cost -- i guess they need to cover their overhead for the person handling the insuranc documentation). they shouldn't charge more because the owner might make more money on the book. when i got my home inspected it was based on the size of the home and how much work the guy had to do to inspect it, not what neighborhood I was buying in, which might make the home worth 3X as much as the same home 2 miles away. so yeah, a 64 pager should cost more to grade than the 24 pager..i got no problem with that.

 

What are you talking about?

CGC is not a subsidiary of Heritage.

 

OR did I read your post wrong?

 

Correct.

 

Heritage...specifically Halperin...is a large shareholder in CGC. (thumbs u

[Hedge Collector]

well, if tht conflict causes them to bump up more books then it is likely going to be a wash in the medium and long term as supply will tend to lower the premium pricing those books receive (and lower the value of the 9.6ses while they're at it).

 

in the short-term yes, but eventually thr market will adjust.

 

in theory...

 

I think you're right, the market will always take care of itself eventually.That's not where I see the problem.

 

When I said that conflicts of interest eventually (they may persist for some time) reach a breaking point it is because of this progression.

 

Let me further your example to make mine.

 

You state that the market will adjust thus creating a wash. CGC will eventuallly realize this wash, money earned (ie. profits) will stagnate, and they will again move the bar in order to realize higher profits. That continual (though it can be very slow) moving of the bar will eventually be a problem (maybe not today but "tomorrow").

[the blob]

Correct.

 

Heritage...specifically Halperin...is a large shareholder in CGC.

 

-------------------

 

ok, not a subsidiary per se, but pretty close.

 

the "appearance" of a conflict is there. i'm not saying anyone acts on that conflict. i've bought some slab-worthy raw books from heritage (that they owned), so i do not think they're operating in the hypothetical way...otherwise they would have had them slabbed for sure fire 9.4+ses.

[Hedge Collector]

Don't take the FMV as such a strict rule. Unless it's an *extreme* case, they let the book slide through without a mark up in the charge. They're not fleecing you out of every penny possible, and they're not marking up grades to get extra money.

 

Nice thought, but ridiculous to anyone that has experience submitting books to CGC.

 

 

You misunderstand me I think. I am not accusing CGC of any of these things.

 

Just concerns and curiosities is all.

[seanfingh]

 

This alleged "conflict of interest" is bogus. The only way that they get more bread based upon the service that they provide is if they look up GPA and charge a fee based on the 9.8 v. 9.6 or 9.6 v. 9.4 or whatever. I have never seen any evidence that they do this. But I have seen a ton of evidence that they do not upcharge in a lot of situations where they otherwise could have.

[DiceX]

But I have seen a ton of evidence that they do not upcharge in a lot of situations where they otherwise could have.

 

A LOT! being an understatement.

 

 

[Hedge Collector]

This alleged "conflict of interest" is bogus. The only way that they get more bread based upon the service that they provide is if they look up GPA and charge a fee based on the 9.8 v. 9.6 or 9.6 v. 9.4 or whatever. I have never seen any evidence that they do this. But I have seen a ton of evidence that they do not upcharge in a lot of situations where they otherwise could have.

 

That is good to know.

 

However, I called CGC and asked them how they would go about determining FMV and the lady specifically told me GPA. Is this not the case?

 

Can you give examples of your evidence?

 

In the end, I'm definitely glad CGC is able to be as upstanding "as possible." Good for our hobby no doubt.

[DiceX]

Tell you what. Go submit hundreds of books on the Economy and Value tiers and get back to us on what your experiences are. (thumbs u

 

 

[Hedge Collector]

Tell you what. Go submit hundreds of books on the Economy and Value tiers and get back to us on what your experiences are. (thumbs u

 

 

Economy and Value isn't where most of the conflict of interest lies.

[Weird Paper]

well, if tht conflict causes them to bump up more books then it is likely going to be a wash in the medium and long term as supply will tend to lower the premium pricing those books receive (and lower the value of the 9.6ses while they're at it).

