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Wednesday, January 25 2012


We mentioned in our previous blog post the five questions you should ask estate liquidators when you are researching companies to hire.  We would like to dive a little deeper into the aspect of “percentages” and how much of a driving force they should be in making your final selection.

Basic math skills might tell you that a lower percentage rate means more money in your pocket.  Actually, it can be the exact opposite if you don’t look at the company holistically.

Many estate liquidators want you to look at their competitors based solely on percentage.  This allows them the opportunity to bottom line their percentage to “seal the deal” and get your business.  Does this make financial sense for the estate?  More often than not, it will not.

Averages in the industry range from 25%-35% of gross sales.  The exact percentage should be determined by the estate liquidator after considering several factors:

  •  Prep Work Required:  They need to look at the estate and “guesstimate” how much prep work will be required to organize, set-up and price the items in the estate.  In large estates, set up could be a couple of weeks.  There have been occasions where it could (and has) taken longer because the family has been in the same home for 50+ years. 
  • Value of items in estate:  Some estates are filled with valuable antiques and collectibles, and others might be stuffed to the rafters with lots of “smalls” but there could also be collectibles.  Then there is the estate that has no high value items at all, just volume in various household items.  The estate liquidators will typically have a certified appraiser that will research and provide the values for big ticket items.  From there, the total estate value is guesstimated.
  • Percentage is determined based on overall value of the estate.  The higher the potential value of gross sales, the lower the percentage.  The lower the potential value of gross sales, the higher the percentage.  Prep work coupled with the overall value of the sale is taken into consideration when setting the percentage, so it’s all balanced out. 

Now that you know how percentages should be calculated, your next move is to understand more about the company itself. (Which is where our five questions you should ask come into play.)  At the end of the day, your decision should be based on who you can trust, who you believe can earn you top dollar for all items in the estate, therefore obtaining the highest gross sale figure possible. This ensures a win/win scenario for both you the client (the estate) and the estate liquidator.

Let’s do a quick math example:

Suppose Estate Liquidator A charges 35% commission on total gross sales.  They are a trustworthy company that is bonded & insured, and works hard to get you top dollar for every item in the sale.  They have no conflict of interest and don’t have a warehouse, retail store or sell items in auction. They earn $50,000 in gross sales for your estate.
 

.35 x $50,000 = $17,500 for commission; with the remaining balance of $32,500 for the estate, minus costs associated with running the sale (which should be explained to you upfront!) 

Estate Liquidator B charges 25%, they may not be as trustworthy as Company A since they are not insured and bonded, and they have a warehouse, retail location or sell items at auction.  They’re not incented to get you top dollar since they can (and will) buy the items from your estate for 60 cents rather than $1 (so the estate still gets something), and then turn around and sell those items at a future time.  Since their focus is not on earning you the absolute top dollar, they only bring in $30,000 in gross sales.

.25 x $30,000 = $7,500 for commission; with the remaining balance of $22,500 for the estate, minus costs associated with running the sale.

As you can see, even if you select the estate liquidator that has a lower percentage rate, when you look at the company holistically (reputation, conflict of interest, bonded and insured, etc.), you are actually losing money for the estate.  You thought you saved, when in reality you lost $10,000!  That’s a significant loss!

So next time you try to compare estate liquidators’ apples to apples – look at all the factors not just percentage rate.  You could be leaving too much money on the table for your estate.

 

 

Posted by: AMS Estate AT 08:31 pm   |  Permalink   |  Email
Friday, January 13 2012
 estate sale

 

Researching Estate Liquidators? 

Be sure to ask these 5 Important Questions to receive the highest value for your estate items

During these drastic times, some people are taking drastic measures.  Let’s face it, the economy for the past 4 years has been less than rosy.  People are unemployed or underemployed and the recovery has been slow.  Oftentimes families find themselves in a position to downsize their households.  Others turn to their collectibles or items they have been saving for a rainy day, to sell in order to just get by.  We are seeing Baby Boomers handling their parent’s estate as they downsize, move to assisted living or even move in under the same roof.  Estate liquidation is a viable means to the end of finding new homes for your treasures and get cash for your household items.  One of the advantages of hiring an estate liquidator is that there is typically no out-of-pocket expense for you as the client.  In fact, all the work is handled by the estate liquidator from prepping the estate, to research and pricing, advertising and running the sale.  About a week or so after the estate sale has ended you receive a report and payment.  All the headache and stress of figuring out what to do with the estate is handled for you. 

It’s more important than ever to find the RIGHT estate liquidation company.  We’ve come up with the 5 Questions you should ask when you are researching estate liquidators.  We hope you find them helpful!

1.    Are they BBB accredited with a history of being a reliable and respectable business?  It could be a red flag that you are working with a company that has not established a solid reputation in your community.  The best marketing tool any company has is positive word-of-mouth and a solid reputation.  Do your homework to ensure you are hiring truly respectable businesses.

2.    Do they collect  and pay sales tax on your behalf at the city and state level?  If a business does not collect sales tax during the liquidation, it is not operating as a real business should.  Also, you as the client could be liable for making such payments after the fact, including interest and penalties.

3.   Do they earn you top dollar?  Estate liquidation is much more than simply emptying your house after a move.  Does the liquidator have the experience to handle valuable items?  Do they take the time and have the connections to do proper research?  Some unscrupulous liquidators will buy your items on the “cheap” then resell them themselves at a later time, place or date. Find out if they have their own storage space, retail store or auction.  Certainly the liquidator is not motivated to get you the absolute best price on your items if they can wait and sell them later themselves.  You are much better served by estate liquidators who run “pure” estate sales with no “sweetheart deals” with or early sales to their dealer friends.

It is also important to point out that hiring an estate liquidator because they charge the lowest percentage, more often than not does not result in a bigger bottom line.   In fact the converse is most often true.  Quality, experience and attention to detail really do make a difference in your bottom line.
 (Read our follow-up blog post that explains this point even further.)

4.   Do they have client references that you can personally contact?  Ideally former clients that have utilized their services are the ones to whom you want to speak.  Be sure to ask the references for details about the preparation of their sales as well as the sale itself, and the final reporting and delivery of payment.

5.    Are they bonded and insured?   Bonding addresses the trustworthiness of the        business and the insurance is to protect both you and the estate sale company from liability. 

Once you have received satisfactory answers to the above five questions as well as evidence to validate the responses, you now have your short list of the estate liquidation companies with which you should continue your discussions.  Beware shopping by percentage alone.  As with almost any service, you do truly get what you are willing to pay for.  If there is anyway possible, go to sales run by the companies on your short list.  You will readily note differences in the way they operate and deal with the customers as well as the sale items.

Congratulations!  You have just increased the value you will receive for liquidating your estate.

Posted by: AMS Estate AT 09:31 pm   |  Permalink   |  0 Comments  |  Email

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