Estate sale vs Buyout
for your loved ones personal property
I’m Kim Ward, I am a real estate broker in San Diego, California, and an expert helping executors, administrators and trustees with homes in probate or a trust.
You’re probably mourning the loss of a loved one, and considering how to handle their remaining personal belongings. You may have narrowed the choice down to an estate sale or buyout and you’re wondering what’s the difference? What’s the difference in cost, how much will the estate net perhaps, and what are the benefits for each of these options; What’s the work that’s involved for you? Maybe you’re wondering why you would even consider using one of these two options when you can simply call a donation company and they’ll take the items away and you’ll have a large Write off for the estates taxes. I’ll address these questions, explain a bit about each service, and show an example of the cost breakdown. My Hope is that this will help you narrow down the options that you are considering.
full estate Liquidation can be a great option if you have a large amount of items that are valuable. The estate sale will sell anything from linens to luxury items, and the consultation is free. Worst case scenario, after you have a consultation, the items that are there do not qualify for an estate sale, and you move on to some of the other options available to you.
Considering that an estate sale company will take the entire process off of your hands, with the added benefit of producing some funds for the estate, and it leaves you with a cleared home ready to put on the market and sell it should be your top pick.
What would be expected of you
if you should choose an estate sale, the first thing is you would clear out any items that your family or friends want or are items of value to them. Once you remove all those items that that’s when you have the estate sales company come in and take a look at everything that’s left and determine if there’s enough left to have an estate sale.
There’s no upfront costs for an estate sale, The estate sales company will receive their payment by keeping a percentage of the funds from the items that are sold.
Sample estate sale breakdown would be this…
Let’s say that the gross profit is $10,000. On average, the estate sale company will keep 40% for the work that they do. That means that the esate sales company will take $4,000, and the estate would then receive approximately $6,000. There may be some additional clean-out costs, in my experience this fee is usually around $700 to finish cleaning out the home after the estate sale. So, in this scenario, your total sample earnings would be about $5,300.
If you’re interested in additional cost breakdown examples here are a few from online sales companies. I am in no way affiliated with these companies, but its helpful sometimes to have a few more examples to get a better understanding of the process.
A buy-out company is buying the rest of the personal property left from the estate after the heirs remove things of value to them. Buy-outs are great for estates that are looking to let go of a fair amount of items while still producing some cash for the estate.
The catch here is that items are being purchased specifically for resale. The buy-out company is looking at what the resale value would be for them, and all of the items are typically looked at as a bulk price. The buy-out company is looking to buy up the estates personal items so that they can make a profit once they go through the process of selling the said items.
The benefit to you, as the personal representative of the estate, is if you don’t have enough valuable items for an estate sale, or if for whatever reason circumstances don’t allow for an estate sale the buy-out can be a great option and a great way to produce extra cash for the estate will getting the house cleared out quickly of all the remaining personal property.
What would be expected of you
When there’s a buy-out, the personal representative will still be expected to clear out the items that the family members and friends would like to keep. Then you bring in the buy-out company and they will look at everything and be able to give you a price and the costs involved.
As with the estate sale there should be no upfront cost for you, however, you can expect for the items to be purchased at a pretty low price. The discounted rate could really be pennies on the dollar of what your loved one paid for the items. Keep in mind that there’s a lot of labor involved for the buy-out company to come in and package up all the items and remove them from the house.
The buy-out company will take everything, they’ll even take care of items that just need to be discarded. The company will be taking into consideration that they may have to store those items for a while until they can actually sell them, so again, think pennies on the dollar of the original cost of the items.
The option of a buy-out could work for you if you’re on a deadline, and you really need to have the house cleared out so that it can get on the market ASAP, also if the condition of the house and the condition of the personal property does not warrant an estate sale on the premises.
If the estates items value for resell would be around $5,000, you can expect the buy-out company to offer perhaps $1,500. Your total sample earnings would then be $1,500, and they would clear out the house sweep the home, and then you can get the property on the market or start working on cost-effective repairs right away.
opting for charity donations are best for situations where the tax benefit would help the estate. What is meant by this is that the estate would be able to write off that donation.. Donation is also a great choice when there is no other options available or it would cost the estate to have a buy-out company remove all the items. Of course you’ll always want to talk with a tax professional about this prior to making the decision to donate all items in the estate
Donating items is always rewarding because they’re going to a good cost. With that being said, donation should always be the last option for removal of the personal items from the estate. This is especially true when the donation, taxable donation slip doesn’t really benefit you.
What would be expected of you
In that scenario, you would be solely responsible for boxing up all the small items. You would need to contact the donation company and let them know how many boxes you have of donation, what kind of donations they are, what furnishings would be donated, that way they would know how much room they have to have on their truck.
Situations where this option of donation would work for you include: When you’ve interviewed several estate sale companies and they just don’t feel that you have enough items to qualify for an estate sale, or if a time constraint would not allow for a buy-out for some reason.
Lets say there is a total item value of perhaps $5,000. When you look at tax bracket rules, there may be a deductible limit of about $3,000. So your total sample deduction would be up to $3,000. For more information on California Charity Taxes Click Here.
Every situation is unique, and when it comes to selling the personal property of your loved one there are many circumstances that could affect the ultimate outcome.