Planning an estate sale is complicated. There are so many things to consider: the timing of when to have the sale, DIY vs hiring a professional, decisions on what items the family wants to keep, and most importantly, how to cope with all of these and many other difficulties while grieving for the loss of a family member. We have distilled some of the most common mistakes we see families make into this brief post to help guide you through these decisions, and hopefully, remove some of the doubt and anxiety from the process.
1. Listing the House for Sale Before Planning an Estate Sale
Planning an estate sale requires lots of labor hours to set up and price – up to a month, depending on the size and complexity of the estate. Because of this fact, most estate sale companies have a backlog of clients they have under contract, and may not have an opening for your sale for several months. In our local market (Orlando, FL) houses often go under contract after being on the market for less than a week. The absolute worst time to shop for an estate sale company is after you’ve just put your house on the market (except for possibly after your house has just gone pending, which means you may only have 2-4 weeks to complete a sale and cleanout).
Realtors are easy to find. In the metro Orlando, there were approximately 6730 licensed real estate agents in 2019. There were less than 75 estate liquidation companies, giving you a much smaller pool of companies from which to choose. When interviewing these companies, the best companies may have limited availability, whereas the realtors can typically get your house listed in just a few days. Lack of scheduling flexibility can force your family to choose a vendor that is either not qualified, or not a good fit for your family dynamics, or even worse, run the estate sale yourself when professional help was essential.
Busby Estate liquidation and Realty Services solves this problem by coordinating both your real estate listing and your estate sale on the same weekend, maximizing your marketing, increasing your sales, discounting fees, and providing you with the most incredible open house you can imagine! See more info HERE (hyper link to web page that talks about our combined service offering of estate sale and real estate listing).
2. DIY vs. Hiring a Professional
Not all estate sales need to be run by a professional company. In fact, you may find that your estate sale does not meet the minimum requirements for most estate liquidation companies. Most estate sales will take between 75 and 200 labor hours to complete (this includes the sale set-up, pricing, staffing of the actual sale, breakdown, and cleanup/cleanout) and professional companies will need to be sure they can cover these expenses and still make a profit. Here are some instances where you should seek a professional’s help:
- High End and Rare antiques and collectibles are present
- The overall volume of items to be sold (the larger the estate, the greater the need for professional help)
- High net worth estate with many assets to be sold
- Of state family, trustees, or personal representatives
- Family is too busy to run the sale (if it takes an experienced firm 100 hours to run the sale from start to finish, it will probably take your family 150 hours due to the learning curve)
- Grief and anxiety
Regardless of where you fit on this spectrum, you should have several estate liquidation companies come out and give you their opinion on how/if they can help you. Most companies have certain types of sales that they prefer to run, so you may get vastly different responses from different companies.
3. DON’T THROW ANYTHING AWAY
We put this in bold font because we’ve heard far too many stories about families coming through after a loved one’s passing, renting a 40-yard dumpster, and filling it with items they perceive to be trash or of little or no value. DON’T DO THIS! There are many items that are not only saleable but may be collectible and of high value, that the layperson would view as worthless. Let a professional evaluate the estate and give you guidance before you begin the process of thinning things out.
There are situations where homes are unsafe to enter, such as hoarding, mold, structural damage to the home, etc. Again, in these situations, it is equally (if not more) important to consult with a professional firm before proceeding, as you may require specialized help.
4. Going with the Lowest Priced Vendor instead of the Best Suited Professional
In our region, estate sale companies generally charge commissions that range from 25% to 50% of the total sales of the contents of the estate, with the average commission being around 35%. When planning an estate sale some estate sale companies will have a fixed commission that they charge all clients. Others may have a floating rate that would vary depending on the quality and quantity of merchandise, as well as the amount of cleaning and setup needed to run a successful sale.
While commissions charged are an important factor, there are many other factors that should be given equal if not greater consideration:
- The expertise of the company – how many years has the company been involved in the antiques and collectibles business? In the estate liquidation business?
- Staffing – do they have permanent employees, or do they hire contractors? How many employees will be present during the sale to both help customers and reduce theft?
- Marketing – is there a marketing plan? Are some of the fees you are paying going toward a comprehensive marketing strategy?
- Are they Licensed and Insured (are they a real business)?
The adage that you get what you pay for is certainly true in this business. Why would an extremely knowledgeable antique appraiser, with a professional permanent staff who is in extremely high demand charge a fee at the bottom of the range? The short answer is that they won’t unless your items are of such high value and demand that there would still be money to be made at a reduced commission. That being said, fees are often negotiable based on the quality and complexity of the estate.
5. Not Reading the Contract Carefully
The estate sale industry is not regulated by federal, state, or local government. This lack of oversite has created an opening for some unscrupulous actors to take advantage of unwary families. It is critical that when you’re planning an estate sale, you read the estate sale contract carefully and make sure you understand all provisions of the contract. Here are some examples of things we have encountered over the years, and how they can impact you:
- The client must pay an hourly setup fee at a rate of xx$ per labor hour – This may seem reasonable, but as stated earlier, it is not uncommon to spend upwards of 100 the labor hours setting up a sale. If you contract is for 35% commissions, PLUS labor expenses, you may be left with literally nothing after the sale. It is ok for there to be additional setup or cleanout fees, but they should be pre-determined and fixed, not undefined and unlimited
- All items not sold will be retained by the firm and removed at the end of the sale – This clause is often characterized as a feature and not a potential way to defraud a client, something like “we are going to leave the house broom swept and ready for the house to be sold. Don’t worry, everything of value is going to sell”. I can assure you, that when things are priced at 3 times their resale value, they won’t sell. They then become the property of the estate sale company and can be sold at another sale for 100% commission! Make sure you understand (and have some control over) what happens to items that are not sold.
- Family may not be present during the sale – This is actually a legitimate clause in an estate sale contract and is quite common. Some companies go so far as to say the house must be vacant. The reason for this clause is that estate sales can be very emotional for family members, and their presence can greatly hinder the sale’s success. Again, sometimes these provisions are negotiable, but this particular clause may not be.
- Commissions are still due on all items removed from the estate by the family after the contract has been signed – This one gets a little tricky. Again, it is a legitimate contract clause that is very common and typically is not used in any malicious way. This provision is necessary because certain high-value items are often the reason an estate sale company has agreed to perform the sale at a certain commission rate, or even at all. If those items are removed after the terms of the sale have been agreed to, you are changing the contract, and the estate liquidation company may perceive this as not acting in good faith. Since most companies will not remove this clause, it is especially important that you have removed all items that friends and family want would like to keep before you contract with an estate liquidator (or at least move all items you wish to keep to a separate bedroom, so there is no confusion as to what is included in the sale and what isn’t). An unscrupulous operator can take advantage of this clause by claiming that items removed would sell for a higher price than they actually would have, and per the contract, they will withhold commissions on these items.
Estate Liquidations are complicated, time-consuming, and emotional. You will be much more intimately involved with your estate liquidation firm than possibly any other vendor helping you through this transitional period. Make sure that you pay attention to all of the points noted above, but also make sure that the company you choose is a good fit for your family’s personality and communication style. Above all else, both you and the company you choose need to feel that you can trust each other. This will help ensure a smooth and successful time spent planning an estate sale!
If you have any questions, contact Busby Estate Liquidation & Realty Services today!