Estate Advisor: Don’t Give Away the Bait
How can an inexperienced executor preserve the contents of an estate for liquidation? Begin by changing the locks on the house.
Roger was new to the estate business, and was thrilled that he had just made his first estate-buyout deal. Most of the items were run-of-the-mill household goods (as with most estates), but there were a few “killer” pickings: a Mid-Century Modern dining room set, with table, chairs, hutch, and buffet, some vintage crystal barware, vintage Pioneer stereo components, some vinyl record albums, and other goodies. He was to pay $1,500 for the entire contents of the 1800sf, three-bedroom home. He paid the executor a few hundred dollars as a deposit on the deal, and said he would be back on Monday with his truck and crew to clean out the house. No inventory was written down, and no contract was signed. A rookie mistake.
Over the weekend, the executor sent an email to family members, telling them that “the estate guy” was coming to do the clean-out on Monday, and if there was anything they wanted from the house they had better come and get it.
As you can imagine, the story goes downhill from here. When Roger arrived, most of the goodies he was counting on for his profit were gone. He called the executor; an argument ensued. Roger refused to do the clean-out, and the executor refused to return Roger’s deposit.
The last estate tag sale I executed required over 300 man-hours of sorting, cleaning, tagging, and displaying just to get ready for the sale.
Unfortunately, an executor giving away un-bequeathed goods is a common occurrence. It is well within an executor’s rights to give things away provided a deal hasn’t already been struck to sell the goods. But, for an estate sales agent, there just isn’t enough profit in run-of-the-mill household goods to make a cleanout, auction, or estate tag sale worthwhile. There must be some collectibles in the mix, or a sale isn’t worth doing. The last estate tag sale I executed (before I retired) required over 300 man-hours of sorting, cleaning, tagging, and displaying just to get ready for the sale. I was “in the hole” thousands of dollars before the sale even started.
When an estate is stripped of collectibles, there is nothing to attract a crowd to the sale. In the 1970s, my auctioneering mentor told me: “you can’t catch fish if you don’t have any bait.” Collectibles are “bait” for antique dealers and collectors. Sale agents must advertise what will be offered at a sale, and the goods must be attractive enough for buyers to go to your sale instead of someone else’s.
Take, for example, a sale advertised by Tristan Estate Sales of Valencia, CA. Ms. Tristan identified the household goods that would attract dealers and collectors, and then made a point of sorting them by category and keywords in her advertising: swords, duck decoys, comic books, hand tools, Play Station 2, kitchenware, artwork, and other items. She did a nice job with her presentation. Estate sale buyers can get a sense of what this sale has to offer as they sort through multiple sale advertisements. Leaving off a single desirable collectible could affect the sale’s turnout.
How can an inexperienced executor preserve the contents of an estate for liquidation? Begin by changing the locks on the house. One never knows who has keys or where spare keys might be hidden. Next, segregate the bequeathed items; set aside any item an heir is to inherit.
Then determine the “best” method of liquidating the contents. What’s “best” will vary, depending on an executor’s goals and timeline. For some, “best” will be maximizing the financial return on the property. For others, it will be getting the home empty and broom-clean as quickly as possible so that the house may be sold. Only when an executor knows what must be accomplished, can a decision be made regarding the “best” way to proceed.
The executor must determine the “best” method of liquidating the estate contents. What’s “best” will vary, depending on an executor’s goals and timeline.
Once that decision is made, what is the best way to liquidate? Auction? Tag Sale? Sell the entire contents to a dealer?
If time is of the essence, sell the entire contents to a dealer. Experienced auction and tag sale companies book months in advance, and executing a quick sale is difficult for them.
If there is ample time to execute a sale, get an estate valuation and cost estimates from auctioneers, estate tag sale companies, and buy-out dealers. Subtract the commission and fees from the valuation each dealer places on the estate. All these numbers will be fictitious, of course, but after a few estimates you should see a pattern develop. If the net profit from a sale (valuation – commission) is anywhere near the offer made from a buyout dealer, go with the buyout dealer; it’s a lot less hassle and the house will be emptied sooner.
Ultimately, there won’t be much difference in net profit between an auction and an estate tag sale. Auctioneers and tag sale operators will argue this point, but take my word for it. I’ve run both types of sales, plus combination sales. Each type of sale produces highs and lows, but on average they will net about the same amount of money for an estate.
Sometimes, estate sale agents will decline to contract for a sale. Usually, it’s because an executor has given away “the bait.” In that case, an executor has three choices: sell out to a flea market dealer (they pay a lot less than antique dealers), hold a garage sale, or donate everything to a thrift store.
What’s the lesson in all this? If you want to have a successful estate liquidation, don’t give away the bait.
Wayne Jordan is a Virginia-licensed auctioneer, Certified Personal Property Appraiser and Accredited Business Broker. He has held the professional designations of Certified Estate Specialist; Accredited Auctioneer of Real Estate; Certified Auction Specialist, Residential Real Estate and Accredited Business Broker. He also has held state licenses in Real Estate and Insurance. Wayne is a regular columnist for Antique Trader Magazine, a WorthPoint Worthologist (appraiser) and the author of two books. For more info, check out Wayne’s website at resaleretailing.com or visit Wayne’s blog.
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