An estate sale is one of the cost-effective ways to liquidate your assets, especially when you need to do so quickly. Here’s some of what you need to know to be successful.
When COVID-19 hit the US in 2020, so many practices changed, some permanently. Before COVID, the typical way of liquidating older possessions was through an estate sale or its variants like tag sales, yard sales, garage sales, etc.1 From the public health perspective of COVID, these are dangerous events, bringing together large groups in a compressed period of time with many people collectively touching older items and paying cash for their purchases. Going online can make this process safer.
We had always conducted sales online, but now this is the largest way we liquidate assets. The two major ways to do this are via online sale and online auction.
Online sales. We photograph, price, list, and advertise the items on the best websites that draw audiences. We negotiate with buyers who make bids and typically pick up the merchandise from the home, although we can arrange for shipment. Given transportation economics, most transactions are done locally. We might also remove the item from the home on a consignment basis.
On-site auctions. We set up an auction in your home much as we do for an estate sale or tag sale. On the day of the sale, the auctioneer walks through the house with a microphone taking bids on various items as they go. These auctions tend to attract more dealers with their own shops, who must offer lower prices than those individual buyers. (See below.)
Online sales tend to be more focused on individual items. Online auctions can sell larger groups of items. For example, the auctioneer may ask the online audience, “How much will you bid for the entire contents of this closet?”
Retail vs. wholesale buyers. There are two general types of buyers for your possessions.
Retail buyers buy items for their own personal use. These can be newlyweds furnishing their first home or collectors trolling for a new addition. There are people who seek out memorabilia for Harley Davidson items as well as people buying anything related to Elvis. They often offer higher prices and are willing to pay for more expensive shipping, but they can be picky too. If they already have all the velvet Elvis paintings that will fit in their house, they won’t be in the market for another one.
Wholesale buyers – often dealers – buy items for resale. They are essentially buying an item now to be sold to a retail buyer sometime in the future at a markup. Wholesale buyers will most always have cash for items that they believe have market value, but their prices will be lower since they need to have room to cover their costs of holding the inventory and running a shop until they do sell the items. They also need to make a profit so they can feed their own families.
Managing physical sales events
Eventually, COVID will pass, and we will return to resume the practice of tag sales as it was being done in 2019 and earlier. If for no other reason, estate sales fulfill social and cultural needs. They may just be a smaller part of the market.
The basic reason estate sales exist is for commerce, but buyers often look at these sales as social events, meeting others who value old stuff too. Even if it’s something like an old photo or a baseball card, worth maybe a dollar or two, the buyers still enjoy getting out and the shopping experience itself. Some private individuals today are still holding their own yard sales, even if this may be illegal in many areas. We as a company will not conduct illegal acts, so we don’t do these.
A successful physical sale
During an estate sale, the public is invited into the home to purchase the possessions. Most sales are conducted over a weekend, starting Saturday morning at 9:00 am and ending Sunday afternoon at 4:00 pm, with discounts being offered Sunday afternoon. There are several kinds of people who attend these sales: regular estate sale customers, neighbors within a radius of a few miles, and dealers there to buy items so they can resell them elsewhere at a higher price (wholesale buyers).
If you want to have a successful sale, do your best to maintain a carnival atmosphere, which excites buyers and encourages additional sales. That’s also why we accept credit cards. It’s a buzzkill to have the owner in the background eyeballing the customers while bemoaning the discounted sale of every beloved trinket in the house. Would-be buyers will feel bad and go back to their cars in search of another sale somewhere else down the road.
Preparation is important
Before the sale, we work with you to set up the items in the house creating a mini-retail environment. We group similar items, display them on tables, and price them. The pricing is based on market value, which is best determined by the prices received at a recent sale of a similar item in the area. This is estimated from online sources. The sale is advertised on-line, in local papers, and with lawn signs in the neighborhood.
We split the profits from the sale. To ensure our incentives are aligned, we pass through the costs, which generally are labor, advertising, permits, and security. Together we decide on the budget for each of these expenses. These costs are almost always higher for a physical tag sale than an online sale. Sales at these events often involve haggling which may include group purchases of say, a box of small hand tools or cosmetic items. Items with bigger price tags are set up in a place for special oversight.
Our goal is to move the most merchandise at a reasonable price in a short time. We calculate the final sales by tracking the gross proceeds at the end of each day. While there is no legal requirement (under federal or state law) to keep track of the sale of individual items, we often will document the sale for higher-priced items or those of special interest that the owner identifies in advance. If the owner desires more detailed reporting of items being sold, we are happy to provide those services, including detailed pricing of every major item, over say $20 and specific receipts, but that additional control may not be economical.
Auction houses are another option. This does incur transportation costs, but there are advantages.
1) They are more regulated than Estate or Tag Sales, and consequently they provide more specific sales records.
2) Your items can be grouped with other items drawing a larger crowd who may bid more.
3) Time pressure is somewhat relieved since the auction facility will temporarily warehouse your items.
4) Public health concerns are largely passed off to the auction house.
The cons of this approach are that you will pay one way or the other for transportation and warehousing.
1 Estate Sales, Tag Sales, Garage Sales.
The difference between estate sales, tag sales and garage sales is largely defined by the quantity and value of the items sold. By some definitions, estate sales refer to sales after a person’s death where an entire estate is being liquidated, but a more general definition is that an estate sale may occur whenever a family is moving out of the house.
Tag sales and garage sales don’t necessarily imply that a move is occurring. They are generally used for selling fewer items from a home with fewer goods to sell. To make those sales economically viable we try to lower the costs of those sales by reducing the advertising budget and sometimes conducting them on a single day.