Quote:
Originally Posted by Dpeck100
Third party grading came about because it was a natural evolution of an industry that assigns grades to a tangible asset and that grade can have a significant impact on the value assigned to it. This is nothing new.
Cars, coins, stamps, diamonds all had third party grading services prior to cards.
I purchased my wife's engagement ring when I was 27 and didn't do an ounce of research. We found a yellow diamond and took the jewelers word for it on the ratings and just assumed it was the case and had our grading report tucked away for many years. Thirteen years later we celebrated our ten year wedding anniversary late last year and she wanted a major upgrade and the first thing I said to her was we need to do some research before we even consider purchasing a new one. It turns out the rating company of our ring was a much lower tier company and over grades the diamonds. I was afraid of this as soon as we started looking into it. The diamond is probably worth 30% of what I paid for it and such is life. That said once we had more information we realized the price range it was going to take to get what she wanted and shortly there after moved forward with purchasing a much larger stone and setting that is graded by the PSA of diamond grading.
This right here is exactly why third party grading is a necessity to the trading card market.
The only reason that cards have been able to achieve the level of prices they have is because a non biased entity gives their opinion and the marketplace has chosen to assign higher values based on it.
Not a week goes by that we don't read about a card surfacing on EBAY that is fake or a story like the guy who is pushing the idea he recently found an extremely valuable Babe Ruth and the third party authenticaters act as a referee and protect consumers from being scammed.
All three major third party graders had the same market opportunity and market forces decided that PSA was king. Was it first mover advantage? Was is better service? Was it marketing? Was it tough grading? Was it the advent of the registry? It probably was a combination of all of these but what really did it is that the most successful collectors that exist have either all or a huge percentage of their collections in PSA graded slabs. I can't speak for Marshall Fogel or Ken Kendrick or Donald Spence but something gave men like this the confidence in the brand and decided to pursue cards graded by PSA.
The third party authentication market is close to a monopoly at this point but no one is forcing anyone to use PSA other than the market. The market is built by a large number of participants and their actions have created the current climate. No one has to participate in the registry. Some think it is great others think it is completely stupid but the population reports that dictate the registry have clearly had a significant impact on values and will continue to.
No one has turned over the hobby to anyone. PSA doesn't set the prices for cards. EBAY doesn't require cards to be graded to be sold. PSA doesn't force someone who submits their cards to join the registry. There are 145,501 active sets currently so a lot of people have decided this is a route they would like to take.
I am a market guy and not a socialist so none of this bothers me. I can either choose to accept it or not. I have.
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Not only all of this, but grading can also come in handy when buying/selling in an online world. My area is relatively small and rural compared to a lot of the country. The last show I went to was the 2015 National. Prior to that, I probably hadn't been to a show in ten years. That means that pretty much all of my buying and selling is done online. I am almost to the point to where I don't try and sell anything ungraded online any longer. It is just so much more cut and dried to have cards graded prior to selling them. By the same token, unless I knew the seller really well or had done a lot of business with him, there is almost no way I would buy ungraded cards online anymore.
The other end of this is that buying graded doesn't excuse one from doing his homework first. It is on me (if I am the buyer) to educate myself about the card(s) I am buying both in terms of pricing and in terms of any other nuances particular to that card. There is absolutely no substitute for knowledge. I am still buying the card and not the flip, and in many cases I am still pretty selective on whom I am buying from, especially if the purchase is substantial. I say all of this as someone who has not really been a "grading guy," but I am coming to grips with the direction transactions in this hobby are taking.