How to Liquidate an Estate – The Different Options
Most families feel like they are in a quandary when a loved one dies and they are left to handle an entire estate filled with personal property. How does the family begin to liquidate the contents of an estate?
The solution depends on what an estate sale professional recommends, after considering factors like location and type of estate (single-family home, high-rise, condo or patio home, in the city or rural, space for parked cars for an estate sale). The professional will also consider the content after the family has selected their items, high-value items and collections, and the needs or desires of the family.
Here are a few options to carefully consider:
Conducting an estate sale is no easy task. Muscle power and organizational skills go into every sale. A good estate sales professional will answer your questions, including whether an estate sale is the most beneficial option for your situation. They will also tell you exactly what they will do and what they will not do. When they contract for an estate sale, they will research items and price accordingly. They are professionals at setting up/displaying, sorting, pulling out items, organizing, and driving traffic to the sale using multiple methods.
An estate sale is usually conducted on-site. All items in the home are organized for sale; for example, all pottery may be grouped on one table, china on another, and so on. The estate company uses its own tables to create a welcoming and open flow of buyers into the home. Estate sales are very convenient for the family because most sales are completed in a short period of time. Individual items are carefully priced; only the conducting estate sales professional can negotiate those prices.
Some estate sale professionals also offer a clean-out service post estate sale, including packing up for donation or an outright purchase of leftovers. Some are also appraisers, and many are savvy and know the values of residential contents.
Estate sales are usually conducted for a percentage of the gross proceeds of the sale (35 percent is the national average). Always inquire about what is included in that commission. Antique and collectible dealers use estate sales as one of their more important sources to buy at reasonable prices. Estate sales typically take one to three days to execute, often with a price reduction offered toward the end, depending on the liquidator’s practices.
An auction is a process of selling or buying goods by offering them up for bid. The highest bid is the successful buyer. Many feel that an auction is a true indicator of fair market value. In other words, if the maple desk sells for $100, the market has spoken. The bidding is controlled by the auctioneer, who will do his best to get the bids as high as possible. Some auctioneers are also appraisers, but not all. Like estate sales professionals, they see so much every day and have so much experience with residential contents that most are quite knowledgeable.
There are two types of auctions: absolute and reserve. Absolute means it will sell to the highest bidder regardless of what the price may be. If the highest bid is $10, the item sells for $10 regardless of its worth. A reserve auction means the seller can set a minimum price to protect the piece if it doesn’t sell for the reserve price. If your reserve price on the highboy is $1,500, and the bidding closes at $1,000, the item will not sell. The seller has the right to accept or reject the highest bid.
Auctions can be a viable way to liquidate a house full of items. Some bidders are quite enthusiastic and bid very high, and other bidders can be very slow to get started, and the sales price is less than they hoped for. An auction company will usually come and pick up the items to be sold, which can be a benefit for the family. Fees vary with auction companies and can range anywhere from 10% to 30%. They may also have buyer’s premiums, pick up fees, storage fees, and advertising fees. Ask questions.
Another option is to take unwanted items to a consignment store. The store keeps between 40 and 50 percent of the money received and gives the rest to you. Sometimes the consignment store will come and pick up from an estate, take it back to the store, price it, and sell it within three to four months, often much sooner. If an item does not sell within a certain time period (usually 90 days), the store may lower the price. If the item does not sell at all, the family may have the option of retrieving the item or it can be donated to a local charity. Be sure to ask about fees and time frames. A consignment may be a good choice for a few nice-quality items, such as china, silver plate, framed prints, decorative items, furniture; this is not a good option for a house full of things.
Families may wish to donate the entire remainder of the estate to a worthy charity. This process is straightforward and comes with a tax donation receipt. Even after an estate sale, if remaining items are older appliances, linens, kitchenware, clothing, bedding, etc., then a donation is probably the best option at that point. All items should be boxed up, so the charity can pick up all the items in a timely fashion with their hand trucks. Be sure to call them two to three weeks in advance, and call them again once or twice to reconfirm the appointment and address.
Online Auctions — eBay
Online auctions are a good way to sell and thin out items when downsizing or handling an estate. However, most people do not fully understand the amount of effort, time, and dedication it takes to successfully launch just a handful of items. First, the item must be described accurately; what is it exactly? Some items just aren’t worth selling, considering the fee schedule. At what price should the item start on auction? The time involved to pack, ship, and handle each item needs to be considered. What if the buyer decides he doesn’t like the item and wants a refund?
Before using an online auction, consider hiring an estate sale professional who uses online auctions as a good selling tool. There are also peak times to use online auctions and flatter times to avoid. Even with their commission, remember they know how to advertise and describe the items to attract buyers and maximize the selling price.
“Free” is always tempting. Some items may not be worth selling, and can be given away “free at the curb.” Other items, such as furniture, etc., can be loaded on Craig’s List in hopes of attracting buyers who are searching for a particular item. Is the family comfortable meeting with strangers? Are they okay with strangers coming into the home or other places where these items are located? One downside to Craig’s List may be that people make appointments and either they don’t show up or they offer next to nothing for what the items. While this may be a good option in some cases, it may not be as productive as other solutions. Never allow someone into your home while you are alone; always have a friend there with you or meet in a public place.
Do-It-Yourself Yard Sales
There’s nothing wrong with doing-it-yourself. However, this is one task a family may not want to handle alone. Working closely with the public is hair-raising and exhausting at best. Ask honestly if the family really wants to deal with the public. Will they know how to advertise appropriately? Will they know what these items are worth or are they inadvertently selling something significant for very little? Trying to save the cost of paying a professional their commission is one thing, but losing out on the special knowledge of that professional is another. It won’t do any good to sell something for $3.00 that should be getting $50.00; it happens every day. Think twice about the do-it-yourself option, unless certain that the items have little value. Most people would be amazed at what a family thinks is junk, but professionals can sell for a small fortune.
How to liquidate an estate will be up to the family and the professional hired to offer guidance for the process ahead. Whichever option or combination of options are chosen, try your best to get all the facts, ask questions and use estate professionals who truly understand the market.