Many people hold estate sales during times of personal struggles and major life changes. Maybe they're dealing with the death of a loved one or a divorce, or maybe they're just getting older or moving a far distance and simply need to downsize their belongings and declutter.
No matter the reason, they're often so overwhelmed by the emotional circumstances they're dealing with that they prefer to rely on an estate sale company to run their sale from start to finish. These companies handle the nitty-gritty details of the sale, including operations, taking the burden off those who are working through a trying time.
If you've ever considered operating an estate sale company, it's a great way to help people during times of transition while making some money.
This article will walk you through the process of starting an estate sale business and how to operate a sale.
What's the Difference Between an Estate Sale and a Garage Sale?
You might be wondering what the difference is between an estate sale and a garage sale. After all, don't both sales sell off used and unwanted items?
There's a big difference between an estate sale and a garage sale. A garage sale – also called tag sale or yard sale, you name it – is when you declutter your home and sell items you no longer use. Often, an individual will organize this sale themselves and does not need calling in a professional.
Estate liquidation is a different animal altogether. Estate sales are when all the contents of a person's home and the home itself are sold off quickly to collect as much money as possible. These estate sales usually take place as families are dealing with death, divorce, downsizing, or debt.
It's recommended that professionals handle estate sales as it's a significant undertaking, i.e., one that involves appraising every item in a home and documenting all inventory.
How to Start an Estate Sale Company
Transition is a big part of life. So, if you start an estate sale business, you'll never run out of clients. There will always be someone out there who is downsizing their home.
Still, there's a lot of work and research that goes into starting an estate sale company. If you're not sure where to start, here are the steps you should take.
Name Your Estate Sale Business
First, pick a name for your new estate sale company. Choose a name that makes it obvious what your business does, making it easy to promote your services. Also, be sure to check your state's legal requirements for naming a business since certain states restrict certain words from being used in business names.
Select Your Business Structure
Next, choose the best legal business structure for your business. There are four main types: sole proprietors, partnerships, corporations, and limited liability companies. Each type operates differently, including how they're taxed and the amount of personal liability that will fall on your shoulders. Establishing a legal business entity as an LLC or corporation will offer you the most personal protection but be sure to review these business types carefully.
Register Your Business
With your name and business structure selected, you're ready to register your business. Where your business is located and operates will determine where you register it. Check with your state economic development department or the Secretary of State's office to find your application. Also, check with your city and county to see if you need to register on the local level.
Apply for a Tax ID Number
All registered businesses need to obtain state tax ID and federal tax ID numbers. These Employer Identification Numbers are necessary for paying your state and federal taxes, which you're required to do as a formal business.
Obtain the Necessary Permits and Licenses
Each state has its own laws when it comes to estate sales. So, be sure you check to see if there are any permits or licenses needed to operate. In addition to state-level licenses, check with your city and county for their local requirements, as well.
Determine Your Fee Structure
There are numerous factors to consider when determining the fee structure for your services: your level of experience as an estate liquidator, the turnaround time, the going rate in your area, and the size of the estate. And remember, you're doing more than simply hosting a garage sale. You're a knowledgeable appraiser running a professional sale that's unloading a large number of items very quickly. Generally, estate sale companies take a total percentage of the profits from the sale. This commission rate tends to range from 25% to 45%.
Create a Plan for Accepting Payments During Each Sale
Decide in advance how you will take payments at checkout during estate sales. While many only take cash because it's more convenient, accepting checks or credit cards could attract a wider range of estate sale shoppers. No matter how you accept payment, though, it's important to keep accurate sales records.
Advertise Your Estate Sale Company
There are many ways to promote your estate sale business. In many areas, print local newspapers are an affordable way to reach older individuals who might need your services. Also, consider joining networking groups and local commerce chambers and sending out targeted mailers in your region. Partner with real estate agents who will regularly need to empty homes quickly as they put them on the market. They'll be a great resource for client leads.
6 Steps for Hosting a Successful Estate Sale
Once you've established your business, you're ready to begin hosting estate sales. It can take weeks to prepare for a sale, as there's a lot of work that needs to be done before you can open the doors to shoppers. Here's a checklist of steps you should take to operate a successful estate sale from start to finish.
Step 1: Document the Inventory
Carefully document all items in a home by taking pictures of every room from multiple angles. Also, take close-up images of many items, as well. These images will come in handy when promoting your sale and also serve as a record.
Walk from room to room with a clipboard and write down everything you see, as well as the condition it's in and any other important details. Then, create a spreadsheet for these items and start pricing them. For items in large quantities – like records or books – you don't need to waste time writing down individual titles or album names unless they're particularly noteworthy.
If the homeowner is available, do this walk-through with them or consult with them to determine which items are not for sale.
Step 2: Set Aside Items of Value
As you document a home's inventory, take the standout items like large, valuable items and collectibles and set them aside. You will either want to price these particularly for the estate sale or find another means for selling them. For high-value items, consider selling them on auction sites like eBay.
Step 3: Prepare Items for the Sale
Once you know which items will be sold during the estate sale, you need to prepare them. Make sure there is appropriate signage displaying pricing. Display the items attractively on tables and other surfaces throughout the home, so it's easy for shoppers to browse. As you display items, determine if any rooms will be off-limits during the sale.
Step 4: Select the Date of the Estate Sale
As you organize an estate sale, determine the best dates to host it. Keep in mind the amount of time you'll need to prepare a home for a sale and any seasonal influences in your area. For instance, in hotter and more humid parts of the country, estate sales are more popular during cooler months.
Step 5: Advertise the Estate Sale
Promoting an estate sale is one of the most important steps because if you don't get shoppers through the door, then all of the work you have done was in vain. Local newspapers are excellent places to advertise these events. Craigslist in your city or region is another popular place to list events like this. There are also websites like estatesales.net and estatesales.org dedicated solely to listing and promoting estate sales. And don't forget about marketing your sale on social media. On Facebook and other sites, you can join groups targeting those specifically interested in finding estate sales.
Step 6: Clean Up After the Sale
Although an estate sale is over, your job isn't done yet. You still need to clean up. Package up all unsold items carefully and figure out what to do with them. In many cases, family members will let you donate them to a local charity organization.
Grow Your Estate Sale Company Using Skynova's Small Business Solutions
The estate sale business is fast-paced and involves a lot of moving parts. Skynova's small business accounting platform makes it easy to accurately track all sales and manage your estate sale company's financial records.
Our all-in-one software creates a centralized hub for generating the documents you need to stay organized, look professional, bill your clients, and get paid for your hard work.
Learn how you can get started using Skynova's products designed specifically with small businesses in mind. Our customizable templates and software make it easy to drop in your information and handle all your bookkeeping needs with minimal effort.
Notice to the Reader
The content within this article is meant to be used as general guidelines and may not apply to your specific situation. Always consult with federal, state, and local guidelines to ensure your estate sale company operates legally.