Official Luthiers Forum!

I know that this is a sensitive question... Most people will buy a luthier guitar in a different way someone will buy a vintage guitar... But almost everyone while considering buying a luthier guitar will still ask himself, or around or the luthiers if they are buying a guitar that will increase in value, loose 50% of its value out the door or keep its value.

Again I know that this is a sensitive question...

But what would you answer to newbies like me who are toying with this question?

Again all of this to help me prepare material to help promote luthier work with the Montreal Guitar Show and to help demistify the purchace of a luthier guitar.

thanks!

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Jacques-André Dupont
http://www.guitarjunky.ca
http://www.montrealguitarshow.com

You might get a more valid answer to this question by asking folks like Elderly's, Gruhn's or Mandolin Brothers as well as some of the boutique guitar shops that sell Luthier instruments for many of the Alpha-Builders.

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JJ
Napa, CA
http://www.DonohueGuitars.com

[QUOTE=JJ Donohue] You might get a more valid answer to this question by asking folks like Elderly's, Gruhn's or Mandolin Brothers as well as some of the boutique guitar shops that sell Luthier instruments for many of the Alpha-Builders.

[/QUOTE]

I know, but I'm looking for the luthiers point of vue here

thanks

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Jacques-André Dupont
http://www.guitarjunky.ca
http://www.montrealguitarshow.com

Jacques-Andre,

Personally, I would tell them to take their money and go and see a stockbroker if it's an investment they want. The sort of investment they need to make for one of my instruments is love and the chance to be inspired and take their playing to different levels. You can't really re-sell that.

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Dave White
De Faoite Stringed Instruments
". . . the one thing a machine just can't do is give you character and personalities and sometimes that comes with flaws, but it always comes with humanity" Monty Don talking about hand weaving, "Mastercrafts", Weaving, BBC March 2010

I think this is a valid question. Everyone would love to be able to say how they bought a D'Aquisto when he just left John's shop, or a Traugott when you could have them for less than the price of a car.

I don't think many people are LOOKING for the appreciation in terms of a financial investment per se as much as they are looking for the opportunity to get in with a luthier who is on his way up to very high places.

I think that creates a sense of pride within the customer. One in their ability to spot (yet undiscoverd) talent and in their knowledge that **if** the day ever comes when they choose to sell this instrument they could get 5x what they paid for it.


That said... I think ALL buyers are slightly worried about devaluation. I think that monkey is on OUR backs to keep our marketing up and to keep our instruments in enough demand as to always allow our past customers to recoup their investment if they want to sell the instrument.

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Brock Poling
Columbus, Ohio
http://www.polingguitars.com

[QUOTE=guitarjunky] [QUOTE=JJ Donohue] You might get a more valid answer to this question by asking folks like Elderly's, Gruhn's or Mandolin Brothers as well as some of the boutique guitar shops that sell Luthier instruments for many of the Alpha-Builders.

[/QUOTE]

I know, but I'm looking for the luthiers point of vue here

thanks[/QUOTE]

Fair enough...but the valid answer is always better. I would bet that few builders actually know the resale value of their guitars. Then again...I could be wrong

I actually like Dave's take on this...there's no substitute for passion! And in my opinion, the buyer of a commissioned guitar is getting passion in spades...and hopefully getting infected with the same emotion.

So perhaps a better starting question might be...What percentage of buyers use resale value as a primary criterion?

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JJ
Napa, CA
http://www.DonohueGuitars.com

I think Brock makes a valid point, "I think that monkey is on OUR backs to keep our marketing up"
Why else would we see builders such as Jim Olson and Rick Turner, or Jeff Traguott showing there stuff?
Its the responsibility to the previous buyers to keep your "brand" up.

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Lance@LuthiersForum.com

I've been fortunate that I've been informed of most of the sales of my instruments, and in fact I'm often asked to find a new owner for them, and I am happy to oblige. To me, that's part of the matchmaker part. If you ask me t find a new home for your guitar, for example, I'll go through my wait list for the wait list and see who's looking for one similar, and then put the two of you in touch.

This also means I stay pretty well up to date on the re-sale value of my work, and at this time that is anywhere from double to triple or more from what the instruments went for originally.

If I were at a show and you asked me this question, that is what my answer would be. But, if I were at a show, trying to sell my instruments, odds are that I wouldn't have this long backlog and a hot re-sale market, now would I? Supply and demand; if I'm at a show with 5-10 shiny new instruments for immediate sale, then odds are that the resale value will be lower than the initial price(why pay someone twice as much if the builder can sell you a new, full warranty one, next week?) So, it's a valid question to ask, and each builder should know the answer to his/her unqiue situation.

 Perhaps someone putting out Rick's numbers won't know for sure, but the rest of us should know where our "street prices" are.