 

in the short-term yes, but eventually thr market will adjust.

 

in theory.

 

what about the theoretical conflict in heritage selling their own CGC books, which have been slabbed by their subsidiary? of course, it's only hypothetical, as the fine folks at CGC would not factor that into their grading, but if we were talking about another company.....

 

 

of course, the whole pricing scheme doesn't make any sense to me. if value is an issue because they're taking more risks with an expensive book, charge a flat fee for grading the book and a separate insurance fee at cost (or roughly cost -- i guess they need to cover their overhead for the person handling the insuranc documentation). they shouldn't charge more because the owner might make more money on the book. when i got my home inspected it was based on the size of the home and how much work the guy had to do to inspect it, not what neighborhood I was buying in, which might make the home worth 3X as much as the same home 2 miles away. so yeah, a 64 pager should cost more to grade than the 24 pager..i got no problem with that.

 

What are you talking about?

CGC is not a subsidiary of Heritage.

 

OR did I read your post wrong?

 

Correct.

 

Heritage...specifically Halperin...is a large shareholder in CGC. (thumbs u

 

I'm sorry... I'm not trying to ruffle anyone's feathers, but how could this not be a huge conflict of interest?

 

 

[seanfingh]

This alleged "conflict of interest" is bogus. The only way that they get more bread based upon the service that they provide is if they look up GPA and charge a fee based on the 9.8 v. 9.6 or 9.6 v. 9.4 or whatever. I have never seen any evidence that they do this. But I have seen a ton of evidence that they do not upcharge in a lot of situations where they otherwise could have.

 

That is good to know.

 

However, I called CGC and asked them how they would go about determining FMV and the lady specifically told me GPA. Is this not the case?

 

Can you give examples of your evidence?

 

In the end, I'm definitely glad CGC is able to be as upstanding "as possible." Good for our hobby no doubt.

 

I don't have evidence, but I can tell you about my experiences using the Value tier. I valued the books that I subbed in my two forty book submissions using Overstreet values. I would also look at GPA on books that I knew were sharp (9.4+) to make sure that I had reasonable values. Many of these books came back 9.6 and 9.8 and there was no upcharge.

 

Now, I understand that your original post was about 2.5% FMV books. I am not tall enough to ride that ride yet. But the question you posed intimated that the grade could be artificially inflated to enjoy the arbitrage between or among various grades. I do not believe that if a big book comes in valued fairly as a 9.2 that comes back 9.4 would be assessed, even if the difference is 50 grand. If it came in valued at 8.0 and came back 9.4, I believe they would reassess.

[DiceX]

Tell you what. Go submit hundreds of books on the Economy and Value tiers and get back to us on what your experiences are. (thumbs u

 

 

Economy and Value isn't where most of the conflict of interest lies.

 

You're totally missing what I'm telling you. Submit your $150-$5000 books through economy and tell me how many get upgraded.

 

 

[Silver Surfer]

Insurance is expensive and I think the last thing they would want to do is argue over the value of a book after its been damaged internally. Better be safe than sorry, I always inflate the value a tad because you never really know how it will grade until its done.

[short_box-migration]

This alleged "conflict of interest" is bogus. The only way that they get more bread based upon the service that they provide is if they look up GPA and charge a fee based on the 9.8 v. 9.6 or 9.6 v. 9.4 or whatever. I have never seen any evidence that they do this. But I have seen a ton of evidence that they do not upcharge in a lot of situations where they otherwise could have.

 

That is good to know.

 

However, I called CGC and asked them how they would go about determining FMV and the lady specifically told me GPA. Is this not the case?

 

Can you give examples of your evidence?

 

In the end, I'm definitely glad CGC is able to be as upstanding "as possible." Good for our hobby no doubt.

 

I was told by Dena that CGC uses GPA for FMV.