When do used guitars hit bottom price?

Originally Posted by Mystery123

Let's say you bought a guitar for $1500, new or used.

You've introduced a new variable here. And the same logic doesn't apply equally to both.

New will depreciate quicker as now it's used and used will/may depreciate a lot less (assuming it won't go to collectible/vintage status as price will go up).
Assuming resale value is dropped, you may sell it for $1200 after 6 months.
That means the guitar will have $0 value after 4 sales.
But it doesn't work that way.
Maybe the guitar will always hang around $900 no matter how many resales it will have.
That's what I was getting at when I thought about hitting bottom price.

You're really asking two questions here and you're muddying the waters with the extra variable (new or used). But OK, let's try to sort this out.

New, we understand pretty well. It drops like a rock the first time sold after being bought new. You'll be hard pressed to get 60% back out of it. After that it becomes the other scenario.

Used. If you buy it at fair market value and then sell it, and then the next guy does the same and let's say it's at iteration #4 and the guy (or gal, not being gender specific here) sells it again, will they mention they are the 4th owner? Will they even know? Will the buyer care? At this point it's usually age and condition that determine price.

I think a guitar could be on its 10th owner and your example of the guitar hanging around $900 through multiple sales would be the most likely scenario as long as the condition hasn't deteriorated. People almost never mention which owner in line they are unless they are the original owner. You never hear anyone say, "I'm the fifth owner of this guitar." So you're just not going to have that information most of the time; so the next criteria you are going to focus on is the condition of the guitar. If the market value was $900 at the first used sale and it maintains its condition it will likely sell for $900 the 10th time too. That is as long as other variables don't change the economics of the situation, such as a lot of time going by and inflation causing the market price to swing upward. Or the opposite, the market gets really weak and demand is low, so you can no longer get $900 and maybe have to settle for a lot less.

What usually doesn't matter is "limited runs." Hardly ever does anyone care if your guitar was #55 out of 70 of a run. If your guitar wasn't owned by Brian May or Jack White, it's just another guitar off the line. Custom guitars are one-offs yet they get what they get depending on the maker and the features.

Most commodities seem to work this way as long as they aren't disposables. There are exceptions, such as high-end stereo gear. I can sell one of my pricey headphones for closer to 70~75% of what I bought them for. Go figure. But the caveat here is that they drop again if a newer model comes out, whereas that doesn't happen with guitars. Pianos. Oh, man. never buy a piano. You will loose your trousers reselling those. I had a baby grand that cost $40,000 new. I bought it for $15,000. Dramatic drop right? Doesn't end there. I had to sell it for $4,500 when I moved and it took months upon months and I sold it to the ONLY person who responded to my ad after those many long months. A church. Baptist I think. They paid with a pile of crumpled ones and fives and a water jug full of change (just kidding, that was a collection plate joke).

[BFD]

Originally Posted by Denny B

THIS ^^^^ needs to be stated over and over...far too many folks are way out of line with their asking prices for their used Martins, because they didn't do their homework, and paid far too much to the wrong dealer...

Thank you, Todd...

I wonder if something needing 'to be stated over and over' for the benefit of 'far too many folks [who] are way out of line' and 'paid far too much to the wrong dealer' is actually the vocal minority indicting the majority for happily going about the useful business of feeding its inner muse while also keeping the industry afloat. Perhaps a review of the definition of 'normal' might be in order?

[fuman]

I think there's a dip in value when the supply is relatively plentiful, nearer to when the guitar was produced. After a while, your less common guitars will "settle in" with people who wanted that specific guitars. The supply is diminished, and the price goes up.

You'll probably be able to get a Taylor 314CE or 714CE for less as time goes on. Same with a newer D-18 or D-28. I don't know how steep a drop you're looking at, and all the way down to $700 for a used, USA, solid-wood Taylor seems unlikely unless it's a beater or a 3xx. I think you may see pretty stable or increasing prices on good guitars that weren't hugely popular, though.

[Dwight]

Originally Posted by Todd Yates

Your post demonstrates why it is so difficult to get a handle on used prices - too few people know the real “best” prices on new instruments. You should be able to get very close to 40% off MSRP on a new D-18, which is $300 less than your estimate of Street. I can buy a half dozen BRAND NEW before 9:00 AM tomorrow for the price you’re suggesting for used ones.

A lot of people do know that but certain sponsors and dealers here don't like being put in the position of selling at that price. I'm pretty sure that leaves them with very little to nothing after spending an hour on the phone, picking out the best one, paying the electric bill, taking a credit card and then shipping it for free. ....If you're a walk in with a pocket full of Ca$h and buying in bulk, all those things can help in getting the best deal.

[Denny B]

Originally Posted by BFD

I wonder if something needing 'to be stated over and over' for the benefit of 'far too many folks [who] are way out of line' and 'paid far too much to the wrong dealer' is actually the vocal minority indicting the majority for happily going about the useful business of feeding its inner muse while also keeping the industry afloat. Perhaps a review of the definition of 'normal' might be in order?

That's a very well written, but kind of off the beam response to my simply saying that folks shouldn't be surprised when they find it difficult to sell their (MAP price purchased)used guitar for the same price a smart shopper can buy a new one...

I can't speak for others, but if anyone has info that can save me $$ on a purchase of just about anything, I'm delighted to hear it...

My inner muse likes saving money...

[grasser]

I wonder how successful you can be in getting a seller to come down in price when it's obvious they paid a lot more than they could have.

Case in point, local CL guy wants $2,000 for like new 2017 D-28. Not a great price for those in the know, but he thinks he's doing someone a favor because he paid nearly $3,000 (GC price plus high state sales tax). It might be hard for such a seller and a buyer to have a meeting of the minds.

[merlin666]

Originally Posted by Frozen Rat

Used. If you buy it at fair market value and then sell it, and then the next guy does the same and let's say it's at iteration #4 and the guy (or gal, not being gender specific here) sells it again, will they mention they are the 4th owner? Will they even know? Will the buyer care? At this point it's usually age and condition that determine price.

That's an interesting scenario and can get even more complicated. I have an example: about four years ago I was quite interested in a guitar that the original owner asked about $1,500 for. It was an incredible deal and of course I waited too long to pull the trigger. Now in the last two years or so, this guitar got bought and sold at least three times, and to my knowledge always at prices above $1,500. Then recently one of the owners traded it for another guitar, and the current owner has it up for sale asking $2000. He obviously was not aware of the price history when he did the trade.

Originally Posted by merlin666

I have an example: about four years ago I was quite interested in a guitar that the original owner asked about $1,500 for. It was an incredible deal and of course I waited too long to pull the trigger. Now in the last two years or so, this guitar got bought and sold at least three times, and to my knowledge always at prices above $1,500. Then recently one of the owners traded it for another guitar, and the current owner has it up for sale asking $2000. He obviously was not aware of the price history when he did the trade.

I think you've shown some reasons why in the post. 4 years of inflation where guitar prices has crept up steadily, and a guitar that may have originally sold in a soft market or by a seller who was more motivated to sell fast than most. Also, they may be asking for 2k now, but will they get it? Prices find their way in the market. What Adam Smith said back in the day holds true today. Unless someone comes along who is blithely unaware of what the going price is for that guitar (harder to imagine at that price point) then it will only sell for what the market is at this moment. Probably back down around $1500 or slightly above I'd be willing to bet.

[Mr. Jelly]

Today's guitar market is like the housing market in that buying and selling incur an expense. Usually but not always shipping and Reverb or EBay expenses are involved.