Buying a Gibson Loar

[Jeff Mando]

Yup, we actually have a similar saying in the vintage banjo world... Seemingly valuable vintage banjos are notoriously easy to modify into existence.

I really like the fact that vintage mandolins are not as easy as vintage banjos to "modify into existence". To a large extent, we can thank the dove-tail joint for that.

Don, your quote reminds me of a story from my younger days. I think it was 1985, the first time I attended a vintage guitar show and the first one in our area. Me and a couple buddies decided to get a table and try to sell some of our extra equipment. We were not dealers by any stretch, just musicians having fun. In preparation for the "show" and in addition to the stuff we brought, I contacted a few other people I knew and see if they wanted me to take any of their stuff to the show and try to sell it. One man ran an antique store and said, "yes, I have an old banjo and want you to sell it. It is a Gibson and I think it is worth some money." I went to pick it up from him and (not being a banjo guy) was not impressed. Yes, it was an old Gibson Mastertone, but a four string and filthy and had the original old case showing wear. He said he wanted $500 for it and anything I could make over that was mine. I shook my head thinking nobody wants a 4 string, but reluctantly agreed to take it along and try to sell it for him. TO MY SURPRISE, it got a lot of interest. One man offered to trade a 50's Gibson ES-295 for it and at the time, I believe was a $1600 guitar. Being broke, I couldn't take advantage of the trade because I would owe the antique dealer $500 in cash, which I didn't have. Anyway, we had a fun weekend and on the last day someone bought the banjo for $750, so I made a little money on it and made my friend some money. BUT, over the years and having learned more about stuff, I have often wondered if it was a "good one" like Earl's!??

keep in mind, this was before the internet and the information wasn't out there to find, without being part of a select circle who knew this stuff.....

[dhergert]

Without seeing it, it's hard to guess what you might have had there. But being 1985 and being a 4 string I would tend to guess that it might have been pretty original. The big money then and now would have been for an original 1930s flathead one-piece-flange Mastertone banjo. But people were mixing and matching parts back then, "modifying into existence", and in fact by 1985 people had been doing so for almost 25 years to feed the bluegrass market. So there's no guarantee that you had a banjo "like Earl's"... One of those mysteries we'll probably never have an answer for.

I know that originality among mandolins can also be "challenged", but it's not so easy to swap out a neck or the main tone producing parts of a mandolin. And to me, after 46+ years in the banjo world, that's kind of refreshing. There are a number of things I really like about this side of the fence.

[Beardog]

I haven't read the whole thread. But, if you want it, if you can afford it, and if your spouse is on board, buy it. You only live once, and your estate won't follow you beyond the grave. With that said, I am glad that in the photo, you are holding that sucker real tight, with both hands!

[Links]

One thing that hasn't been discussed and may or may not be relevant is what these instruments are really worth.....not in terms of "is a piece of wood with strings worth this much money", but in terms of how much the seller is really receiving. The fern Loar Elderly's is listed for $135,000, and I think is a consignment, therefore subject to a 20% commission although you might think that for an instrument that expensive Elderly would negotiate and take a smaller percentage. If it is 20%, the owner is realizing $108,000. So, is that instrument worth $108,000 or $135,000? How about if the same instrument sold at Skinners for $120,000. The buyers premium is probably around 20%, thus the buyer would be paying $144,000 and the owner would receive $120,000 less seller's premium which I think used to be about 10%, thus getting $108,000. Some auction houses have changed their commission structure, so it may be a little different now. The problem, as I see it, is that you may have bought a mandolin for $135,000 and when you walk out the door, you may have a $108,000 instrument.

Of course you have the option of selling directly to another individual (one I would take), but with Elderly having possession of their Loar for (someone said ten years....I know it has at least been there several) a long time, what is the liklihood of you selling it yourself for what you paid, or even close to what you paid for a mighty long time. It can get pretty complicated!

[Jim Garber]

I believe that for high end instruments major dealers will take a smaller percentage upon sale. I don't know off-hand what commission the super-high end instruments will bring, but I imagine it is also negotiable when consigning.

[Jeff Mando]

Which is exactly the time to buy...

You are correct to buy when the prices are low, but take it one step further......

buy "wholesale" -- however you want to define it. For me, I guess I worked for too many "vintage" dealers to ever get excited about paying "retail" for a used instrument. I've seen how the "big time" dealers operate, up close and personal. Of course, anybody can take on a consignment for any price and wait and see if it sells......not really any pressure there. What separates the men from the boys (that expression suddenly sounds quite dated, doesn't it?) is the ability to buy outright and for what price. When the vintage market was healthy, before 2008, let's say, dealers had no problem paying 70-80 percent of retail outright for instruments -- and were content with that small sliver of a "potential" profit. But, with high end items lingering for years with no sales it is difficult to say what is a fair cash price for an outright sale. I'm thinking half of the $135K, maybe less.....regardless of the quality of the instrument -- it doesn't seem to have much bearing on how fast something sells, when none are selling. Even at that, you have to believe in the instrument and that the market is still strong enough to turn around, at the same time knowing it won't be a quick flip. And, yes, I said cash price -- a very different thing than buying a house -- same amount of money involved, but very different when dealing with bank loans and paying over time, etc. For a country boy like me, the first time I saw a guitar dealer open his fanny pack with $300K in cash laying there, well, let's just say I realized I wasn't in Kansas anymore.......

