How & where to sell 1927 F5

[MikeEdgerton]

Honestly you have one thing to worry about. Getting it into the hands of someone that can sell it. They will handle the prep work for you. They are going to get the most for it that they can. You can set a minimum you'll accept for it. That can be determined talking to folks that are listed above.

[mrmando]

I wouldn't recommend, say, having Frank Ford set it up and then asking Gruhn to sell it. The more you can get your services integrated in one place, the happier you'll be.

Assuming that you live in the Bay Area, you are within striking distance of Frank Ford in Palo Alto (easy walk from the Caltrans station), Lowell Levinger in Inverness and Dexter Johnson in Carmel. That's enough expertise to rival anybody anywhere.

[Lynn Dudenbostel]

We are in a wonderful position for buying/selling the type of instruments we are talking about here. All of the dealers mentioned have a good reputation and will appraise the instrument fairly close to the same dollar amount. There will be some variation, but not much. As I understand it, in the violin world (and I'm talking upper end violins) you can buy a 1700's whatever at one dealer, take it to another big name dealer for an appraisal, and expect to get an appraisal for about 1/2 what you just paid! That just doesn't happen in these circles. If you asked my opinion (and no one has, but I'll offer it anyway) and not knowing where the instrument resides, I'd go to the following.....

West coast: Dexter Johnson - Carmel Music ; Gryphon Stringed Instruments in Palo Alto
Mid-west: Jim Baggett - Mass Street Music (Jim is an appraiser for PBS Antiques Roadshow)
Eastern US: Gruhn Guitars (talk to George Gruhn, Christy or Walter Carter... Walter is former historian for Gibson and litteraly wrote the book on Gibson history); Elderly Instruments (Stan Werbin); Larry Wexer NYC (his specialty/passion is vintage Gibson mandolins); Mandolin Brothers on Staten Island (Stan Jay).

I've not intentionally left anyone out of this list, but these are people with tremedous experience selling exactly this type of instrument, and all either have repair/set-up facilities on site or access to absolutely top shelf repair work. They should also work with you on the consignment fee (expect to pay no more than the repair/set-up cost and shipping if the instrument doesn't sell), but be prepared to contract with them for at least 90 days where they have exclusive rights to represent the instrument.

With all of that said, the vintage mandolin market is soft right now. There are more 1920's Gibson F-5's on the market than I can remember in quite some time. You had mentioned that you don't have to sell it right now. My advice would be hold on to it until the economy picks up. It will only increase in value. I've seen this exact era Gibson mandolin appreciate from about $7500 in 1982, then hit about $25,000 around 2000, and now reaching $80,000 or more. There was a period of time just a few years ago where these mandolins doubled in price over a period of 12 months. Right now, your money is better tied up in the instrument than in the stock market or heaven forbid, a CD! Get a good insurance policy (Heritage or Clarion) and just sit on it. These things are cyclical. Prices go up, the plateau for a while, then they go up again. We are on a long plateau right now.

Just my 2 cents.

Lynn

[AlanN]

Yea!

Lynn D. for Treasury Secretary
Big Joe for Homeland Security
Mike E. for Press Secretary
Saska for Secretary of State

Moderator, whack away...

[woodwizard]

To me Lynn's advice is the best I've heard so far. IMHO ... I'd hold onto it for awhile if I was you.

[Lynn Dudenbostel]

Man, Alan... there you go talking politics again! Don't you know the folks you just listed are too honest to run for office!

We never know what someone elses financial situation is, but if he can hang on to it, that's what I'd do. Case in point... one of the dealers mentioned above had several (5 or 6 as I remember) vintage D-45's in his personal collection (probably back in the late 1970's early '80's). When they hit about $8500, he thought they could go no higher and sold all of them. Now some are hitting over $250,000. The crystal ball gets a bit foggy sometimes, even for the top dealers.

As George Gruhn told me once, these instruments are better than blue chip stocks (Eastman Kodak was a blue chip, remember?). When these instruments were made (and you can add late '50's Les Pauls, 1930's Martins, 1950's Fenders to the list) they were the very best of their type in the world. Today, they are still considered the very best in the world, and during the time between when they were made and present day, none have been added or taken away from that list. Think about it. This is why they are considered the "gold standard".

Lynn

[1927-F5]

... With all of that said, the vintage mandolin market is soft right now. There are more 1920's Gibson F-5's on the market than I can remember in quite some time. You had mentioned that you don't have to sell it right now. My advice would be hold on to it until the economy picks up. It will only increase in value. ...

