A coin's value is primarily based on two important factors: it's rarity and condition. The ability to accurately judge a coin's condition can mean thousands of dollars difference in value and price.
For example, a 1921-S (San Fransisco mint) Walking Liberty half dollar in poor condition, according to the Numismatic Guarantee Corporation (NGC) price guide should cost about $46.00. The same coin in high mint state condition can cost up to $227,500. (http://bit.ly/WvQia0),
Determining a coin's condition is a hard skill to master, and this article won't make you an expert. But, it should provide a basic guide of the basics to allow you to have a good idea of a coin's overall condition. More important, it may prevent you from being ripped off when you go to purchase a coin at a coin shop or show.
The condition of coins has standardized according to a numeric scale that runs from 1 (poor) to 70 (perfect). This scale is called the Sheldon Scale.
The Sheldon Scale is a 70-point scale for grading coins, developed by Dr. William Sheldon in 1949. A slightly modified form of the Sheldon Scale has become the de facto standard for grading U.S. coins today, and is used by the major third party grading services when assigning a grade to a coin. The adjectival grading system was the predecessor to today's 70-point grading scale, and the adjectival terms are still used to help clarify the numeric equivalent (http://bit.ly/3E5aXj).
The Sheldon Scale for the grading of U.S. coins runs as follows:
Poor-1 or P-1 (Poor) - The type is barely discernible, but little else, due to the coin being badly damaged or worn smooth.
Fair-2 or FR-2 (Fair) - Type and date are barely discernible, but otherwise the coin is damaged or extremely worn.
AG-3 (About Good) - Type and date are discernible, although some spots may be worn out. Some lettering should be apparent, if not necessarily readable.
G-4 (Good) - Major devices and features are evident as outlines. although the coin overall is heavily worn.
G-6 (Good-plus) - Coin has a full rim plus major devices and features are clearly outlined. Heavy wear.
VG-8 (Very Good) - Full rim with clearly discernable devices and features. Most legends are readable clearly, but the whole coin is still significantly worn.
F-12 (Fine) - Distinct rim, all legends readable, clear devices showing some detail, but the whole coin is moderately, but evenly worn.
VF-20 (Very Fine) - Clearly readable but lightly worn legends, devices show good detail, rims are clean, but the whole coin shows moderate wear on the high points and a little wear below.
VF-30 (Good Very Fine) - Legends are clear, devices show all detail with little wear; high points are lightly worn.
EF-40 (Extremely Fine) - Legends are sharp, devices are clear with slight but obvious wear on the high points.
XF-45 (Choice Extremely Fine) - Legends and devices are clear and sharp, with slight wear on the high points, and great eye appeal.
AU-50 (About Uncirculated) - Sharp legends and devices show only a trace of wear on the highest points. There must be some remaining mint luster.
AU-55 (Good About Uncirculated) - Sharp legends and devices show only a hint of wear on the high points. Remaining mint luster must be at least half; great eye appeal.
AU-58 (Choice About Uncirculated) - Virtually uncirculated, except for minor wear marks on high points. Nearly all mint luster must be present, and must have outstanding eye appeal.
MS-60 (Mint State Basal) - Coins in this grade are ugly, dinged-up, bag-marked, ill-toned specimens, but they are in mint condition and free of any wear.
All coins graded from 60 to 70 are mint state coins. They are also uncirculated. The two terms are interchangeable. The difference between the numeric grades between 60 and 70 are all based primarily on eye appeal, quality of luster and/or toning, and the presence or absence of contact marks, hairlines, etc.that will affect the detailed condition of the coin, but the coin remains uncirculated, mint state.
An important note is to never clean a coin or purchase a cleaned coin. Cleaning a coin drastically affects its value. A cleaned, damaged, scratched or bent coin cannot be officially graded. A coin's value can plummet by half or more just by being cleaned.
Some coins are colorized, made into jewelry or otherwise altered. A buyer may aesthetically like the coin, but changing a coin will detract from the inherent value of the coin. Originality is key. An mint state coin will all its original luster will hold the most value.