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I would tell him that the market is down and slow, and be kind about, the fellow is desperate for cash, I can understand how he feels, he should have started his price about $1000 with a reserve at $2000
$500 is generous who the hell would tell him it's worth 5 grand
Obviously he has never built a bike himself. If he added the hours of time and cost of bits to make this a race runner he would be around $10k for the experience..... Pete