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Function
Baseball card trading regained popularity in the early 1990s with the internet and the advent of baseball card grading companies. A card's quality can have a significant impact on its value. Having a baseball card graded by a third party company helps consumers make more informed decisions when trading, buying and selling cards.
Benefits
Graded cards allow dealers and collectors to set prices and value their collections more accurately. In addition to creating a level playing field for collectors and dealers by establishing a relative value on a card, a graded card is more valuable on the secondary market than a "raw" card. It authenticates the card by a third party and preserves the card in a tamper-proof cardholder. The card prices will still fluctuate based on many factors but, "such standards allow (the exchange) to set a price, not unlike a price set for other commodities and stocks," according to Marc Lore, CEO of ThePit.com.
Scoring and Grading
The scoring and grading of a baseball card is done by a grading company. The card is scored on a scale of 1 to 10, with 10 being a "Gem Mint" or "Pristine" card. Cards are carefully scrutinized by the grader under a microscope and several factors are taken into consideration including the centering, staining, print defects, focus, the cut and wear of the card. By knowing the grade, consumers and dealers can easily know the estimated market value of any given card by looking through a published or online price guide.
Grading Companies
There are two types of grading companies and each have a specific purpose. Third-party submission companies such as Professional Sports Authenticator (PSI), Global Authentication, Inc. (GAI) and Beckett Grading Services (BGS) are independent companies that collectors and dealers send their cards to be graded. The grading service company seals the card in a "slab" and clearly labels the card with a serial number and grade. The second type of grading company is the inventory grading company. These companies purchase large quantities of cards and grade them just as a third party company does. The difference is the inventory grading company owns the merchandise it is grading.
Warning
Third-party grading companies are generally honest. The market value of lesser-known grading companies may lower the ultimate value what the card could be sold for. Lesser-known grading companies also have historically graded less consistently than the top five grading companies.
Submitting an already graded card from a lesser known card grading company to a more recognized grading company is known as "crossing over." Use caution when submitting already graded cards. It is very rare that a grading company increases the grade of a card and, due to the inconsistencies of lesser known companies, the card may be graded significantly lower.