To Hire Or Not Hire An Auction House…

Should you inherit an estate belonging to a relative or friend who has passed away, you probably need to dispose of the contents of the house, the house itself and other items associated with the total estate such as automobiles. 

Most all 50 states have laws governing auction houses and auctioneers and some of those laws are going to vary state to state. Any rules and regulations mentioned here are based on Florida law so use them as a guideline only. You can check with your local government online and find out what the particulars are for your state. 

You will probably want to put the actual real estate portion of the estate up for sale with a real estate broker or agent. There are people who do sell houses at auction but, in most cases, this is done when there are other considerations in play such as foreclosure, back taxes or the need for fast cash. In Florida, real estate property can be auctioned but it must be auctioned by a licensed auctioneer who is also a real estate broker or agent. 

For the most part, automobiles are usually kept and used by the benefactors of the estate. If not, they can be sold in the traditional manner - ad in the paper, for sale sign on the vehicle or word of mouth. Auction houses in Florida are allowed to auction automobiles if they are part of an estate, as long as the same auction house is liquidating the rest of the estate (less the physical property). Auction houses are not allowed to accept just automobiles for auction as they do other merchandise. This would require special licensing. 

This leaves the contents of the house. What should you do with it? It is common for relatives and friends to be given items from the estate that are of sentimental value to them. However, you must be careful not to "pick" all the "good" stuff from the estate. This will make it more difficult for you to dispose of the rest. There are several avenues you can take to settle the estate. We will briefly address each of them here. 

You could look online and make calls to both estate liquidators and auction houses in your area but remember when you speak with them they have a monetary stake in the advice they give you. In other words, they want your business. 

The information you receive from us is just our opinion but you can take heart in the fact that we have nothing to gain. Our goal is to help you make an informed decision. The options listed below are not listed in any order of importance.

Option 1 - Call local antiques malls or local antique dealers. Each one you call will probably come out to the location and make you an offer. If they do not make an offer, this does not mean that you don't have anything good. It could be too big for that particular mall or dealer to handle either because of price or size. If that is the case, some of them may offer to buy just certain things. 

Until you make a final decision as to how to dispose of the entire estate you should not sell anything to anyone, no matter how good the offer. The worst thing that can happen is to be left with a ton of items that have little or no value. You will have trouble getting anyone to take what's left if the good stuff is already gone. Even if you ultimately get less money for the items people offered to buy outright, you will make money on everything that's left as long as someone is willing to sell it for you. In the long run you will make out better.

Option 2 - Call an estate liquidation company which is a company or an individual who runs estate sales. The estate sale will be held on the property and people who work for the estate company will come in and reorganize all the merchandise and price it for sale. The estate company will charge you a flat fee or a commission on the sale price. Each estate company operates differently. The price they quote you could be higher to include the cost of advertising or the price could be lower with you paying the advertising costs directly. 

Be careful. Advertising can be very expensive. If you are to pay these costs, find out from the company where they are going to advertise, how many days will they advertise and what are the prices of the ads. Obviously, the better the advertising the better the turnout. However, in the present economy, the prices you are going to realize for your items may be much lower than they would have been in a better economy. Not so for the advertising costs. They just keep going up. 

Usually estate sales are scheduled for a weekend when better traffic is likely to happen. Some estate companies have a list of preferred customers and those people may be allowed access to the merchandise earlier than the general public. It is important for you to make sure that the house is still protected by liability insurance for the time it takes to do the set-up and to have the sale. 

After the sale is over, you may still be left with some merchandise that didn't sell and, as we discussed earlier, it could be difficult to get rid of it. Donating it to a charity such as Good Will or the Salvation Army is an alternative but they, too, have become more selective in what they will take. 

Option 3 - Have a yard sale. This means that you are the one responsible for setting up the sale and for conducting the sale. This could be a way to go if you are talking about a small estate. Some of the merchandise can remain in the house where customers go in, look around and buy. However, a large amount of it should be outside where it will attract attention. Although you could advertise in the newspaper, most yard sales are announced with signs posted in the neighborhood, which is why the added exposure of having items outside is so important. 

