This discussion appears to run parallel to another recent discussion of graded damaged notes, i.e.,
http://www.cdnpapermoney.com/forum/index.php?topic=14953.0Grading companies grade. They are not in the business of telling you what your notes are worth or what you should pay for a note that has been graded by them. Bob is entirely correct in saying that it is up to the seller and potential buyer to negotiate a price that is suitable to both parties. Also, the catalogue clearly states the following in the grading commentary section:
"A note with portions missing should be graded as if it were a whole note, then the amount missing should be fully described. This process is much more informative than 'net grading', which should be avoided."
In the case of the 1937 $1 solid number note at the core of this thread, it does not have a portion missing but is torn along a fold and is almost in two pieces. Notes like this should probably not be submitted for grading because the severe damage trumps anything meaningful that can be derived from the technical grade which is based on what the grade would be for a note that is identical but lacking the damage. But, obviously, notes like this DO get sent to grading companies because the grading companies can't seem to figure out how to tell the owner "No, we will not grade this note". And I surmise that the reason why TPGs that specialize in paper money will not reject notes sent to them, unlike coin TPGs that will "bag" damaged and heavily cleaned coins, is that the majority of notes are impaired in some way. If paper money TPGs did reject some notes, the question that immediately comes to mind is how do they determine when a note is ungradable, and then they will invariably run into problems of inconsistency where, for instance, someone will say, "Hey, you refused to grade my note, but you graded another person's note that is in worse shape"... And it's not good for business if you're spending large amounts of time on the phone arguing with your clients.
So I would agree that the 1937 $1 note is graded appropriately based on what I see. I don't think there is really a grading concern as much as there is a valuation concern. The seller of the note is asking a stiff price for his highly damaged note, a price that appears to ignore the damage and appears based on the technical grade alone. This is nothing new. Everyone plays dumb at negotiation time... sellers downplay negative attributes of what they are selling while buyers go in the opposite direction trying to leverage discounts for every little irksome thing they see. Paper money collectors yearn to find some kind of authoritative source to tell them exactly what their notes are worth; that is also nothing new. In the absence of an authoritative source, the value could be anything, and rather than try to figure out a reasonable price, many people simply avoid something when there is a realistic possibility that they could end up overpaying. And because some people do that, we all do that to some degree. Why I suddenly have a picture of lemmings running toward a cliff and falling over the edge, I'm not sure.
Anyhow, while net grading has been largely discouraged by the authoritative sources of information in the hobby, figuring out what something is worth is, in effect, an exercise not unlike net grading. Maybe it should be called "net pricing". So take that 1937 $1 note with serial number 7777777. Catalogue estimates the value in Fine to be $1,500. Maybe a VG should be worth two-thirds of that, so $1,000. How much of a discount do you assess for a VG that is nearly torn in two pieces? Some people would say 50%, some would say 80%, a few would say 100%, but if we settle on 75%, then the net value of that note is $250. That's a lot less than the $1,400 the seller wants, so if you pretend you're a dragon on Dragon's Den, and someone comes to you with a valuation that is 5x or 6x higher than what you think their product is worth, the best thing to do is say "I'm out". Even if there is a buyer who comes along and buys the note for $1,400, that changes nothing. Too many potential buyers are too concerned with individual notes and individual transactions, like the sale of one note can fundamentally change the market. I don't think coin collectors have that phobia and cling to every listing they find interesting. I think many paper money collectors are prospectors and closet profiteers, and when they see something sell for a lot more than what they were willing to pay, they automatically recalibrate their compasses as if to say, "Geez, if only I would have gotten to that note first, I could have resold it for a profit!"
So... in summary, I will reiterate that grading companies only do grading. It is not their job to tell you what something is worth; that's your job as the buyer. If you are stuck on this idea that grade = price, then you will have a hard time evaluating the price of anything because net grading is no longer an accepted practice.
