How Estate Sales Work (and How to Find Out What Belongings Are Worth)

After a death, a house full of belongings has to be sorted, divided, sold, donated, or discarded. An estate sale can be the most efficient way to place the things nobody wants to keep, and it can also be disappointing if you expect it to turn ordinary contents into a windfall. This guide covers how they work and how to find out what things are actually worth. For the emotional side, see a lifetime of belongings: what to do.

Who can sell the belongings?

Before anything is sold, confirm two things:

1. Who has legal authority. Usually that’s the executor or administrator appointed by the court, not just a family member who has the keys. See what an executor can’t do
2. Who is supposed to get what. A will or other instruction may leave specific items to specific people, and family members may have strong feelings about certain things. Give family a chance to claim items before the sale. See property distribution after a death and who gets Mom’s jewelry

Selling first and sorting out claims later can cause family conflict and problems for the executor.

What is an estate sale, and how does it work?

An estate sale is a fast way to sell belongings that family members don’t want to keep. Professional estate sale companies, sometimes called liquidators, typically take over the whole process: sorting and organizing the contents, staging the home, pricing items (often including appraising them), promoting the sale to the public, and hiring staff to run it. Most sales last about two to four days, and prices often drop as the event goes on, to reduce what’s left when it ends.

You can also hold a sale yourself, use consignment, an online marketplace, or an auction house for particular items, or donate what isn’t worth selling. A company is most useful when there’s a lot to sell and you don’t have the time or the knowledge to price and manage it.

How do estate sale companies charge?

Companies usually take a percentage of the sales. ElderLawAnswers says commissions are typically 25% to 50%, with a smaller sale of mostly everyday goods tending to carry a higher rate because the company still has to sort, stage, price, and staff it. SmartAsset, citing the estate sale listing company EstateSales.net, reports an average sale of just over $18,000 and an average seller commission of about 40%. These are industry figures and vary by market and company. Ask about add-on charges such as advertising, cleanup, or removal of leftover items, and whether there’s a minimum.

How do I choose a company?

ElderLawAnswers notes that the industry is largely unregulated, so it falls to you to vet the company. It advises checking references and insurance (in case someone is hurt at the sale) and making sure there’s a written contract. Things worth asking:

• What are your commission and any other fees? Can I see them in writing?
• Are you insured? Can I see proof?
• Can I speak with recent clients? Can I see photos or listings from past sales?
• How will you price items, and when and how much will you mark them down?
• How is cash handled, and how soon will I be paid? Will I get an itemized sales report?
• What happens to items that don’t sell, and who removes them?
• How will valuables and sensitive papers be protected during the sale, and can I set things aside first?

Get at least a couple of bids, and compare what each includes, not just the percentage.

What are belongings really worth?

Expect less than you think for everyday items. The IRS says the value of used household items (furniture, furnishings, electronics, appliances, linens) is usually much lower than the price paid when new, and that such items may have little or no market value because they’re out of style. What matters is what people actually pay.

The IRS’s definition of fair market value is the price that property would sell for on the open market, agreed between a willing buyer and a willing seller, with neither required to act and both reasonably knowing the relevant facts. A few consequences:

• Replacement or insurance value is not fair market value. The IRS gives the example that an appraisal obtained for insurance reflects only the replacement cost of jewelry, not what a willing buyer and seller would pay
• Sentimental value doesn’t count. The IRS says it has no effect on fair market value of jewelry
• Liquidation prices aren’t a reliable guide. The IRS notes that liquidation sale prices usually don’t indicate fair market value
• Price guides and auction results can mislead. The IRS cautions that catalogs and dealer price lists aren’t always reliable and should be supported by other evidence; for example, a dealer may sell for much less than the list price, and an auction price can be the result of a rigged sale

How can I find out what something is worth?

• Comparable sales. What similar items in similar condition actually sold for, close to the date you care about, in a comparable market. The IRS says the degree of similarity matters, so a third edition in poor condition says little about a first edition in good condition
• Cars and boats. For a car, the IRS describes using a used-vehicle pricing guide’s private-party price, not dealer retail, and adjusting for condition and mileage. For a boat other than an inexpensive small one, it says to rely on an appraisal by a marine surveyor
• Real estate. A detailed appraisal by a professional appraiser
• Jewelry and gems. The IRS says these are specialized enough that it is almost always necessary to get an appraisal by a specialized jewelry appraiser
• Art, antiques, collections, and rare books. A specialist appraiser, especially if the item may be valuable. The IRS says value turns on authenticity, condition, and comparable sales, and recommends specialized appraisers for books except collections of modest value

When should I get a formal appraisal?

Set aside anything that might be valuable, such as jewelry, art, coins, stamps, collectibles, and old documents, before the sale, and get opinions. For items worth real money, a written appraisal is worth the fee. Two useful facts from the IRS:

• For donations, a deduction of more than $5,000 for an item or group of similar items generally requires a qualified appraisal by a qualified appraiser and Form 8283. A qualified appraiser has verifiable education and experience in valuing that type of property, regularly prepares paid appraisals, and has either earned a designation from a recognized professional appraiser organization or has met education requirements with at least two years of experience. The IRS says it doesn’t recognize any particular appraiser or appraisal organization, and that an appraiser’s opinion is never more valid than the facts it rests on
• Fees: you can’t deduct the fee for an appraisal of donated property, and generally no part of the fee for a qualified appraisal can be based on a percentage of the appraised value

Be careful about relying on an “appraisal” from someone who also wants to buy the item. A neutral specialist’s written opinion is better evidence, both for deciding what to sell and for the estate’s records. For the tax significance of value at the date of death, see step-up in basis.

What about donating instead?

Donating items the family doesn’t want and a sale won’t be worth running is a common choice. If you plan to claim a deduction, the IRS says household items and clothing must generally be in good used condition or better, you need a receipt or written acknowledgment from the charity, and the larger the claimed value, the more documentation is required. Ask a tax professional before relying on a deduction; see which tax forms an executor may need.

How do I account for the money?

Proceeds from selling the person’s belongings generally belong to the estate. Get the itemized sales report, deposit the payout into the estate’s account, and keep the contract, report, and receipts with the estate’s records. See keeping the estate’s records and what beneficiaries can ask an executor for.

What should I do next?

1. Confirm who has authority to sell and what the will says about specific items
2. Let family claim what they want, in writing, before the sale
3. Set aside valuables and important papers, and get specialist opinions on anything that may be worth real money
4. Get two or three estate sale bids, check references and insurance, and sign a written contract
5. Keep the sales report, receipts, and proceeds with the estate’s records

For a home with extreme clutter, see how to clear out a hoarded home after a death.

Estate sale practices, fees, and legal requirements vary by state and company. This is general information, not legal or tax advice; the executor’s attorney or a CPA can confirm what applies.