Downsizing and dispersing estate personal property can be challenging. In this series of four articles I have attempted to give you readers information to make knowledgeable decisions. The first article discusses finding a qualified appraiser. The second article discusses the ins and outs of estate sales as an option. This third in the series will discuss some of the pros and cons of property auctions as an option. The fourth will look further into choosing an estate sale or auction or both. It is my hope you will find the information valuable when faced with the challenge of downsizing or handling the responsibility of estate personal property. Selling at property auctions is very different from a ‘tag’ or estate sale.
Pro: Everything is most often sold. You have it done. You do not have to handle the property again or figure out other alternatives for anything remaining after the auction.
Con: Everything is sold…no matter at what value. Items are often grouped into box lots, display can be minimal. Results can be mixed, good, or devastating to actual value, the bidders set the selling price. If there is no interest the item can be “passed” and not sold.
Pro: Major auction houses are a very good and often best option for selling quality, rare, or very desirable valuable items such as fine art, antiques, and major scarce collectibles.
Con: Shipping costs to get items to an auction are usually your responsibility. If an auction house wants the item(s) badly, they may share or absorb that cost for you. Shipping is expensive, especially for items like furniture or very fragile items which will need to be specialty crated or packaged.
Pro: Major property auctions offer extensive advertising to reach both national and international audiences. Region auctions also have a lesser or usually good advertising range. To determine which items should go and for shipping insurance, it is advisable to have a qualified appraiser of personal property (1st article) determine insurance value for you and optimally also fair market value to enable you to judge if the auction estimates are in the range of that fair market value. Auction sales are at fair market value which is what you as a private individual can expect to sell an item in a proper market. Marketing-advertising is part of the commission you pay to the auction house and not an additional expense. That is a big plus due to the larger audience they attract.
Con: Regional and especially local auctions do not have the marketing reach of large auction houses. Local auction audiences can be small which limit sale results. The smaller the auction house, the more you can expect grouping, lesser advertising, and lower results. You will be at the mercy of who happens to attend, and if the items you have to offer are attractive or needed by the attendees even if a few people show up, the auction goes on. Choose your auction house carefully by reputation and past results.
Auctions charge a commission on the sale of your items. The seller pays from the hammer price. An additional commission is charged on top of the hammer price to the buyer at major auctions. Your resulting sale will be based on the hammer price. Auction commissions vary from 15% up. A commission price of 20% is fairly normal to sellers but can sometimes be negotiated.
Smaller auction houses may or may not have an additional percentage charge to buyers. Your sale as the seller is always based on the hammer price.
Hopefully you feel more knowledgeable and confident about the auction process after digesting this article. Learn as much as you can about your choice, check out their reputation, their process of selling and their advertising. Understand and approve/disapprove or negotiate extra fees beyond the commission. Lastly and very important, understand their accounting method and what your recording process you will receive for the sale of your items.
The last (fourth) in this series for downsizing and estate selling information, how to, and tips will appear next month. This last article will address the pros and the cons of deciding between offering your personal property or estate at an estate sale or an auction or using both services.