At some point in your life, you may be called upon to hold an estate sale after a relative dies or goes into a nursing home. Deciding how to sell or dispose of belongings without accidentally scrapping something valuable — while potentially navigating tricky family dynamics — can be a daunting task.
Here’s everything you need to know about how to hold a successful estate sale.
[Read: Estate Planning Tips to Keep Your Money in the Family.]
What Is an Estate Sale?
An estate sale is a little like a garage sale. Only you’re selling everything in a garage, as well as the living room, the kitchen, the bedrooms.
When people die, generally a survivor — often an adult son or daughter, or maybe a niece or nephew or sibling — must decide what to do with everything in the home. That could mean you discard and donate everything inside, and then sell the house.
There’s no rule that says you have to do an estate sale, but it’s a route that many people take. After all, if family members have already chosen what they want, something must be done with the remainder of the home’s contents. If there’s decent money to be made, you may feel as if you’d be financially crazy to not hold an estate sale.
But it is a long process, and you’ll want to keep a few things in mind.
Allow Time to Prepare
Estate sales are a lot more complicated than a garage or yard sale if you want to do it right and make a profit.
“Selling an estate-owned home is undoubtedly an emotionally stressful and challenging time,” says Michael Shapot, a licensed associate real estate broker with Keller Williams NYC. “Sorting through these cherished items and making decisions is overwhelming. Try to relax, cherish the memories and don’t hesitate to seek help and support from friends, family and professionals.”
If you haven’t already, give family members a chance to “shop.” Exactly how you want to do this is up to you: You may want to hold a lottery for certain items that several family members want. You may want to sell some of the belongings cheaply to family members, or you may want to simply give stuff away. That’s probably the best strategy to keep your friendships and family bonds intact.
[Read: 10 Steps to Writing a Will.]
But whatever you do, the best and smartest approach is to treat your family members the way you would want to be treated. That means getting their input on handling the estate sale and keeping your relatives’ feelings high on your priority list.
“I’ve seen more than a few families break apart and fight in the wake of someone’s passing. It’s always sad. Keeping each other involved might not 100% eliminate the possibility of fighting, but it goes a long way,” says Ryan Reiffert, a business and probate and estate attorney in San Antonio.
After your family goes through everything, you might decide that it’s not worth the time and effort to have a sale. Not everyone departs leaving behind a houseful of riches. You could keep a bunch of things, donate a lot — and perhaps you’ll decide that it’s more cost-effective to haul the rest away yourself.
Decide Whether to Hire a Professional for Your Estate Sale
If you don’t want to sift through the remaining belongings, organize and run the sale yourself, you can hire an estate sale service. Generally, they take a pretty significant commission, such as 30% to 45% of the sale’s gross profits, but you may also find some that will hold an estate sale for a flat fee.
Hiring a professional or service is a significant expense, but if there’s a lot of money to be made from the estate and a lot of work that will go along with it, the cost may be worth it. The service will handle most of the headaches, and hopefully you’ll still be paid handsomely for it.
You might also consider partnering with an auction house, says Reiffert, who works with a local auction house doing estate sale auctions. But it depends on what you have to sell.
“Antiques and old stuff will tend to do much better at auction than something newer, even if the newer thing is very expensive or nice and of high quality,” Reiffert says.
Consider Selling Some Stuff Yourself
If there are a few big expensive items — like your late father’s Cadillac — you may want to sell it while the estate service provider or auction house handles everything else.
“I’d say selling larger items yourself is a good idea for two reasons,” Reiffert says. “One, you have the power to negotiate if the potential buyer wants to negotiate, rather than outsourcing that power to an estate sale company. And two, you don’t then have to pay the estate sale company’s commission on the large item.”
Make the Event as Professional as Possible
If you go it alone, remember that while this may be a bad time for you, it’s also a business experience and opportunity.
Advertising the event is a good idea. Mention some of the items people will find at the sale, like vintage clothing, vintage jewelry or sterling silver, suggests Helaine Fendelman, who owns Helaine Fendelman & Associates, a fine arts, antiques and appraisal firm in New York City.
“If one knows that folks are going to be in line early or very early, serve coffee and some sweets,” Fendelman suggests. “Wearing masks and limiting numbers of people in the house will make those waiting happier if there are refreshments.”
She suggests having some fun music playing softly in the background. “Again, helps the mood and makes folks maybe want to linger longer. That is the goal, so they will keep looking and buying,” Fendelman says.
She also says that people like to negotiate, and so you shouldn’t fall too in love with the prices you set. Fendelman also suggests adopting a policy that the more someone buys, the larger the discount. After all, the goal of this business is to get out of business as soon as possible. Most estate sales last a day, or maybe two or three.
[Read: How to Declutter Your Home]
After the Estate Sale, Sell the Home
From there, the rest of your estate sale — actually selling the estate, if that’s what you’re doing — is pretty much like selling any home. But getting that house empty, and then as fixed up as possible, is crucial, Shapot says.
“All of this entails packing, professional moving, storage and pickup from various vendors,” he says. Shapot adds that you may also be working with furniture rental companies and a property stager, who will transform the home into something that sellers will fall in love with.
As cold as it sounds, given that this home may have been a place where you had a lot of happy memories, Shapot says, “A residence about to come on the market is no longer a home; it is a product to be merchandised. Sentimental and personal items must be removed, and the overall aesthetic of the property should be universally inviting.”
Loop In a Tax Advisor
Generally, you’re not going to have to pay taxes on that $900 you earned selling an antique dresser. The IRS has a tax exemption for estates of less than $11.7 million in 2021. In 2022, the exemption will be $12.06 million. As for selling an inherited house, rather than living in it, you may owe a capital gains tax if you sell the home for more than it was purchased for, which is often the case.
But there are ways to reduce that capital gains tax, which is a good reason to consult a tax professional.
Does all of this sound overwhelming? That’s all the more reason why you shouldn’t feel like you’re doing something wrong if you earn revenue by selling a loved one’s possessions. This is probably what your dearly departed would have wanted for you, and it’s a lot of work dispersing a lifetime of belongings. Whatever money you can make from an estate sale, you’ll have earned every penny.
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How to Hold an Estate Sale originally appeared on usnews.com