Thanks Lynn for reminding me to look at the big picture. Unfortunately, now that the existance of this instrument has been announced, even if it doesn't come to the market right now people know that it's lurking out there, which reduces the value of what's currently for sale. I'm really sorry that I did not know about the one at Gruhn's before announcing this one -- it makes their job harder and doesn't help me at all either.

But yes, you have a good point -- what will hold its value better over time, the instrument or the American dollar? Considering the original purchase price in 1927 and its current value now, even in a soft market, clearly the instrument has done better.

The other thing to consider is that mandolins may lose popularity, like they did between the 40s and 70s. They didn't increase monotonically in value by any means!

[Skip Kelley]

You've got a real nice F5 there. With the economy the way it is right now, I would hold onto it!

[ninevah]

1927 F5
Why don't you learn to play it?
You would have the best beginner mandolin to learn on anyone could want.
You keep an heirloom in the family.
While you pick away the price will climb, and hopefully the economy will come around so people can buy again.

[Rick Schmidlin]

Another dealer that I trust is Greg Boyd in Montana. He is well trusted and educated.

[1927-F5]

Thank you, gentlemen, for all your help.

Negotiations have begun, and I feel much better prepared due to all of your help.

[Treble in mind]

A couple of things I'm not seeing mentioned:

First and briefest, the store-in-a-vault thing is great, but I'd sure like to know the ambient humidity in that vault! I'll defer to the luthiers here, but it's obvious that humidity that's too low, or too high for that matter, could create problems.

The other thing...

Since you say that you inherited the mando, your income tax basis (meaning "what you have into it") is its fair market value at the date of your dad's death.

The sales price would be decreased by any expenses of sale, including commissions, all of which you should document, but it's the basis that matters the most.

So if he passed in the last 2 or 3 years, you almost certainly need not worry about paying any taxes on the sale, since it's highly unlikely in today's market that your sales price minus expenses of sale will be greater than the date of death fair market value.

You ought to ask whomever is going to handle the sale, assuming it's one of the dealers that have been mentioned above, to give you a written estimate, a retrospective appraisal if you will, of that date-of-death value.

And since you really don't want to deal with responding to a "Dear Taxpayer" letter, you should report the sale on your tax return for the year of sale using the death-of-death basis number per an appraisal as mentioned above, and presumably reporting no gain (and no loss, since the mandolin is a personal, not a business, asset). That way you'll have covered yourself.

Talk to your tax advisor, of course. This was free advice, not to be relied on, blah-blah-blah, and worth what you paid for it.

What a wonderful inheritance!

[Timbofood]

'27, I may be rushing you but, you mentioned an appointment with Stan at Elderly. How did it go?Or am I premature?
Lynn, you really offer some very thoughful insights about how to go about this without getting in "the middle," how tactful!
Darryl, how cool that you offer your expertise about this mandolin's brother and sister. You must know a lot of the various "families!"

[Timbofood]

Treble, I know you! Good point

[f5loar]

Capital gains taxes and the IRS is not a matter to overlook in this situation. Assuming the mandolin was listed on the estate death tax returns or gift tax return prior to death the IRS should already know about it. I can think back about 10 years ago a certain son of a very famous mandolin picker who died who also owned a very famous 20's Gibson F5 that had the honor of having the IRS knock on his door for selling the F5 for more than it was appraised for and not reporting the capital gains.
The only way I know for you to get out of paying these taxes is don't sell it now and become a Senator or other politician and then you don't have to worry about paying those taxes !

[Treble in mind]

f5loar, I'm sure you know more about Loar F-5's than I ever will, but let's clear up some things you said in your last post about taxes, which I do know a good deal about. Nothing personal here, just some clarification.

If the mando was an inheritance, the date of death value will be its basis. It doesn't matter whether an estate tax return was filed.

In some cases when an estate tax WAS filed, the basis may the value at 6 months after death, but that's needlessly complicating this issue.

And gift tax returns have nothing to do with it if it was inherited property.

Again, the seller should consult his own tax advisor. Let's get back to this kewl mando....

[Zigeuner]

What a beautiful instrument! All of the suggestions for methods of sale are quite good.

As Lnn Dudenbostel mentioned, I would make certain that the instrument is properly insured. Furthermore, that insurance policy and certificate of insurance should clearly state that the instrument is insured for the specific location where it is to be when placed for sale if it's out of your posession.

Good luck!

[Timbofood]

The question of insurance is a good one. I would have assumed (apparently incorrectly) that upon entering into the agreement for the "brokering" of the instrument, that the agent would bear the insurance given the commission he would realize. After all, he has virtually no monetary investment other than a possible set up (which would have been paid for by either the seller or the final buyer). Am I wrong? Just curious.

