Executors faced with the personal property liquidation of an estate will quickly realize that it is the most time consuming administrative task. Executors who fail to fulfill their duties can be removed from office by the Probate Judge, so it is important that they aggressively seek to dispose of the estate property so that bills can be paid and the estate settled.
What you will get from this item
Executors have three main settlement options, and I will discuss the pros and cons of each in this article. Any company chosen to liquidate an estate should be vetted; I will tell you how to do it conscientiously, and I will also propose the best settlement method. I’m assuming the executor’s twin liquidation goals are to achieve the highest cash return to the estate and get the house cleaned up so it can be sold. Of course, there are ways to maximize your cash return for each type of sale, and I’ll tell you what they are.
Spending ten minutes reading this article could save an Executor many hours of work.
Option 1: Have an auction on the site
Benefits of an auction on the site:
Auctioneers are very competitive lots. It should be an easy job for an executor to find an auction company that is willing to take on the estate settlement job, and the commissions will be competitive. A strong argument in favor of an on-site property auction is that when the auction is over, there will be very little cleanup. If desired, real estate can also be auctioned, as auctioneers are licensed to auction real estate and other titled property. In one day, the house, car, boat, RV, and all household items could be sold.
Negative aspects of an auction on the site:
Auctions are driven by competitive bids. Consequently, you need to have a lot of people at your auction. Large crowds require good weather, plenty of parking, restrooms, food, and snacks to keep people from leaving. Online offers can be included to increase attendance, but it’s the local crowd that generates excitement and drives up prices. To attract a crowd, the property must have collectibles and other quality goods. The run-of-the-mill items you can buy at your local thrift store are insufficient to attract a good auction crowd.
Suggestions for an auction on the site:
If your estate has many large collectibles, such as antique furniture or a piano, an on-site auction may be your best option. Summer weekends, when the weather is hot and dry, are the best times to hold an on-site estate auction. The auction company you hire should be equipped with sound equipment, canopy tents, display tables, and plenty of help to pay quickly.
Option 2: Auction Gallery Consignment
Pros for Auction Gallery Shipping
If weather is a concern, you may want to consider submitting your items to an auction gallery. Submissions at an auction gallery are grouped by item type to maximize participation and get the best prices from their collectors. For example, there may be an auction dedicated to art and home decor, musical instruments, or ceramics.
Cons for Auction Gallery Shipping
There are quite a few reasons not to consign to an auction gallery. For starters, many auction galleries will accept only the best heritage items. Ninety percent of an estate is made up of items that are of little interest to the auctioneer, leaving the executor to deal with the remaining ninety percent of the estate’s ownership. Finally, when an auction gallery spreads merchandise across multiple auctions, it can take months for all items to sell, delaying the property’s closing.
Auction Gallery Submission Tips
Before consigning to an auction gallery, ask the auctioneer how your merchandise will be distributed among the auctions; get a guaranteed settlement date. You will also need a plan for disposing of all remaining estate merchandise.
Option 3: Selling labels on the site
Advantages of selling labels on the site
Tag sales have several advantages over a site auction. For those unfamiliar with tag sales, the sale takes place on the premises and in the house. Companies that specialize in selling tags are less common than auction companies. At a tag sale, everything in the house is priced, just like at a garage sale. Buyers will browse the house and choose the items they wish to purchase. When buyers arrive at the home, they take a number and are admitted to the home when their number is called. Tag sales typically start Friday night and end Sunday night, so there’s no need to provide food or sanitary facilities. Label sales can take place rain or shine and in any season.
Cons of selling labels on the site
The biggest disadvantage of hiring a tag sales company is that tag sales companies are not held to the same legal standards as auction companies. Auctioneers and real estate agents are bound by law to inheritance through a fiduciary bond. A fiduciary relationship obliges the agent by law to act at all times in the best interest of the estate. Trustees are licensed by the state, must pass tests, be bonded, must hold all funds in an escrow account until distributed, and must liquidate the account with the estate within a specified period of time.
Trustees must also keep accurate records and follow certain protocols. Failure to follow procedures by a trustee may result in fines or loss of license. Label sales companies are not held to the same legal standards, although they certainly have a moral obligation to the estate. Label sales companies can handle the details of the sale and the distribution of money in any way they see fit.
Another problem with tag sales is that there is often merchandise left over after the sale. Often there is a LOT of merchandise left over. When many items are left over, the executor has a housekeeping problem, because the house must be “broomed clean” before a real estate agent will list it for sale. Unlike an auction, where prices go up with every bid, tag sale buyers want to negotiate a lower price for everything, which not only consumes time but costs the estate money.
Tips for selling tags on the site
When working with a label sales company, read the contract carefully and make sure any settlement agreements are included. the operator must have a solid pricing plan, adequate staff, and a solid track record.
What about internet sales and retail shipping?
Internet sales work well for items that can be easily shipped, such as small collectibles, books, and artwork. Before you decide to sell these items online, remember that having a good variety of collectibles at your auction or tag sale is what will attract buyers to your event. If you sell all the good collectibles online, you won’t get a good turnout for your sale. Don’t even consider a retail shipment; they will take too long to sell their items.
How do I know if I am dealing with a reputable company?
Unfortunately, asking for references doesn’t always work; no one gives a bad reference. The Better Business Bureau lists ratings for some companies, but not all. With an auction company, most states have an occupational licensing board that can give you the status of an auctioneer’s license and tell you if they have any complaints on file. Controlling a company that sells labels is much more difficult, because there is no agency that follows up on complaints. A useful website is http://www.ripoffreport.com. When you’re on the site, search for the name of the company you want to research; also type the owner’s name to see what appears.
Hire a company with a solid internet presence
These days, it is imperative for a business to have an online network. A business that is well connected in the online world is likely to be a business that is well connected in the local area. A business with a poor website or no website at all is unlikely to be able to use the internet to generate sales for their event. Doing a Google search for the company’s name or web address is the best way to see how well connected they are. Go to the Google search bar (not the address bar at the top of the page, but the search bar in the middle of the page) and type in the company’s web address starting with www. How many search results are returned that pertain directly to the business you are investigating? If the business is a national franchise, ignore the overall franchise results and only count the results where the local business is mentioned. A good search engine ranking does not necessarily mean that the company is the best for your needs, but it is a good indicator of the company’s professionalism. Typically, companies that have a lot of returned results do so because other organizations want to partner with experts in their field, so they link to the expert website. A large number of linked companies is like a “vote” for the company you link to. A company that shows a lot of Google results is usually recognized as an expert in its field.
So what is the best way to liquidate an estate?
The best type of sale for estate liquidation is to hire a licensed trustee to sell the estate property in one day, down to the bare walls, any time of the year. To accomplish this would require an event that is part tag sale and part auction, run by an auctioneer. Since Tag Sale operators are generally not licensed auctioneers and auctioneers generally hate doing tag sales, that is a difficult solution to implement. However, there are auctioneers who combine these services. Finding such a company will give the executor the flexibility to have a sale any time of the year, the ability to sell down to bare walls with nothing left over, and the security of dealing with a state licensed and certified trustee.