Brock,

Given that most "artists" works only take on real value hikes after they are dead then I'd do a careful vetting of your customers if I were you

Personally I don't want any "Monkey" on my back and my main responsibility to buyers is my lifetime warranty of the instrument. If we really think we have a duty to the owners resale value then we would make this transferable to new owners as well rather than limited to the first buyer.

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Dave White
De Faoite Stringed Instruments
". . . the one thing a machine just can't do is give you character and personalities and sometimes that comes with flaws, but it always comes with humanity" Monty Don talking about hand weaving, "Mastercrafts", Weaving, BBC March 2010

Just yesterday, I was asking about resale value of luthier guitars with a group that often bought and sold dozens or even hundreds of guitars a year. The consensus was that anything but a Martin or a Gibson was a gamble. The issue wasn't necessarily the resale price but the time it takes for the instrument to sell. You can sell a Martin at the going rate in just a few days. You can probably get a good price for a luthier instrument but it may take you a few months to do it. The time you are waiting to sell an instrument is a time when your money is sitting on a shelf.

You might argue that you aren't going to sell your instruments to a dealer but eventually someone will. How much that dealer or trader is willing to pay for an instrument will percolate through the system and affect the resale value an almost all transactions.

I learned something else interesting. Guitars don't depreciate on a curve. A new guitar sells for $X and as soon as it has been sold for more than 90 days or so it will drop in value by a certain percentage. It will than stay at that price for years if the physical condition of the instrument doesn't change. Thus a 3 year old D18 will cost you about as much as a 15 year old D18 provided that they are in similar condition.

After 20-30 years or so, the instrument will start to appreciate in value because there is a separate market for older instruments.

Mike, there are exceptions to any rule, and like most other things related to what we do here, each one needs to be taken on its own. Generalizing just doesn't work for handbuilt anything. A small change of fortune can drastically alter everything we do. Wayne Henderson couldn't have predicted what happened to his instrument's resale values when a unknown writer decided to write a book on him titled "Clapton's Guitar". Lynn Dudenbostel couldn't have predicted that the teenage kid who borrowed his 5th F-5 mandolin would become a phenomenon. Last I talked to him one of his mandolins changed hands for more than my first house cost!

Take each one individually, as each of us is in a unique situation.

Mario, Your point is well taken and there are exceptions to any rule. You can add a few more names to your list of successful builders who have excellent resale value. (Manzer, Olsen, Ryan for example). It sounds like you too have a fortunate situation.

The point of my post, however, was to relay the impression of guys who buy and sell a bunch of guitars. In general, they like to stay away from the hand built because of it's unpredictability.

GuitarJunky has set for himself the task of addressing the barriers to customers buying luthier made instruments. Resale concerns is one of them.

As for the price of your first house, you so far north that the houses up there melt in the summer.

We don't live in igloos, and yes, we have sliced bread...

Methinks the junky needs to address each of the individuals who will be showing, individually. And that was my point. I suspect Ervin's work doesn't go down in value the day after the sale, but also suspect that some of the others' will. Lumping them all together can't be good for any of them.

In many ways I think this brings us full circle to Guitarjunky's first query as to what a buyer should discuss with a builder before ordering a custom guitar.

Presumably, if the buyer really knew what they wanted, or required, the guitar would be perfect for them and they wouldn't be selling it in the first place.

If the buyer ordered on speculation or is a member of what we used to refer to over at the Martin forum as the "guitar of the month club" (i.e. someone who goes through so many guitars that they they decide to sell one before the check they wrote for it comes back in their monthly statement) then they are going to be mightily disappointed in the resale as they would be even for a popular factory model.

Buyers of custom made instruments need to realize that they are paying a premium for "custom" and that does not always translate into value for someone else.

I'm in total agreement with Brock on his points (as usual). A serious builder has a responsibility to maintain and even increase his/her standards as time goes by - keeping their website updated and professional looking, attending shows, and even advertising their products in the trade magazines. Brand image is what it's all about. Your name needs to become a household name to the industry in order to gain the branding necessary to have your instruments hold their value or even increase. It didn't happen for Martin and Gibson overnight. Fortunately, we have the technology today to cut years and decades of the time it takes to establish a good brand name and image. As Mario said though, there are exceptions to every rule. Nothing is hard and fast.

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"I want to know what kind of pickups Vince Gill uses in his Tele, because if I had those, as good of a player as I am, I'm sure I could make it sound like that.
Only badly."

It would seem to me that Grumpy's situation is ideal, from a standpoint of having control over resale of his instruments.  It is nice for him, and nice for his customers.  Also, as I recall, from perusing many of the Luthier's sites, many of them ask customers to contact them for resale. Seems like it could be a part of the contract, or maybe it already is - as part of the  experience of dealing with a Luthier.  It also controls who owns your guitars, and the warranty situation is controllable.  The last thing you might want, is a bargain hunter, trying to lowball your instruments with some dealer out there, who you don't know.

