More and more people in the Washington area are finding out that the price they get for their grandmother's sterling silver tea service, if they can sell it at all, is nowhere near the current market price of silver.

Silver dealers throughout the area have been swamped in recent weeks with people trying to sell everything from silver chess sets to coin collections. The price they will pay depends on a number of factors, including the quality of the silver and the condition of the scrap market.

Many area dealers will buy up silver at prices below the spot market price, which was $46.80 per troy ounce yesterday, and then sell it to metal refineries where the silver is processed for primarily industrial use.

"The people who buy that silver will send it to refineries where it has to be assayed, refined and converted into bullion bar or into sheet or wire," said Al Menecker, whose company, Buried Treasure, does not buy silver from the public. "Each of those steps costs money. The guy who buys it wants to cover overhead costs and

Menecker said he received a call from someone who had a 72-piece sterling place setting to sell and wanted to get $40 an ounce for it. "If he expected $40 an ounce he's misleading himself. Twenty-six dollars would be a good price. The information that is being put out publicly is misleading a lot of people. To them it's silver.

According to Mark Watts of the Gaithersburg Coin Exchange, the market for sterling silver is saturated. "The smelters have their hands filled. They're not buying at all right now," he said. "Coins and .999 (pure silver) bars are completely negotiable."

Downtown, at Deak-Perera, lines form daily with people carrying suitcases or bags filled with silver coins.

Deak will only buy and sell silver bars, silver coins minted before 1965 and silver certificates.

"What we buy, we immediately sell to the public," said Deak vice president Michael Checkan. "Silver, in 1979, has out-performed gold. It's not just emotional buying (which has driven the price up). More silver is consumed than produced."

Most dealers in the area are paying between $15 and $20 an ounce for sterling, jewelry and coins. "It depends on the consistency of the silver," said Larry Linton of the Midas Coin Center. "We base our price on $18 per troy ounce on sterling and $20 an ounce for silver coins but it changes everyday."

"You have to stop thinking of silver as a precious metal and think of it as any industrial product," said a spokesman for a major metal refining company.