When families get together over the holidays, it can be a time of great merriment, but families are often confronted with serious family decisions. When deciding what to do with real estate, keepsakes and STUFF that has been collected over the years, this can be an overwhelming process; many people are desperate for information on how to manage and eliminate the overall hassle of making these decisions. Much of the time, emotional attachment to items and their family home can become a very sensitive subject which requires a delicate approach on how to manage a familial estate. Below are a few examples of some of the options that many consider when taking this important step:
THE “DO IT YOURSELF” APPROACH
Some individuals have a do it yourself approach and think that this may be the most cost effective and cheapest option. While it may not cost you as much on the front end monetarily, there are a few things to consider when taking this approach.
Are your ready for some serious sweat equity?
Sometimes people feel this is easy but don’t fully realize that this approach is all on your shoulders (literally) and many times may be much more time consuming and labor intensive than expected. Digging through a full household of items, cleaning out attics and crawlspaces, old garages and getting items cleaned up and staged for sale can be back breaking and dirty work. If I had a dollar for every time that we have heard, “I wished, we would have called you first”, we could have made a small fortune just on that comment alone! By the point that people have reached this stage, the estate is no longer viable for an auction company to handle what remains. Unfortunately, mistakes may have been made along the way, reducing the value and costing the estate.
Do you have the expertise on the value of items?
How many times have you heard the story that so and so item was purchased for $50.00 at an estate sale and sold for big bucks at auction! In another story the executrix of an estate who was trying to handle everything was cleaning out a safety deposit box which held some family heirlooms and some seemingly loose change and miscellaneous items, so she cashed in the change with the teller and went about her way, until she realized that the loose change was actually part of a valuable and highly treasured coin collection, by that time it was too late and the mistake was unrecoverable. Sometimes this can be one of the biggest issues that the Do It Yourselfers have to overcome, “What is the real value of an item?”. This can go both ways in considering value. When family members feel that an item is an heirloom and used to be great-great-great grandma’s pie safe that item is going to be perceived as being far more valuable, when in actuality the antiques market has been in a downward spiral and the younger generations simply do not desire to have these items in their homes (no matter the emotional value connected to it). This can lead to overpricing and not being sold leaving those DIY’ers to further deal with the handling of all that stuff.
Ask yourself these further questions:
Are you prepared to haggle?
You have gone through all of the labor and cleaning to get items ready to sell and have done the research on what you feel the item is worth priced it at $200. And someone offers you $40. This is a standard practice when holding an estate sale – is this something that you are ready for?
Are you ready for the “Swoopers”?
These are the folks that will attempt to swoop in and try to make an offer on items presale. This can also be well meaning neighbors, extended family and friends. While it is possibly meant to be well meaning it can also be a contentious and uncomfortable time. You may hear certain comments that you aren’t expecting, ie: “Since I have been checking on your grandma she told me that I could have this antique armoire, china and all the vintage table linens”. “I have been helping keep things up around here and your grandpa told me I could have the 1950 Nomad station wagon in the garage” etc. Unfortunately, these type of things do occur when preparing to DIY it and can be quite unexpected to family members. While this does occur, some people can be truly well meaning in trying to “help” and end up costing the estate when family members decide to either give them the items or deeply discount the items.
What’s your position?
Nothing can get more volatile than dealing with family issues. Not all families agree or appreciate the effort that an individual commits to when doing it yourself. And sometimes the DIYer can feel underappreciated and taken advantage of for the personal sacrifice that is made in order to take on such a huge obligation as dealing with a lifetime of a family members collection. Ask yourself the following questions…. Are all family members on board with the personal management of the estate, items and real estate? Could this potentially cause unreconcilable conflict between family members? Are the expectations both emotionally and monetarily from all family members reasonable?
Do you have a plan?
How do you plan to market the sale? How many people will you realistically reach? How will you reply to people who contact you via the marketing? Have you considered the safety factor? Afterall, you are putting out your personal contact information, the address of the location and telling people what you have in this location to sell. Safety is something that many people rarely think of and should be at the top of the list of considerations. You are inviting the general public to attend, do you have the proper insurance to cover this?
At the end of the day there are numerous situations to consider when moving forward with the DIY approach. This may be just fine in many situations, but it is advisable to consult with a professional prior to proceeding. Do your research and know exactly what you are going to experience. After considering all the details simply ask yourself and your family, “Does this really make sense for us to do ourselves?”.
HIRING AN ESTATE COMPANY
The rise of the estate sale company has steadily increased over the last 10 years and has become a popular way of selling general household items. When hiring an estate company there can be a lot of questions that arise. One being, why should we hire an estate company to handle this? Well, read section 1 and it will quickly bring some perspective about how overwhelming the process can be. While estate sale companies have become widely accepted for general household sales, over the last few years items and estates that are higher in value that have highly desirable assets are seeing an increase in estate sale companies sending those items to auction and working with auction houses to achieve higher monetary results for nicer quality goods. Working with a reputable estate sale company that considers all avenues and covers the needs of their clients is key to a successful sale. Below are some questions that may arise when considering hiring an estate sale company.
How much will this cost?
