Whether you recently lost a loved one or you are selling most of your belongings to prepare for a move, there is an art to hosting a successful estate sale. Prior to hosting an estate sale, it's important to do proper research and prepare.
What Is an Estate Sale?
An estate sale is a way of liquidating items or belongings of a family or estate. These are usually much more extensive than garage or yard sales. When someone needs to sell items due to downsizing, moving, divorce, bankruptcy, or death, this is when they'd host an estate sale. The public then gets invited into the home and given the opportunity to purchase any item that is being listed for sale.
How do Estate Sales Work?
Estate sales are not overly complex but usually have some guidelines. There are a few ways estate sales are typically run. The more common method is that items get marked with a selling price, and buyers will pick up items as they go. If an item is too large for a buyer to carry, you can have it marked “sold.”
Some estate owners will allow for bidding on items over $100. This typically comes with strict guidelines to ensure buyers act in good faith when reserving items for a bid.
Estate owners usually use a system to establish organization among guests. One of them is the first come, first served policy. This is when a line forms at the door of the home where the sale is taking place. Lines may start several hours before the sale opens.
You can also use a number system. Numbers are given out starting at a particular time prior to the opening of the sale. This does mean that at times there will be a first come first serve line just to get a number to enter the sale.
Should You Have an Estate Sale?
Deciding to host an estate sale depends on a few factors. First, you'll want to see if the items in question have serious value. Because estate sales require serious planning, you want it to be worth your while to have one in the first place.
If you realize that you have enough items of value to have one, you can work with a company that helps host them. However, some people don't find it worth it depending on how much they charge in commission. Companies have different pricing structures, but the average commission rate nationwide is 35%. Not to mention that around 80% of estate sale companies have additional fees of some sort.
Here is a simple breakdown of what your profit would look like by hiring a company to help with the estate sale. Let’s say your gross profit of your estate sale is $10,000. The company percentage might be 35%, which leaves you with a profit of $6,500. Keep in mind this breakdown doesn't take into account any additional fees like clean out costs.
If you decide to skip the estate sale route, you can donate your items for a tax deduction. Or can even sell items individually on various websites like eBay and Craigslist.
How to Set Up an Estate Sale
Setting up an estate sale requires more planning than anything. Depending on the reasons for having an estate sale, you'll want to speak to respective family members about the items in question. If any of the items are sentimental, you'll want to give the family a chance to make mementos.
After you've decided what you want to do with the items, it's up to you how to set prices. Some estate sale hosts bring in professional appraisals to properly value everything. This is a good idea because you might not know the true value of some items. Based on what information the appraiser gives you, you might want to consider if having an estate sale is worth the time.
If you decide to go through with the sale, you have the option of hiring a company to run it. The benefit of doing this is they take care of all the tedious tasks like pricing, organizing, and running the sale. Make sure to perform extensive research on each company as well as set up a detailed contract outlining the terms.
You'll also want to avoid selling to dealers. Instead, try selling to individuals. Dealers are there to make a profit, which means they need to buy things at a low enough price to turn around and sell them. You can expect a dealer to offer you a price that may be adequate, but it will not be as good a price as you could expect from an individual buyer.
Understanding Estate Sale Tax Laws
While small garage and yard sales can fly under the radar when it comes to taxes, an estate sale is different. If you are selling a substantial amount of items or valuables, you’ll really want to pay attention to the tax laws regarding an estate sale. You won't need to file a tax return on estates or profits as long as they stay under a dollar amount.
Deciding to host an estate sale is entirely up to you and anyone who has rights to the property and items in it. You have a few great options to choose from, but make sure you perform proper research to help make your decision.
If you inherited a property and are looking to sell, it's always recommended that you work with an experienced real estate professional. By working with Clever, you'll get partnered with a top-rated, full-service real estate agent that will be able to help you sell quickly and for a great price.