I, obviously, am not speaking from any level of experience or knowledge.

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Waddy

Photobucket Build Album Library

Sound Clips of most of my guitars

I wonder what humidity control would be like in an igloo. Leave the dehumidifier on when you go out for the afternoon and find your house gone when you get home.

What would you tell a potential visitor to the guitar show if they asked you about resale value? The answer, "That depends..." is quite unsatisfying and unlikely to allay their fears. "Many luthier made instrument increase in value" is a true statement but doesn't define "many" or say how likely it is.

I'm inclined to answer the question that they don't depreciate any more than other guitars and some of the top builders, many of whom are exhibiting here, actually go up in value.

Very few builders can make the claim that their guitars go up in value over time. That's not the same thing as selling guitars early in one's career at huge discounts while paying a price to get one's product and brand recognized. A lot of the time, if those people go on to having success in the industry, those instruments will sell in the future for far more than they were sold originally for. Those are not the same as their current instruments though, which will react to the market based upon the reputation of the builder and their brand that was established in years prior. Every builder will have a different result based on their brand status in the industry.

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"I want to know what kind of pickups Vince Gill uses in his Tele, because if I had those, as good of a player as I am, I'm sure I could make it sound like that.
Only badly."

[QUOTE=Don Williams] Those are not the same as their current instruments though, which will react to the market based upon the reputation of the builder and their brand that was established in years prior. Every builder will have a different result based on their brand status in the industry.[/QUOTE]

That is true as long as the instruments are traded among the knowledgeable few. In my informal and very unscientific surveys, I also asked if they could name a luthier. Usually they couldn't. Some of the answers that I did get were, Olsen, Collings, and Huss & Dalton. One of the group took exception to Collings being a luthier and asserted that they were a factory.

Some of the guys that I talked to would be considered quite knowledgeable about guitars yet they seemed to be quite unaware of our own little parallel universe. It doesn't bother me too much that the general public doesn't know about us but I am concerned that we aren't reaching those who should know. I think that our lack of visibility to guitar fanciers is frustrating.

Mary stays in contact with most of our customers and we are happy to say that only two guitars have ever left the hands of the original owners which unfortunately, on both cases, were necessitated by financial hardships. We have had numerous customers comment that they are glad to see routine price raises by us because it drives the value of their guitars up.

Retail and resale prices, IMO, are largely driven by the reputation of the luthier. As their reputation grows (in a positive way) I think you also see the value and demand of their increase. Broc has a much better handle on this because of his marketing background but that is my take on this.

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tim...
http://www.mcknightguitars.com

My older Model 1s rarely come up for sale, but when they do, they are going for close to the current retail for my new ones, and that means they're going for about three times what they sold for new. Of course it doesn't hurt every time Fleetwood Mac or Lindsey go out on tour. I've been fortunate in that camera driving videographers, film makers and photographers seem to love that guitar.

On the other hand, vintage standard Alembics do not seem to have held value so well, though new ones are through the roof. I do hear that ones from my era there...1970 to '78...are creeping up, and one of the basses I made for John Entwistle went for over $60,000.00 at auction...of course that had celebrity value.   I think Gruhn had the sculpted dragon guitar I made for Johnny Winter listed at about $25,000.00, but was a one off.    

My current more production oriented guitars and basses are really workhorses, and though they don't come up for sale often, they often sell for a little over current wholesale. That seems about right to me as they do get dinged, scratched, etc.; they've been made in greater quantities than my higher end stuff; and fewer of them have been customized.

The moral of the story for me is probably that I need to be making more one of a kind instruments!

Ahh, yes, the Johnny Winter guitar is or was up for $25,000.00.

http://www.gruhn.com/features/jwinter/EZ4787.html

I think we charged $1,600.00 for it in about 1972.   Of course in '75 I bought a house in Santa Rosa for $32,500.00.

Hey Rick, if you're sellin', I'll double your money for you on that house...

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"I want to know what kind of pickups Vince Gill uses in his Tele, because if I had those, as good of a player as I am, I'm sure I could make it sound like that.
Only badly."

Sold that joint years ago after it got torched by an arsonist...true story...It went up on Pearl Harbor Day, 1978...not a good year in my life, that. Lost a Stauffer guitar, a nice Howe-Orme, and a lot of 18th and early 19th century antiques among many other things...

<groan> I feel for you bud...really do.
That had to hurt. Ouch.

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"I want to know what kind of pickups Vince Gill uses in his Tele, because if I had those, as good of a player as I am, I'm sure I could make it sound like that.
Only badly."