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Welcome to our beginner’s guide to estate sale planning. If you are considering hosting an estate sale, you are likely in the process of dealing with the loss of a loved one, downsizing, or, less commonly, simply looking to declutter. While an estate sale (and all that comes with it) can seem overwhelming initially, it can also be a great way to sell your loved one’s possessions and clear out space.
In this guide, we will provide an overview of the estate sale process, including how to choose a professional estate sale company—or host the sale yourself. Whether you are new to estate sales or have some experience, we hope this article will provide you with the basic advice you need to make the most of your estate sale.
What Is an Estate Sale?
An estate sale is a type of public liquidation sale that sells the belongings inside a property (a person’s estate). Anything from the cleaning products under the sink to the art on the walls can be sold in an estate sale.
There are several reasons someone might decide to sell their personal belongings, and most of them include some type of significant life change. Some include:
- Death in the family
- Downsizing to an apartment
- Debt that needs to be paid off, i.e., bankruptcy
- Divorce and a split of assets
In the case of a death, the individual’s will will dictate how the estate sale will run. Will heirs have the chance to pick items out before the sale, or will everything be liquidated and the cash split among the surviving family members? If the terms are unclear, the situation can become stressful for everyone involved.
How Estate Sales Work: General Rules
An estate sale company generally runs an estate sale, and they will have their own rules for how the estate sale will go. There are locally-specific regulations regarding permitting, marketing, and sales tax. (These rules may not apply if you host the estate sale yourself.) When dealing with a company, there are two types of sales you’ll run across as a seller.
For a partial sale, estate sale companies will take an agreed-upon commission from the sales—usually between 25-45%. This fee will help the company cover its marketing costs, staffing, and profit margin. For some people, marketing alone is enough of a reason to hire a company and not attempt to run a sale yourself.
This type of estate sale might only include certain items from the estate rather than the entire contents. Partial sales are often used when an estate has valuable items that the heirs want to keep or when certain items are unsuitable for sale. If you have many valuable items, your commission may be lower because the gross sales are expected to be higher. If your items need a lot of work, like being organized and cleaned, your commission rate may be higher. Make sure the company can provide accurate receipts, so you feel confident that the commission is legit at the end of the day.
For a complete sale, some estate sale companies will opt to pay a base price for the entire estate ahead of time. In this case, they will pay a flat rate and then will be in charge of clearing the entire house of all belongings, sold or not, at the end of the estate sale period.
This type of sale can be a good option for individuals who want to sell their possessions quickly and easily without worrying about the details of a house clean-out if not everything sells. In this case, the estate sale company will typically send a representative to assess the value of the items in the estate and make an offer. The offer may be based on the estimated value of the items, as well as the costs the company expects to incur in preparing and selling the items at an estate sale.
If the individual agrees to the offer, the estate sale company will typically pay for the items in cash or with a check, and the individual can then use the proceeds to cover any outstanding debts or expenses. The estate sale company will then be responsible for organizing and hosting the sale, as well as handling all of the details such as advertising, pricing, and selling the items.
Remember that the offer made by the estate sale company may not be as high as the potential proceeds from an estate sale since the company will need to make a profit on the sale of the items. It is important to carefully consider all options and get multiple offers before making a decision on the best way to sell an estate.
How to Verify an Estate Sale Company
- Research online reviews. Look for reviews of the estate sale company on various online platforms, such as Google, Yelp, and the company’s own website. Pay attention to both positive and negative reviews to get a balanced understanding of the company’s reputation.
- Ask for references. Ask the estate sale company for references from past clients. Contact these references and ask about their experiences with the company.
- Check with the Better Business Bureau. Check the company’s rating and any complaints filed with the Better Business Bureau (BBB). While a lack of complaints doesn’t necessarily mean the company is reputable, a high number of complaints could be a red flag.
- Ask about their experience and credentials. Ask the estate sale company about their experience and credentials in the industry. Look for companies with a proven track record and experience in handling estate sales similar to yours.
- Consider the company’s policies and procedures. Review the company’s policies and procedures for handling the estate sale. Look for clear, fair, and transparent policies that protect your interests and provide good customer service.
Pros and Cons of Hiring an Estate Sale Company
Overall, hiring an estate sale company can be a convenient and effective way to handle the sale of a loved one’s estate. However, it’s important to weigh the pros and cons and carefully consider your budget and priorities before making a decision.
- Professional experience. Estate sale companies have the experience and expertise to handle all aspects of the sale, from pricing and organizing items to advertising and managing the sale itself.
- Time-saving. Hiring an estate sale company can save you a significant amount of time and effort, as you won’t have to handle the sale on your own.
- Maximum profitability. Estate sale companies know how to maximize the profitability of a sale and can often get higher prices for items than you might be able to on your own.
- Stress-free. This factor is arguably the most important. Dealing with the sale of a loved one’s estate can be emotionally and physically draining. Hiring an estate sale company can alleviate some of this stress, allowing you to focus on other important matters.
- Cost. Estate sale companies typically charge a percentage of the total sales, which can be a significant cost.
- Limited control. When you hire an estate sale company, you may have less control over the pricing and management of the sale.
- Limited flexibility. Estate sale companies often have strict policies and procedures that may not allow for much flexibility in terms of the timing or location of the sale.
How to Host a Sale Yourself
If you decide to have an estate sale at your home without a company, here’s what you’ll need to do:
- Set-up. Make sure the house or space where the sale is taking place is clean and organized. This will make it easier for buyers to browse and shop.
- Pricing. Prior to the sale, appraise all items and come up with fair pricing. Have a price list ready for all items that will be for sale. It is important to have a clear pricing system in place to avoid any confusion or misunderstandings during the sale.
- Cash handling. Have a designated person responsible for handling cash transactions. This person should have a secure place to keep the money, such as a cash box or register.
- Security. Consider hiring security or having a designated person responsible for keeping an eye on the house and any valuable items.
- Signage. Have clear signage directing buyers to the sale and indicating any parking restrictions or other important information.
- Sales team. Have a team of people available to assist buyers and answer any questions they may have about the items for sale.
- Sales tax. If applicable, make sure to collect and properly record sales tax on all transactions. If you are not a registered business, this may not be necessary. Check the laws in your state.
- Clean-up. After the sale is over, be prepared to clean up any leftover items and properly dispose of them by donating or trashing them accordingly.
- Payment. After the sale is complete, make sure to account for all sales and payments. This will help ensure that any taxes or splitting of assets has accurate data.