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How to Hold a Successful Estate Sale
Malcolm Katt
08/28/07 - 09:56 AM EDT
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You don't have to be rich or liquidating a large estate to hold an estate sale. They can be profitable even if you're downsizing into a smaller home or going through a divorce, or when faced with valuable but unwanted inheritances.
It's difficult to put a figure on how much profit a home's contents could generate. One house could be filled with priceless antiques and collectibles, and another filled with items treasured only by a mother. However, antiques and collectibles in an estate sale should bring prices comparable to what they would bring at a good auction. The advantage of estate sales is getting rid of everything in one fell swoop. I used an estate sale after my grandparents passed on: Their residence was located in a different state, and my family just didn't have the time or inclination to deal with maintenance. It was a far easier process than making multiple trips with relatives to clean out the home, and the remaining family and I simply divided up the proceeds. Keep in mind, an estate sale is distinct from a garage sale -- while the latter may be a great way to get rid of some clutter, it isn't a serious moneymaker. A garage or tag sale usually involves the contents of just a room or two, and the work is often tedious -- running ads; making and putting up signs; pricing, tagging and setting up items; haggling over prices; and collecting money. After the sale, you'll have to clean up, with only possibly 5% to 10% of the items sold and a meager profit. In an estate sale, however, you pay professionals to manage the event and sell items from the entire house. These companies take a commission of the total sales -- typically 20% to 35% -- or charge a fee for conducting the sale, or both.
Estate-Sale Strategies
If you're considering an estate sale, here's what you'll need to do.- Find a professional. Before hiring an estate-sale professional, learn what they will cover. Some take care of all the details, from pricing and selling to cleaning the house and hauling off items that didn't sell. Some are only involved in preparing and conducting the sale. Professional estate-liquidating companies can be found online, but it's best to ask friends for referrals. Interview at least two estate-sale companies and check their references. Also check the local Better Business Bureau for any complaints with the companies you are considering -- only look at those that are insured and bonded, and who will provide a detailed contract covering all aspects of the sale. Once you have some names, visit an estate-sale event they're running and note how it's going. Were you greeted upon entering the premises? Was security provided to secure valuables? Were there enough people to answer buyers' questions? How were the items priced? Was the money collected in a systematic way and secured? If customers see a well-run outfit has taken the time to properly display, clean and mark each item, they are more likely to pay better prices.
- Don't throw anything away. Items you may consider trash are other people's treasures -- valuable pieces include old magazines, photographs, dated kitchen utensils, costume jewelry and vintage clothing. Well before the sale, have the estate-sale professional walk through the house to help you decide what can be discarded.
- Check prices. The professional service will assess the value of your items and make price recommendations. They should be equipped with reference books and a camera, and produce a household item price sheet for you to review. Still, you should check reference books and online auctions like eBay (EBAY - Cramer's Take - Stockpickr) to verify that their estimates are accurate.
- Consider alternatives. You may consider selling certain valued antiques and collectibles from the estate through a separate auction, especially if they're particularly hot items at the moment. Prices attained could be higher than you'd get at the estate sale. First, though, obtain an independent appraisal -- find a qualified expert at the American Society of Appraisers -- on all the valuables you're selling, as it's always preferable to get a second (and informed) opinion.
- Know the timeline. Depending on the number of items, an estate sale can last for several days or run over one or two weekends. Keep in mind, many estate-sale professionals hold a presale event allowing friends and relatives of the seller to buy items before the sale is opened to the general public. Most sales will offer significant discounts (typically 50%) on the last sale day on unsold items.
- Finishing up. After the sale, get a complete accounting from your service. All money should be settled between you and the estate-sale company immediately. When considering your profit from the sale, don't forget about the 28% capital gains tax that will be due in most cases. Many services offer a "cash buyout" on items not sold, which will be based on a percentage of the selling price (laid out in your contract). Without a cash buyout, remaining items can be donated to charitable organizations; make sure the estate-sale company obtains receipts so you can get a tax deduction for a charitable gift of items in good-used condition or better. If the estate-sale company isn't contracted to haul away the rest of the unwanted items, you'll need to make arrangements for disposal.
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