Liquidating An Estate - What's the Difference Between and Auction and an Estate Sale


Should I Have An

Auction (Online Bidding) or Tagged Estate Sale?

 

"Auction" or "Estate Sale"

  Many people use these terms interchangeably, and many estate representatives I have spoken with are not familiar with the auction method of marketing and the difference between an an auction and an estate sale.  In fact, many do not understand that there is a difference between an estate (tag) sale and an Auction.  The differences are becoming more subtle, with the actual method being different; and they often refer to the same general outcome -- a liquidated estate.

An Auction (online bidding):  Price is determined by competitive bidding, price increases incrementally and is generally sold to the highest bidder.*  An Auction may be conducted live or online 

An estate sale:  Price is determined by the estate sale operators. Sale is carried out over a series of days, usually three, items are priced and price decreases generally are taken over the course of the sale (25%, 50%, 75%, for example. (Also known as a tag sale, etc.)

 

Auctioneers for years have used the term “Auction Method of Marketing."  It is a method by which your items are brought to the public and offered for sale in a competitive, transparent way. Whether online or live bidding is used, the key components are the same. Bidding allows each item to be maximized without capping potential price realized.  Prices generally start on the lower end to encourage bidding and increase incrementally as bidders compete to buy the item.  They can place a maximum bid and have the computer bid for them by proxy up to their maximum.  They can watch it close and bid each increment manually as the items are closing in a soft close or timed auction setting where items end at a rate of 30 seconds or so per lot and the time can extend if a bid is received in the last couple of minutes. Online-only auctions do not require a professional license and are conducted by auctioneers and more and more estate sale companies are using the method every day.

 

For live auctions, auctioneers must be licensed.  Professional Licensed Auctioneers are licensed by the State of Texas under the auspices of the Texas Department of Licensing and Regulation and covered by a Recovery Fund.  Professional Auctioneers have had specific training and/or classes in their fields and may seek additional professional designations in a specialty.  Most importantly, there are specific rules and laws that outline the conduct of Professional Auctioneers.  In addition, Auctioneer conduct is also addressed and outlined in the Uniform Commercial Code; Texas Motor Vehicle Code; Bureau of Alcohol, Tobacco, and Firearms; and the State Comptroller’s office with regard to Sales Tax.  Professional Auctioneers also must complete approved Continuing Education hours every year to maintain licensure.  A conscientious professional Auctioneer will maintain professional associations, hold themselves to higher ethical standards, and always strive to improve the services offered to their Sellers. 

 

 There are specific laws and rules that Auctioneers must follow or be subject to fines and penalties, including a possible loss of license.  If for some reason you are not paid by the Auctioneer after your estate or personal property is sold, you have somewhere you can turn to lodge a complaint.  There is no such organization to consult if the estate sale company is not owned by a licensed auctioneer.

To date, there is no governing body or regulating entity issuing a license to an estate sale company.  There may be situations where an estate or garage sale is more appropriate for your situation; and there are some really good estate sale operators out there. Look for one that holds special designations or specialties and has experience and a good reputation. Always do your research, look for reviews, ask for recommendations and know who you are dealing with, no matter what method or company you decide to use.

Your expectations matter!  It will be very important for you to discuss your expectations with your estate professional.  Be open and honest about your desired outcome, price expected overall or on key items in your sale.  If you don't express your true expectations, you won't be able to learn if the professional can meet those expectations to your satisfaction.  A dear friend and colleague used to say, "Are we counting 'gators or draining the pond?"  Sometimes we are counting gators and each piece needs to bring a certain amount; and other times, we are draining the pond and it all just has to GO!  Which situation you are in is important information for the company to know BEFOREHAND!

 

To address the most common concerns, you should ask questions of the estate and auction companies and understand how they conduct their sales. I've complied a list of important questions for you here:

Does the estate sale operator or auctioneer have a license? 

Do they own an antique or resale shop? Do unsold items go there? Who owns them at that point, and who gets paid if they sell there?

Are they bringing in additional items to add or supplement your estate sale? Do you want them to?

Are they arranging to haul away or dispose of anything that doesn’t sell by the last day of the sale?

What happens to any unsold items?  Do you haul them away or the estate sale company? Can you get a donation receipt for the value? 

Do you broom sweep, clean up afterward? 

Can they quote your project sight unseen, or will they view to evaluate services needed to ensure the fee structure is fair to you? 

Is it a flat fee charged or commission-based fee structure? 

Are they additional charges for advertising, photography, cataloging?  Any other fees? 

Do you allow preferred customers to buy prior to the actual start of the estate sale?

What type of accounting and settlement can you expect of each item sold? 

How long does it take to receive payment?

Do you accept cash, checks or credit card at the sale?  What's their procedure with regard to chargebacks or returned checks?

Do they charge a Buyer's Premium?  The Auction company retains this in almost all cases, and is a standard way to help reduce fee to actual seller.

Are they collecting and remitting sales tax to the Texas Comptroller's office?

How soon can you get started?  How long do you think the set up will take? How long for the entire process to be completed?

Your ultimate goal is that everything sells and that there isn’t anything left over at the conclusion of an estate sale and that it was a good experience for you.  

(There are additional Auction solutions that can be offered, such as a Live Auction event, an online only "Internet Auction” event, or “Live and Simultaneous Internet Auction” events (Simulcast).  

 *  There are situations where a reserve price must be met before an item will sell.  Reserve prices are usually determined by the Seller.

The opinions expressed are those of the author, Valerie Grimm.  She is a licensed Realtor with Keller Williams Realty Clear Lake/NASA, Professional Auctioneer and owner of Martindale Auction Services, Licensed by the State of Texas, and a member of Texas Auctioneers Association (TAA) and Fellowship of Christian Auctioneers International (FCAI), National Association of Realtors®, Texas Association of Realtors® and Houston Association of Realtors®.  She has served on the Board of Directors for the TAA (2011-2012, 2012-2013 & 2014-2015).  Texas Auctioneer’s License No. 16230.  This article is not intended as professional advice or counsel and may be very different from where you live.  Use your best judgment and consult an attorney in your personal and business dealings.  Use of this article is protected


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