Liquidating the estate of a deceased or relocating a loved one is a huge responsibility. Moreover, it lands at the most fraught time—in the midst of grief, apprehension, and transition.
The estate probably includes a massive collection of possessions, built up over a lifetime. You and other loved ones will no doubt want to select mementos to keep in the family, but any unclaimed items must be disposed of—either (A) donated, (B) trashed, or (C) sold for cash.
Many estate executors prefer option C. Not only can the beloved possessions find new life in the hands of a new owner, but the cash can help defer expenses or add to the cash value of an inheritance.
You can take one of two approaches when liquidating an estate for cash: an estate sale or an estate auction. These two approaches have some similarities, but also important differences.
Let True Legacy Homes unpack those differences with the following deep dive into Estate Sales vs. Estate Auctions.
1. What is an Estate Sale?
2. Pros of an Estate Sale
3. Cons of an Estate Sale
4. What is an Estate Auction?
5. Pros of an Estate Auction
6. Cons of an Estate Auction
What is an Estate Sale?
Estate sales, also referred to as “tag sales,” invite shoppers into the home of the estate owner. The house gets turned into one big second-hand store, with every possession tagged and displayed for sale.
You can organize your estate sale yourself, but many executors prefer to entrust this big task to a professional estate sale manager, also known as an “estate sale liquidator.” The manager will handle every aspect of the estate sale, including:
- Making an inventory.
- Appraising and pricing merchandise.
- Marketing and advertising the sale.
- Arranging items into a sale display.
- Running the sale event, including cashier and security services.
Estate sale companies offer all of these services in exchange for a commission on sold items.
Typically estate sales run one to three days, with price reductions toward the end of the sale to liquidate as many items as possible. Selecting the right estate sale liquidator can ease the burden tremendously.
A version of an estate sale could be held online using eBay or Craigslist. This will typically net more cash, but it takes a lot of work, from price research to building out the listings, complete with photos and an honest assessment of the condition of each item. Listings with multiple high-quality photos tend to sell for much higher prices. As of now, no easy method exists to hold an estate sale online.
Pros of an Estate Sale
- Every estate sale is unique.
- Every item can be individually priced for maximum revenue.
- A wide range of items can be sold, including but not limited to furniture, shoes, appliances, linens, jewelry, china, and other household items.
- Sales take place over two or three days, giving more buyers the opportunity to attend.
- Estate sale liquidators can handle the marketing and advertising to get the word out about your sale.
- Heavy items are already in the house, so no transport costs are incurred. Buyers bear the cost of transporting their purchases from the sale.
- Estate sale allow the seller to set the price.
- Estate sale liquidator commissions are competitive and reasonable, typically between 25 and 35 percent of the sales proceeds. This usually comes out to be cheaper than the cost of an estate auction.
- Items that are priced properly should sell quickly.
- Most estate sale companies settle with their clients within two weeks—meaning you get your money more quickly.
Cons of an Estate Sale
- Prices might be drastically reduced on the later dates of the sale to entice buyers.
- Leftovers must be disposed of, either donated or trashed.
- Many estate sales companies have a provision in their contracts that no family member is allowed on the premises while the sale is in progress.
- Strangers will be in your loved one’s house and property.
- Household items tend to sell well at estate sales, but not fine antiques or works of art.
- Any items that get overpriced are unlikely to sell.
As you probably already know, an auction is an event at which property or goods are sold to the highest bidder. An estate auction puts the entire contents of the estate on the auction block.
You can hold an estate auction yourself, but most executors hire an accredited auction company to run the event. The professional auction facilitator markets the auction to a network of buyers and auction enthusiasts, sets starting bids, handles the logistics, and runs the auction (complete with the patter-talking auctioneer).
An auction is typically open to the public and can reap surprisingly high prices for your loved ones’ possessions. Professional auction houses and auctioneers usually have years of experience and extensive training in the auction business.
Auctioneering is one of the oldest occupations in the world, dating back thousands of years. Today, networks of auction houses serve the entire country, even remote or rural areas.
It’s hard to beat the auction when it comes to determining the value of an item—after all, what is value if not the most a person is willing to pay for it in a public setting?
Online estate auctions are a growing segment of the auction industry. Ask your auction house about the possibility of an online platform for your estate auction.
Pros of an Estate Auction
- Estate auctions expose the assets and goods to a more qualified pool of buyers. Usually only serious buyers attend auctions.
- Auctions create a sense of competition among bidders when bidders compete sellers win and set the highest price of its item.
- The seller has full control of the auction event. Everything happens according to the seller’s conditions.
- Online auctions can bring a larger pool of buyers that can be national and international.
- Estate auctions satisfy governmental and judicial auditing requirements for estate disbursal.
- Estate auctions are fully transparent and widely accepted as fair to both the seller and the bidders.
- Well-defined industry standards govern the auction industry through the National Auctioneers Association.
- Auctions can produce high sales prices through competitive bidding.
- Off-site auctions involve the removal of sale items from the house, allowing for swifter progress in the renovation and listing process.
- In the event of an off-site auction, crowds of people don’t descend upon the estate owner’s home, safeguarding privacy at an emotional time.
- Estate auctions have higher sell-through rates than an estate sale.
- Fine antiques and works of art do well at estate auctions.
Cons of an Estate Auction
- Auctions typically do not accept household items.
- Sellers bear the cost of transporting merchandise to the auction site.
- Starting bids tend to be low. There is always a risk that valuable items will sell for cheap. A “reserve price” can be set, below which the item will not be sold, but a realistic reserve price can be hard to obtain.
- Estate auctions can take 20 to 30 days for marketing and setup.
- Both onsite and online auctions can take a considerable amount of time—one to three cataloging days, and seven to fourteen online bidding days.
- Small- and medium-sized auctions have structures and expenses similar to those of estate sales.
- Auction houses can take up to 45 days or longer to settle with the client, delaying your receipt of the proceeds.
Trouble deciding between an estate auction or estate sale? Contact True Legacy Homes to discuss your specific estate liquidation needs. We can recommend the best course of action to navigate the challenging process of estate disposition.