Estate Sale Contracts: Everything You Need to Know
Estate sale contracts are imperative when conducting any type of estate sale. 3 min read
2. Estate Sale Contracts
3. Types of Estate Sale Contracts
4. Estate Sale Contracts: Pre-Sale
6. Insurance: Is Everyone Covered?
Estate sale contracts are imperative when conducting any type of estate sale. This document essentially outlines the agreements and responsibilities of both parties in writing. Reputable companies provide professional estate services, and based on the agreements outlined in the contract, the client will know exactly what they can expect.
In order to make an estate sale, you do not need to own an estate. In fact, most estate sales or liquidations occur when a family member passes away. In this case, an estate auction will generally occur. This process is much different than a regular sale in that a company or associated professional is paid a predetermined percentage in order to run and manage the sale.
Estate Sale Contracts
Although estate sale contracts will vary from one company to the next, this will be the most important document you create. This document will outline your agreement terms in writing, as well as the responsibilities of both parties involved. This step is key because a verbal agreement is not enough in terms of legal protection.
Types of Estate Sale Contracts
Since estate sales can become rather complicated, your contract should be crystal clear. There are also various types of estate sale contracts, including:
- On-site contracts — This will cover the traditional estate sale, which generally takes place in the client's home. Once items are sold, the remaining items are either disposed of or given to charity.
- Consignment contracts — In this case, an estate sale company will sell items on consignment. This will either take place in a showroom, a warehouse, or a similar type of setting.
- Clean-out contracts — This contract is when the estate company is paid a set fee to clean out the entire estate under the agreement that the items will be sold on-site, on consignment, or will be disposed of. Another option is a "straight clean-out" where the client pays a flat fee for the company to clear everything out and they can then do what they wish with the items.
- Buy-out contracts — Everything is bought from the estate for one set price.
Estate Sale Contracts: Pre-Sale
Although the actual estate sale is the main event, there is a lot that leads up to this sale. Once a company begins working on an estate sale, there are numerous costs involved. When creating a contract, you will need to specify what these costs are. How much will you charge? Clearly define all estate sale pricing and appraisals, as well as any fees for advertising, marketing, setting up, etc. Treat this step as a task list, so that all parties understand what their role is prior to the sale.
When creating estate sale contracts, the commission rate is typically the single most important factor. How much you decide to charge can either make or break your deal. The rate you decide on is generally based on your experience in the industry, the services you will offer, and the regional norms. Since standard pricing differs from region to region, do your research. See what other estate companies charge and do not be shy to ask questions.
For example, in some areas, a 25 percent commission may be the standard rate. However, in other areas, this rate will be either too high or too low. There is a Facebook group that you can access known as The Estate Sale Company Network. This is an ideal resource exclusively for those who work as estate sale professionals.
Insurance: Is Everyone Covered?
Liability insurance has become a key cost for estate sale companies. All professional liquidators should be insured to cover any dangers associated with estate sales. Also, it is important that your client has current homeowner's insurance. Unfortunately, accidents happen — especially when shoppers are in an unfamiliar home. If a shopper gets injured during a sale, you need to be protected.
Not only will you want liability insurance for shoppers but also to cover any possible damage to the premises. In your contract, be sure to include an indemnification clause. One company that is well-trusted within the industry is the ACNA, or Antiques and Collectible National Association. If you are new to liquidation, you will want to seek insurance. In contrast, established companies will likely be insured already.
Before you conduct any business in relation to an estate sale, make sure that all terms are in writing. After a contract is signed by both parties, you can proceed as agreed upon. And remember, a verbal agreement is not enough to protect anyone.
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