What a Loar has going for it is the history, reputation and desirability -- an ultimate instrument. And people will always want the ultimate! I guess if your store is well-heeled enough to not require a quick flip, having great inventory in stock is a wonderful form of advertising and the word will get out.....

[Links]

You are correct to buy when the prices are low, but take it one step further......

buy "wholesale" -- however you want to define it. For me, I guess I worked for too many "vintage" dealers to ever get excited about paying "retail" for a used instrument. I've seen how the "big time" dealers operate, up close and personal. Of course, anybody can take on a consignment for any price and wait and see if it sells......not really any pressure there. What separates the men from the boys (that expression suddenly sounds quite dated, doesn't it?) is the ability to buy outright and for what price. When the vintage market was healthy, before 2008, let's say, dealers had no problem paying 70-80 percent of retail outright for instruments -- and were content with that small sliver of a "potential" profit. But, with high end items lingering for years with no sales it is difficult to say what is a fair cash price for an outright sale. I'm thinking half of the $135K, maybe less.....regardless of the quality of the instrument -- it doesn't seem to have much bearing on how fast something sells, when none are selling. Even at that, you have to believe in the instrument and that the market is still strong enough to turn around, at the same time knowing it won't be a quick flip. And, yes, I said cash price -- a very different thing than buying a house -- same amount of money involved, but very different when dealing with bank loans and paying over time, etc. For a country boy like me, the first time I saw a guitar dealer open his fanny pack with $300K in cash laying there, well, let's just say I realized I wasn't in Kansas anymore.......

What a Loar has going for it is the history, reputation and desirability -- an ultimate instrument. And people will always want the ultimate! I guess if your store is well-heeled enough to not require a quick flip, having great inventory in stock is a wonderful form of advertising and the word will get out.....

Jeff......playing devil's advocate....why would a seller be willing to let his instrument (like a Loar) go to a dealer for 50% or less than what a potential retail buyer would pay? If someone had a 100k instrument, it sure seems like there would be a willing buyer at 75 or 80k way before they would let it go for 50k to a dealer. I'm not questioning whether you are right or not, just the psychy behind it.

[Jeff Mando]

Jeff......playing devil's advocate....why would a seller be willing to let his instrument (like a Loar) go to a dealer for 50% or less than what a potential retail buyer would pay? If someone had a 100k instrument, it sure seems like there would be a willing buyer at 75 or 80k way before they would let it go for 50k to a dealer. I'm not questioning whether you are right or not, just the psychy behind it.

No problem, much of what I do is playing devil's advocate! But, hey, it's cheap therapy for me....

I guess if the seller was financially flush, they wouldn't. They would hold onto it until the market was better, pricewise or at least more liquid. The situation currently seems to be that there are a lot available, but few buyers, with some Loars being listed for sale over a year or more. I know a couple that have been several years with no takers. So......if the seller was "motivated" enough and needed the money for a pressing need, a buyer could begin with a line such as, "I know you have a wonderful mandolin and it is worth much more than I can offer, and I'm sure you'll find a buyer to pay full price in the next year or two, BUT if you would like to sell it today, I am glad to pay $50K and that is in cash -- in fact, we can go to my house right now and open the safe and you'll have the cash in your hands in 15 minutes!" Anyway, that might seem mercenary or maybe even predatory, but it is a persuasive technique I've seen used in business -- many, many times. And, it allows you to "take your profit" on the front end, so you know your investment is safe, unlike the person who buys at full retail, decides to sell, and ends up losing money after the commission is paid. And, I do believe in business that a good deal is a "good deal" for both the buyer and the seller. In this scenario, the $50K in cash might save someones home from foreclosure, help to avoid bankruptcy, might pay medical bills, might be used to start a business, college for kids, etc.......so sometimes cash today is more useful than the promise of cash a year from now.

Another advantage of selling to a dealer is that they have the experience to know what they are buying and the risks involved. When the deal is done, it is DONE. With a retail buyer, they sometimes carry unreasonable hopes and standards for a 95-year old instrument (after all, this is a holy grail type of purchase) and sometimes this surfaces in the form of a lawsuit for repairs, misrepresentation, etc., and sometimes this happens years after the sale --who needs that?!! When selling to a dealer there is less hand holding and less chance of dealing with a cry baby down the road. (although, I have had some dealers do that....) In fact, I'll list their names......just kidding!

