As a buyer, enthusiast, collector, the importance of papers is directly related to your knowledge of Nihonto, and for most it is a safety net of sorts.
If you have no idea whether or not a sword is legit then "papers" give you a bit more confidence and reassurance in your purchase. Also, if a sword is unsigned, sending to shinsa may reveal more information about the sword, the school or smith. One downside is you may send it to shinsa hoping to find out the maker and only receive papers attributing to a school or worse merely a tradition.
Another downside that most new collectors or buyers don't realize is that the papers are simply an educated opinion of the granting body, and they are not a guarantee. Now, let me be clear, it is the opinion of the foremost scholars in the field, and they know leaps and bounds more than 99% of all the collectors out there, especially outside Japan. Yet, it is still an educated opinion and subject to debate and change.
For dealers it is a handy marketing tool, again related to the confidence papers give the buyer. One reason the dealer may not have this done is due to the cost and time requirements. If a sword is out of polish, it may need polish to get the best possible shinsa results, a cost of approx $80 + per inch of nagasa and turn around periods of up to 1 year and more. It may also need new habak($400 plain basic)i and or shirasaya($400 plain basic). Shinsa costs when everything is added up, ie; broker fees($300), license fees($60), shipping to broker, to Japan, back to broker, back to owner at $40-$100(depends on value of sword + insurance), shinsa fees(NBTHK Hozon 25,000Y, Tokubetsu Hozon 35,000Y, juyo 220,000Y, Tokubetsu Juyo 340,000Y), etc., can run over $600 for basic hozon papers.
For a $2500 dollar sword it would be cost prohibitive from a dealers standpoint.
Whereas if it is a sword from a smith or school which is the favorite of a collector, he may justify the costs of restoration and shinsa as he has no intention of selling.
Hope this helps.
Gotta run, Dr.'s appt. I'll look over it later and see if I missed anything, or if you have other questions.