[f5loar]

The OP did not say when his father died nor did he say if he received the mandolin through a probated will. Date of death value is unknown to us if the mandolin was even listed in the estate. If his father was doing it right and gave the mandolin to him before he died there should have been a gift tax return filed with a value on it. Regardless of the situation the IRS could get involved and a heafty amount could be owed in the end. Something to think about before you deposit the $100,000 into a bank.
Most people in these situations seem to unknowlingly overlook any tax problems. No harm in at least bringing it up and right he should consult his tax advisor for help if he has one.

[fatt-dad]

If you own a home, get a personal article floater insurance policy for this mandolin. Even a good guess (say like $100,000) even without an appraisal would be appropriate. My PAF did nto require an appraisal, bearing in mind if there is a loss (stolen, fire, etc.), a written appraisal would be your best friend. I'd call your homeowner's insurance and discuss a PAF with them and to what extent you can "guess" on a policy limit (well within reason).

I'd keep the mandolin for its investment potential (i.e., in this soft economy). I'd also download some tab and learn a few fiddle tunes. It's therapeudic!

Nice mandolin. I'm no expert on how to sell it or the vintage market and such, however. I just like entertaining the dog with my mandolin.

f-d

[Chuck Naill]

To all those who suggested holding on to the mandolin and learning to play it, kudos!!

This is a once in a life time opportunity to play what many feel is the apex of mandolins. I would have that sucker set up and just set there like Jim Stafford on that "sack of seeds" and let the good times roll. That F5 will never be worth less. I just hope you do not have to sell it to make ends meet.

[Ken Waltham]

A flyer on yur home policy will not cut it, in no way.
If you want to insure, call Heritage, in Philidelphia. They specialize in vintage instruments, do not balk at the big numbers, and are super easy to deal with.
Your home insurer will not understand, and if it ever should come to paying up, good luck.
Just some friendly advice from the voice of experience.
Ken

[Treble in mind]

Darn it, I promised myself I'd stop the tax discussion, but I can't help it:

f5loar, you said that "if the father was doing it right and gave the mandolin to him before he died..". I don't think that's doing it right at all. Here's why:

Assume that a long time ago Dad buys the mando for $1,000. When Dad dies, it's worth $100,000. Son sells the mando for $125,000 net of commissions and expenses.

If while alive Dad gives the mando as a gift to Son, Son has a basis of $1,000, Dad's cost. That's true whether or not a gift tax return was filed. Even if a gift tax return was filed showing a gift value greater than Dad's original $1,000 cost, Son's basis is still $1,000 (!), unless gift tax was paid on the gift (highly unlikely unless Dad is a very, very wealthy man, for reasons I won't go into here).

So when Son sells the mandolin that he got as a gift, he would have a capital gain of (125,000-1,000), or $124,000.

If on the other hand the mando passes to Son after Dad dies (in other words, if Son acquires the mandolin from a decedent), Son has a basis of $100,000. That's true whether or not an estate tax return was filed.

So when Son sells the mandolin he inherited, he has a capital gain of (125,000-100,000), or $25,000. That's not small change, but it's a lot better than the alternative scenario.

Like nearly everything else in taxation, there are complications and exceptions to everything I just said, and I'd bet that some of you reading this know them, but the basic structure is what I'm stating here.

Ok, let's go back to mandos again...

[mrmando]

Treble: In the above discussion, how is the mandolin's present worth established? Appraisal by a recognized expert?

Let's say Son inherits the mandolin; Dealer appraises it for $100K, so that's the basis. Dealer then proceeds to sell it for $100K and takes a 10% commission. Is Son now looking at a $10K capital loss?

[f5loar]

We can't assume when the father died therefore no educated bases on value at date of death. He could have died 10 years ago and OP is just now getting around to selling it after finding out what it is worth. Don't know if he gave it to him prior to death either without filing a gift tax. We can say all we want but the point to bring it up is to make this OP realize there may be some tax owed down the line and should be considered and factored into before jumping into a high dollar sale of something you have nothing invested in. I don't claim to be a tax expert but I have had serious dealings on estate tax matters and it's nothing to sneeze at with this much money. Let's don't forget all those thankful people on the Oprah show who just showed up that day and got a free $24K car only to find out weeks later they couldn't even afford the tax owed on the cars and ended up selling them to pay that tax. Probably too late now as an IRS agent is reading this post and is waiting in the wings for OP to sell it so they can make their move and he can get his cut of the transaction. I'd keep it too until things heat up again.