New Grading Companies

[fourthstartcg]

Here are my thoughts from the Grading Megathread edited slightly:

@fourthstartcg

I made a video on new grading companies recently, but even over the month since I made it so many more have popped up.

The premise of these companies is as close to a false advertising scam as you can get. They market to people who don’t understand the graded card market and assume that “grading” is what makes the card increase in value. In fact, the only thing that matters about the card is the reputation of the company–not condition, not grade number, not name of the grade. It’s why PSA 10s (Gem Mint) sell for more than CGC 9.5s (Gem Mint) even if a CGC 9.5 is arguably a “stricter” grade and they have the same name. I could provide more examples but you get the point. Since these companies have no reputation, they provide little to no secondary market value increase. The people who end up holding the bag here are the customers of these companies, because they have basically thrown money away.

So many of these companies aren’t making even the most basic effort to develop their reputation. There was a new grading company this week started by aDrive, another popular content creator. This company advertises that they’ll grade basically any standard-sized card, but said nothing about what expertise they have to do so, including identifying and authenticating these cards. When you see things like “anything goes” authentication/grading, it’s a clear sign the company doesn’t care about their reputation and just wants to fleece people out of as much money as possible before the actually reputable companies catch up.

Starting a new grading company is the new get-rich-quick scheme in Pokemon, and while the startups may lose some money, the people who really get screwed are the ones who submit to these companies without understanding how far off their services are from the big boys.

What people don’t seem to realize is that a lot of the common reasons that people cite for submitting to one of these basement companies (and even the way such companies market themselves) are actually reasons to stick to the established companies. For example:

Backlog/Turnaround Times: It sucks to send your cards off and not have them back forever. But what does this actually mean? It means the grading company has a ton of customers and is seeing more demand for their services than ever before. More demand means more people being familiar with their service, more cards getting out onto the market and into the hands of collectors, and a stronger reputation for third-party authentication and grading. All of these contribute to a company becoming more established within the hobby and getting better secondary market values for graded cards.

Prices: Prices are higher than ever for reputable companies. New grading companies market themselves as being cheaper, but they’re cheaper for a reason. They have no customers, limited demand, and are forced to undercut in order to carve out a niche. Low prices do not lead to hobby recognition or else GMA would be the biggest company ever. Sure, you may save $30/card submitting to XYZ Grading instead of PSA, but I guarantee that not only will the secondary market value of the PSA copy be more than $30 greater, but it will be miles easier to sell.

Authentication: Many of these companies say they’ll grade/authenticate nearly anything. As I note above, they spin this as a positive, but it exposes their true motivations and lack of expertise. It’s the Dunning-Kruger effect of grading companies. These companies aren’t CGC with massive investments into authentication technology. Refusing to authenticate/grade certain cards is a positive and shows that the graded/authenticated cards from that company are held to a higher standard.