[Charlieshafer]

As value is all about the psychology of perception, it's interesting to take this thread, and the one on the real value of a Loar and see the direction they've both gone in. Essentially, they end up noting the fact that there are, by most counts, 13 for sale right now that are listed with dealers, and who knows how many for sale privately, with none moving. As much as people go on about the beauty, the curatorship of something truly special, the pride of ownership, they still sit there.

Contrast that with threads on Red Diamonds, Nuggets, etc., and they sell in a heartbeat. How many Brentrups are there for sale? Dudes? I think pretty much everyone is in the same space right now: if you're a player, even a highly skilled professional, a Loar is an unnecessary expense.

Economics is a pretty simple science here, and pretty unforgiving: if there are no sales, there is no value. Until a bunch of people start writing checks (and not just or or two, but enough to create a scarcity) there's no knowing what they're worth, or at what point people say, "hey, I'll jump in..."

[William Smith]

Big bucks I know 165K range ... At this stage in my life I can actually afford it... just convincing the other half it is a good investment ... as I approach the retirement age thinking what the heck,
maybe go for it.... Have any of you Loar owners any advise? Most recently I have been to Carrter and Gruhns checking some out.

Great for you, jump while the gettin is good!
I sure bet that was fun trying out all them Loars! What did ya think of the virzi ones compared to non virzi and what stood out to you as better? Tone/volume/voice wise out of the ones you played. I imagine the virzi Loars weren't as loud? I've never played a virzi so just curious because Carter and Gruhn have em.

[Links]

No problem, much of what I do is playing devil's advocate! But, hey, it's cheap therapy for me....

I guess if the seller was financially flush, they wouldn't. They would hold onto it until the market was better, pricewise or at least more liquid. The situation currently seems to be that there are a lot available, but few buyers, with some Loars being listed for sale over a year or more. I know a couple that have been several years with no takers. So......if the seller was "motivated" enough and needed the money for a pressing need, a buyer could begin with a line such as, "I know you have a wonderful mandolin and it is worth much more than I can offer, and I'm sure you'll find a buyer to pay full price in the next year or two, BUT if you would like to sell it today, I am glad to pay $50K and that is in cash -- in fact, we can go to my house right now and open the safe and you'll have the cash in your hands in 15 minutes!" Anyway, that might seem mercenary or maybe even predatory, but it is a persuasive technique I've seen used in business -- many, many times. And, it allows you to "take your profit" on the front end, so you know your investment is safe, unlike the person who buys at full retail, decides to sell, and ends up losing money after the commission is paid. And, I do believe in business that a good deal is a "good deal" for both the buyer and the seller. In this scenario, the $50K in cash might save someones home from foreclosure, help to avoid bankruptcy, might pay medical bills, might be used to start a business, college for kids, etc.......so sometimes cash today is more useful than the promise of cash a year from now.

Another advantage of selling to a dealer is that they have the experience to know what they are buying and the risks involved. When the deal is done, it is DONE. With a retail buyer, they sometimes carry unreasonable hopes and standards for a 95-year old instrument (after all, this is a holy grail type of purchase) and sometimes this surfaces in the form of a lawsuit for repairs, misrepresentation, etc., and sometimes this happens years after the sale --who needs that?!! When selling to a dealer there is less hand holding and less chance of dealing with a cry baby down the road. (although, I have had some dealers do that....) In fact, I'll list their names......just kidding!

Jeff.....that was an excellent post and right on the money on every aspect. What you are saying is exactly why someone will sell a $5,000 widget to Rick on Pawn Stars for $2,500 (yeah I know that it Pawn Stars is anything but "reality", but what he does happens at pawn shops every day). Cash is hand. I recently purchased a collectible for 7k that the guy selling (for someone else) was asking $8.5k for. I told him that I would give him 7k for it and hope that they did not accept my offer. The guy called back and said the owner did accept the offer. The broker later told me the owner had paid 18k for it almost 15 years ago. I try not to pay more for collectibles than I could turn around and sell them for if I "had" to sell them. Of course, that is not always possible.

[Spruce]

Contrast that with threads on Red Diamonds, Nuggets, etc., and they sell in a heartbeat. How many Brentrups are there for sale? Dudes? I think pretty much everyone is in the same space right now: if you're a player, even a highly skilled professional, a Loar is an unnecessary expense.

....and a hassle to own.
And a inferior instrument in terms of workmanship.
...and expensive as all get-out to repair.
And conceivably not as "good" (or, modern) sounding as a Nugget, Monteleone, etc.

But....it's a Loar.

Interesting thread all....thanks!

[woodwizard]

Been a while since I've checked this thread. The update is I've backed off of the Loar purchase idea just for now anyways. However I did pick up a little #71364 1922 F2 and enjoying it for now.