Many estate sale companies charge a range of 50-70% of the sale. While some will have an extreme amount of sticker shock one needs to consider how much labor goes into preparing for a sale, marketing of the sale, possible research for pricing, setting a price for every item, day of sale labor etc. When considering all of those requirements one can quickly see how fast expenses can add up therefore the cost to produce the sale requires higher percentages.
What reporting will be provided after the sale?
This is a biggie. What type of information will we be provided after the sale has ended so that we can clearly see what was sold? The common practice of estate sale reporting is to provide the executor or attorney with the cash register tape at the end of the sale showing how many sales were made and the final total.
How will the pricing work?
When hiring an estate sale company, you are depending on their knowledge and research to price the items in the sale. Therefore, you may have only one individual’s opinion establishing the price and value of items. Doing thorough research of professional companies and their standards should be carefully considered. Many families feel that having an established price on items gives them a level of comfort and security for the sale. When speaking with the professional be sure and ask the question about how the sale is staged and markdown reductions occur. The common practice for an estate sale is that all items start out at full price on day one, are reduced by a certain percent by day 2, and are 50%-70% off by day 3, which can impact the final proceeds of the sale, so be sure that you fully understand how a company handles this. Additionally, what happens to any of the items that are left after the sale has ended? Traditionally professional estate sale companies will have wholesalers that come in after the fact and do a final bulk offer for any of the remaining items which can be 70%-80% less than the price that was originally established. If a company has overpriced many of the items, this can result in many of the larger items remaining and subject to the reduction or wholesale pricing. Also, if a company does not have established wholesalers then what happens? Generally, all remaining items are donated or disposed of so that the house is cleared out. Hiring a professional company and understanding how the process works is key when considering this approach.
Is the company properly licensed and insured?
This is a huge factor to consider when hiring an estate sale company. Since most estate sale companies are considered general small business they are not regulated in anyway on an official level, there is no required training to obtain a business license and no required continuing education and training. This portion of the industry can be a bit like the wild wild west, anyone can say they are an estate sale company have a general business license, throw up a sign and some marketing and they are in business. When hiring a company be sure that you ensure that they are properly licensed, insured, and ask if they have had any formal training, or what their full experience in the industry is. Afterall, you are inviting the general public access to the property which may have certain liability issues when allowing so many people on the private property. Trip fall hazards, carrying heavy items, damage to property while removing and loading items etc. Proper insurance and licensing are a must in protecting your family and when considering hiring a “professional” company.
When determining how to manage the sometimes overwhelming task of dealing with so much stuff, considering the hiring of a professional company and all of the positives and negatives that can come with this approach is being sure that you are hiring true professionals who will take every measure to obtain the best outcome possible using this type of sale. Have a heart to heart discussion with your family and ask is this the best option for us as a family?
HIRING AN AUCTION PROFESSIONAL
Auction…the word is highly recognized and used to be considered as the sale of distressed assets, and while that may be true in certain circumstances the auction process is now the most widely accepted platform for selling the most desirable and high end items in the world. An auction sets no limits to the amount or value of what an item can achieve. A public auction is the most popular and oldest form of selling assets recognized in the world today. When considering an auction for selling an estate or items many people may have a knee jerk reaction or initially feel uncomfortable about not having a set price on items etc., but realizing that a professional auction company can assist in realizing the top of what the market can achieve and that competitive bidding can drive prices up beyond expectation. What are some questions that should be discussed when considering taking the auction approach to selling your items?
How much will this cost?
A general range is between 15%-50%. This can vary depending on the amount of work that is going to be required to get the estate ready for auction. Because an auction company can facilitate so much more than just household items, farms, ranches, real estate, high end collectables, along with hoarders, business assets etc. the cost can vary greatly depending on the needs of the family and the estate and assets. Additionally, what type of auction do you want to consider having – a live onsite auction, an online only auction, or a hybrid of both? Having options of which approach to take should be discussed with your auction professional.
How does the auction process work?
There are different approaches to selling by auction so each style has its own unique process which we highlight below and should be determined when working with your auction professional.
- Live Auction Onsite: This type of auction is conducted live at the premises with bidders attending and bidding on the items in person. This type of auction tends to draw a nice crowd and provides a great opportunity of competitive bidding.
- Online Only Auction: An auction professional catalogs each lot or set of items using our company auction software system. Each lot is pictured and uploaded for public bidding online. This is a highly desired option for a lot of families due to the fact that it decreases people on the estate property. The only time the general public is on the property is for an inspection day and for auction pickup which is managed by a professional auction coordinator. This is also ideal for estates that offer the real estate at auction as well.
- Live Auction with Online Webcast Bidding: Using this technique you have both live attendees at the premises and online bidders who bid on items from anywhere in the world just like they are attending the event onsite. An auction catalog team sets up the auction items, catalogs and pictures the lots, and stages the items for the auction. This can be an ideal situation for larger estates, farm and ranch items, and for estates that include the real estate being offered at auction.
At Compass Auctions & Real Estate, we know planning and executing an action plan for liquidating an estate can be overwhelming but we’re here to help. We love to work with families in transition. We’re a real estate auction leader and specialize in finding an interested and eager bidding audience for your items. We combine the proven effectiveness of live, at-the-property auctions with the global reach and convenience of real time, interactive online bidding. If you are in need of help with an entire estate or real estate property contact us today at info@soldoncompass.com or 1-800-729-6466 for a free consultation.