Do you know that estate sales are completely unlicensed and unregulated? Compared to the heavily licensed and regulated real estate industry, estate sales often have little to no transparency or accountability. To become a realtor you have to pass a state exam, be overseen by a broker who, in turn, is overseen by the state. A new “estate sale operator”, on the other hand, can get away with a Vistaprint business card and a few card tables. While there are many quality estate sale companies in business, there are just as many that cut corners and don’t operate with the best interest of the client in mind.
It is so important to be educated about the estate sale process and do a thorough interview when looking to hire an estate sale professional. We’ve compiled a list of questions to ask that will help you identify reputable companies.
1. Do you have a written contract?
Do not hire a company unless they provide you with a written contract. This agreement needs to spell out all of the terms of the contract including timeframe, client & company responsibilities, commissions & fees, payment information, and the condition of the home after the sale.
2. Are you Insured and Bonded?
Do not hire a company that is not insured and bonded. You will carry all liability and companies that have not acquired insurance and bond are much more likely to be a pop-up company. A bond helps to ensure that you will be paid on time. If the company doesn’t follow through on their contract then you have legal recourse through the insurance company.
3. How quickly do proceeds get paid to the client after the sale?
Getting paid within one to two weeks is going to be the norm. If a company is asking for a lot of time (more than a month) it should give you cause for concern.
4. How often do you do estate sales?
You are looking for a company that is regularly doing business. One sale every 2 or 3 weeks (at least) is a good average. If they are doing sales less frequently they need to be very specialized (for example they only accept high antique sales). Doing less frequent sales generally means they are doing this as a side job and may not be as current on pricing and will not have a dedicated customer base.
5. Do you have employees? Do your employees have W-2s?
If a company says they only use “subcontractors” or “volunteers” for their help you should be concerned. A “subcontractor” that shows up regularly to work using supplies that are provided for them are legally called employees. We know of companies whose finances have been seized by the government due to misclassification of employees, leaving their clients in a bind.
6. Are your employees covered by a worker’s compensation policy?
Companies that operate without a worker’s compensation policy put all the risk of a hurt employee on the client’s homeowner’s policy. A major injury like a slipped disk can run in the tens of thousands of dollars and should be the responsibility of the company to cover. Ask for a copy of the policy.
7. Do you accept credit cards?
Many estate sale companies still don’t accept credit cards. We don’t consider this a “must”, but we sure think it’s a good idea. Many potential customers don’t carry around cash. Accepting credit cards gives more customers the opportunity to buy and often they’ll spend a higher amount.
8. What is your pricing structure? Do you have any additional fees on top of your commission?
We highly recommend you use a company that works off of a percentage of the sales versus a flat rate up front. A percentage means the company makes money when you make money. It puts you on the same team. It is normal in the industry to have a minimum percent especially if an estate sale is smaller and/or has low value.
Some companies tack on extra fees in addition to the percentage they charge. This could include advertising fees, clean out fees etc. You want to be aware of all the charges that will be removed from your profit before you hire a company. A company that has “hidden” fees that you have to dig to find out about should give you concern about hiring them. You want a company that is upfront and honest with their pricing structure.
9. What measures do you take to make sure my house is taken care of? If there is damage done during the sale how do you handle the damage?
If you have carpet how will they protect it? If a piece of furniture runs into a wall is the company equipped to handle the repair? Do they have examples of fixing issues in the past?
10. Do you have any letters of recommendation, online reviews, or previous clients that are willing to refer your company?
If a company cannot supply any good feedback you should not hire them. If they give you sources, then do follow up with the source. You want to hear that they were good to work with, and that they were able to get a good return for the estate.
11. Do you have a website?
This is pretty basic. If you’re a full-time estate sale professional you should have a website. If they don’t it’s much more likely they do this as a side job.
12. Where do you advertise?
Places that companies commonly advertise are: Estatesales.net, Estatesales.org, Estatesales.com, Craigslist, the company’s personal website, the company’s personal email list, and the newspaper. A company does not have to advertise in ALL of these venues but you want to know they advertise on several of them.
13. How large is your email list? (If you have an email list)
An email list means that people like shopping at this company’s sales. It also helps indicate how long the company has been around. The larger the list the better. A good follow up question is what is their open rate on the email list.
14. What do you do with the remaining items after the sale is over?
Most companies will provide you with a clean out or donation option. What you do not want is a company that either keeps or buys all the leftovers at a discount. They priced the items originally and then get to buy them when they don’t sell. This generally means they will price your items too high so more items are left over. It creates a conflict of interest. These companies may even advertise this as an advantage to you because you “sell everything.”
15. Do you have a store?
This is a tagalong question to the last one; if they do have a store do they source it with leftover items from the sales they host?
· In addition to these questions, there are other things to consider listed on Estatesales.net under “Tips for choosing a company” http://www.estatesales.net/estate-sale-companies/choosing.aspx
· National Estate Sale Association http://www.nesa-usa.com/estate-sales-information/
Asking these questions and being educated about the estate sale industry will insure that you, or your clients hire a true estate sale professional. A quality company will ease the burden of a major life transition, get the home empty & ready for closing while generating thousands to tens of thousands of dollars in proceeds.