How to Determine Fair Market Value and Reserve
I have never had a problem selling a guitar easily with little or no negotiation if it was priced correctly. Determining fair market value depends on many factors and is almost never what you think your instrument is worth. Markets and trends change constantly and so do guitar values. If, for instance, you’ve had your Les Paul R9 listed on Craigslist at $7500 for six months it is clearly priced too high. Some sellers are stubborn and believe their ’55 D-28 is somehow worth more than every comparable guitar and that some day some one will pay their price. Then there are sellers that say they are “testing the waters” and price their instrument unrealistically hoping for a windfall that never comes. Others state their price is “firm” no matter how unreasonable it is. These are not serious sellers and their guitars are not for sale.
Buyers for premium and vintage instruments are generally not first time buyers, are well informed and are familiar with current pricing trends. A potential buyer is looking for “value” in a purchase either in a physical attribute, in price or both. If there are six nearly identical guitars all priced the same the only way to create that value is to adjust price or there is no incentive to buy. Before listing an instrument, do a little research. What are other similar instruments listed at? What did they actually sell for? Are the sellers individuals or dealers? Is there a physical characteristic that makes the guitar stand out like a special appointment, condition or custom color? All this information and price are criteria for determining a fair market value and a reserve price.
What is a Reserve Auction?
Most people who have bought or sold on Ebay or at live auctions are familiar with how a reserve works. Basically, this is the least a seller will accept for their offering. We will not disclose auction reserves or publish that a reserve has not been met until after the auction closes. We believe that stating “reserve not met” in a live auction does not provide incentive for a potential buyer to continue bidding. This can also result in games being played, people asking what the reserve is, etc. So how does a seller establish what their reserve should be or even if they should have one at all? Legacy Guitars refers to current price guides, recent sales and our own experience to determine whether or not a seller is realistic about their reserve. Sellers should realize that prices shown in price guides are typically submitted by shops and are retail price spreads. Even if your 1963 Stratocaster is a near mint example and the book says $21,000 is high retail, you cannot automatically assume this is what your guitar will bring at auction. From our experience, if the guitar is well photographed with a detailed, honest description it will almost always achieve a good result if sold at no reserve.