There are two drawbacks to this option that immediately come to mind. The first is the weather. You don't want to get rained out. The second is, unless you are very familiar with antiques, collectibles and other general merchandise, it would be safe to say that you will not know what you have or how to price it. Just because something doesn't look valuable doesn't mean it isn't. The reverse can also be true. Something can look great but it's actually pretty worthless. If you take this route, you could be letting a lot of money slip through your fingers and, again, you will probably have items left over. 

Option 4 - Call an auction house. You need to find an auction house that will be a good fit for the type of merchandise you have. If you know you mostly have really high-end items, then that's the kind of house you want to find. If you have a few high-end items and the rest is mid-range to low-end, then you might want to consider giving it all to the best mid-range house available to you. If the mid-range auction house advertises your merchandise properly, the good stuff will bring the money. Really good merchandise can pretty much sell itself and a mid-range house will do a better job with your other items. 

However, you must keep in mind that like everything else the economy is having an effect on what items are selling for these days. If the good stuff doesn't get the really good money, it may not be the fault of the auction house. Since everyone's business is down right now, it may not have brought anymore at the high-end house and the high-end house would not have proven a good venue for all the rest of your stuff. 

If you are unfamiliar with the auction houses in your area, check them out first. Most auctions are open to the general public so attend a few auctions before hiring one. If you still aren't sure, ask for references. No one ever asked us for one but, had they, we would have been happy to supply them with recommendations. 

Once you select the house you want to use, you need to have an agreement as to what the charges will be. It is usually a standard commission rate that can range from 20% to 50%. The commission rate is always higher if the house has to pick-up the merchandise. If you were able to deliver it, the rate would be lower. The commission rate usually includes all the costs involved but double check to make sure. The auction house will decide how to best sell your merchandise - what items can be sold individually versus what items need to be grouped together in different sized lots in order to guarantee they sell. Remember the goal here is to have everything gone when the sale is over. 

It is possible that the auction house you select could offer to buy the entire estate outright. If you have an idea of what the entire value might be, you could negotiate a price that is acceptable to both of you. If not, you are better off consigning it to them. When in doubt, let the audience at the auction decide what the items are worth in the present marketplace. Remember the people in the audience have to compete with one another to get the items they want. The more they compete, the more money you will make. 

It would be our advice that you do not request an on-site auction. You should let the auction house pick it up and take it to their facility. Unlike an estate sale that usually lasts for a whole weekend and has traffic coming and going in a staggered fashion, an on-site auction is set for a specific time. The potential buyers all need to be there at once. Unless the property can handle parking for as many as 50 to 100 vehicles all at once, you will not have a good turn out. If there is no where to park, people will not stay. 

It is not necessary for you to be at the auction when they sell your merchandise. However, you are welcomed to attend if you have any concerns. Most auction houses do not allow sellers to bid on their own items so be sure you don't bid on anything you consigned. 

If you are worried about how much a couple of important items might sell for, you could request that a reserve be placed on those particular items. Some auction houses accommodate reserves some do not. Be reasonable in your reserve amounts. If you set the reserves too high, you might miss the opportunity to sell those items at reasonable prices. This could leave you in a position of having to take less for them later. 

Another thing to keep in mind is that at an estate sale, unlike an auction, you will never get more money for an item than the price it is marked. You will usually have to accept less. Most people who frequent estate and yard sales usually want to haggle over price. At an auction, it is possible for items to bring much more than what they might have brought at an estate sale. A bidding war between two or three buyers is a seller's dream come true. 

On the other hand, some items might end up bringing less but you want to look at how you did overall at the end of the day, not how well or how poorly each individual item did.

Written by Anne Benedetto, AuctionHouseTalk
All Rights Reserved