An estate sale involves liquidating a large amount or an entire household of items that a person or an estate owns. Whatever the reason, estate sales can be an efficient and effective way to pay off debt, offset moving or realtors fees, or simply to make money from unwanted possessions. The average American home spans some 2,500 square feet (not counting the storage lockers rented by one in 10 U.S. households), so emptying one out isn’t easily accomplished alone. Hiring a professional liquidator can save you time and money.
Here are a few tips to help prepare and what to expect.
1. Do you due diligence.
Get referrals from people you trust, then make phone calls and ask lots of questions. Once you've narrowed your candidates to two or three companies, schedule onsite consultations. Key signs of a reputable and professional estate sale company are:
2. Before you sign that contract.
If possible, visit an estate sale of the company you are considering hiring. What to look for:
3. Expectations from both the client and estate sale company.
Fees and commissions- There are two cost structures: 1) Fee-based companies are typically franchised companies and charge $1,500 up to $2,500 in upfront fees. The fee is a guarantee they can pay staff expenses and a franchise fee to their parent owner. They also charge an addition commission out of gross sales that ranges from 30%-35%. 2) Commissioned-based liquidators are typically local family owned companies that do not charge fees - they are paid a commission from gross proceeds. Standard commission in the US ranges from 35% to 40%.
Additional costs - Don’t assume fees or commission payments includes the removal of all unsold items. Most companies charge a separate fee, if clients wants all remaining items donated or disposed of and the floors "broom clean". At roughly $1,000, this service doesn’t come cheap, but for many an emptied and clean house may be well worth the price.
Specific rules and standards - The estate sale company is fully responsible for determining what is sellable and what is not (see "What's My Stuff Worth" resource), values and pricing, setting dates and times for the sale, what platforms to advertise on, methods of payments accepted, and managing post sale services. Consistency and accuracy contributes to a successful sale and the credibility and loyal following of the company.
Transparency, documentation & taxes - An estate sale company should keep a record or inventory report of sold and unsold items. Consistent with IRS guidelines, items can be grouped under categories like "clothing, electronics, jewelry". A statement of sales with supporting fees and costs should accompany the statement, like credit card fees or post-sale cleanout invoice. Proceeds can be paid in cash or business check. In some cities, sales tax may be collected, which is a debt from gross proceeds and paid by the estate sale company. Additionally, you may want to consult with a tax or financial professional if your net proceeds are considered taxable income.
Overall value - While there’s no hard and fast rule, the standard threshold for a company to consider having a estate sale is a minimum of $4,000 - $5,000 so both the client and liquidator can profit. Clients with an estimated overall estate worth of $1, 000 - $4,000 may want to consider other liquidation options, such as estate buyouts. However, before accepting a lump sum offer, it’s a good idea to get a second opinion unless it’s absolutely clear there’s nothing of real value.
Your preparation - In general, do not throw anything out until you meet with a professional to assess your items. However, there are items that do not have any value, do not sell and that you can get rid of. Items include: trash, broken and soiled items, personal items such as bills, taxes and paperwork, personal photos and slides, open or out dated food, old toiletries and cosmetics, prescription medications, used underwear, VCR tape recordings, beds older than 2 years, and large tub TVs or monitors (unless they are vintage or antique).
Estate sale timeline - The estate sale process is generally a two week process from start to finish or longer for large estates. The first week is set-up that includes sorting, trashing, inventory and staging. The second week is pricing, photographing, advertising and running the sale. For client's that choose a post-sale cleanout, that commences the Monday following the last day of the sale. Sale payments follow within 10 working days, after the sale.
Trust - If you hire a professional you trust, then you shouldn’t have to be on site to make sure everything goes right. Since the ultimate goal of the estate sale is to strike a balance between fair price and efficiency to sell as much as possible, most estate liquidators include in their contracts that family members can’t be on the premises during a sale or highly discourage it. It's not because they do not like you, but family milling about inhibits progress and can cause unnecessary friction.
Empathy - Even though empathy isn’t part of the estate liquidators job description, the good ones are very sensitive and understand all of the emotions of letting go. We personally have actually sat on the edge of a client's bed and cried with them. Although it is the owner's responsibility to through the house and decide the items to be kept outside of the sale or to friends and family, we try to put ourselves in their shoes with support and compassion.
For questions or information, contact us at 303.906.5133 or 303.506.7268. We are happy to help in any manner we can.