They arrive back at Rivendell at the first of May to the sound of elf-singing. They are welcomed and Gandalf recounts the tales while Bilbo dozes in and out listening for parts of the story he does not know. In this way he learns where Gandalf had gone to. He had been at a council of wizards, and they had driven the Necromancer from the Mirkwood (308–310).
Bilbo recovers from his weariness while in Rivendell. They stay a week before departing on the journey home. On the way back, Bilbo remembers the happenings of a year ago as he headed toward the Lonely Mountain. They unbury the gold from the trolls. Bilbo tries to give it all to Gandalf, but he says that Bilbo should take some as he might need it. They finally come in sight of his home and he breaks into a poem, which causes Gandalf to exclaim, “My dear Bilbo! Something is the matter with you! You are not the hobbit that you were” (310–313).
But when they arrive there is a commotion going on at Bilbo’s house, people coming and going carrying things out. There is an auction of Bilbo’s things. He is assumed to have died. Everyone is surprised, and it takes many years before it is all straightened out. “It was quite a long time before Mr. Baggins was in fact admitted to be alive again.” Bilbo has to buy back much of his own things. The Sackville-Bagginses, who want his home for their own, never admit that he is the real Bilbo, and they are never on good terms with him again. (313–314).
But Bilbo loses more than his furniture. He loses his reputation among his neighbors and is no longer respectable, even though he is now a friend of elves, dwarves, and wizards. He does, however, remain in favor of his nephews and nieces on the Took side. He gives his coat of mail to the museum, hangs his sword above the mantle, keeps his ring secret, and gives gifts to his nieces and nephews. He takes to writing poetry and visiting elves (314–316).
Several years pass and Gandalf and Balin show up for a visit as Bilbo is writing his memoirs: There and Back Again, a Hobbit’s Holiday. He hears news of the rebuilding of Dale by Bard and the replanting and blooming of the desolation. Lake-town is re-founded and prosperous. And elves and dwarves and men are friends. The Master comes to a bad end by stealing gold and then starving in the Waste. The story ends with Gandalf reminding Bilbo that there are greater things going on in the world than just the luck of a little hobbit (316–317).