How to liquidate an estate
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Selling off an estate can be a very challenging affair. There are a lot of factors to deal with, and many times the difficulty is often compounded by the loss of a close loved one.
If you are the executor, you are in charge of making choices that may offend siblings and start family arguments. There can be lot of pressure to the make the most money for the estate, and all this may come during a period in which your still grieving.
As an auctioneer with a lot of experience selling off complete estates, I can tell you that, while it's not an easy task, it can be a very rewarding, and fulfilling experience, giving you an insight into the life of the deceased that you may never have experienced otherwise. You've been given a very important honor, and making the right decisions is something you can look back on with pride for years to come.
Here is the least you need to know.
First, is the estate still in probate? If so, there is really not much you can do until it is probated. Usually, the court will let you sell enough to cover some bills, but not more than that. Different laws apply in different states, but this is the rule of thumb. It's best to try to come up with the money for bills from other sources, or to put them off if possible until the estate has probated. The reason for this is that you won't be pressured to take short money for valuable items.
Once the estate is probated, have a meeting with the other heirs if any. Inform them of the estate's financial obligations, and ask for input, but let them know you are the boss and will enforce the decisions you choose.
It's very important that before you decide how to liquidate, that you determine what is going to stay in the family as a Will won't always take care of this. Obviously, this can be one of the road bumps. I can't tell you who gets Aunt Mable's hand stitched quilts, or Dad's valuable coin collection, but I can give you the best advice on how to deal with disputes fairly. More on this difficult task later.
After you've decided who gets what, you need to choose liquidation options for the estate. Most estates at this point have two categories to be dealt with, real and personal property. Real Property is the the house and real estate, personal property is the contents and belongings including automobiles, vehicles, animals etc.
In any sizable estate, I believe the first and best option is to call in an auctioneer. Here's why.
No one has more estate liquidation experience or contacts than a good auctioneer. Even if they are not interested in the estate, they will steer you in the right direction.
Regarding the "who gets what dispute" mentioned above, auctioneers, deal with this type of problem all the time and are experts at solving it. Usually he will suggest that the items go to auction or sometimes will hold a private auction within the circle of heirs, for those special items. (If there are a few of these special items, I will do this for no commission, as will most auctioneers.)
While this may seem a little cold, it is the only fair method of dealing with a heated dispute as the money goes into the common heir pool, or can be deducted from the winning bidder's share of the estate. You'd be surprised how easily people will let some things go when they are force to place a value on them. While this method may not make everybody happy, no one can argue that it's not fair.
Before you call an auctioneer or any other liquidator, other than disputed items, make sure that you know what the family is keeping and what is going to be sold. This is important when working with a liquidator. No one wants to waste time and energy submitting a proposal based on guesses and will tell you so up front.
Here are some important considerations when hiring an auctioneer.
Availability, you may be interviewing a great auctioneer, but can they realistically do the auction before the real estate closing, or in your required time frame?
Specialty, if your house is full of Chippendale furniture, you don't want to hire an auctioneer that has only done storage space auctions. Attend one of the auctions of an auctioneer you are considering if at all possible.
Respect, you can tell a lot about the business practices of an auctioneer by the way he or she handles the items they are looking at in the estate and how they refer to the family and deceased. If they are respectful at that time, they will most likely be very respectful and professional during the liquidation process.
Ask about the crew, when they will need access to the estate. Will the auctioneer be with them at all times, if not what kind of accountability will there be? Where the items will be sold, on-site or at an auction hall, what kind of receipts you'll get, when you'll be paid. How items will be grouped when sold, what kind of commissions will be charged, including the buyer's premium if any.
Can the auctioneer sell your Real Estate for you? The auction method of selling real estate is becoming much more common, find out if this is an option.
This is an interview process, be up front about that and if you are considering other options or other auctioneers, let the interested party know this. They will appreciate the honesty and you'll get their most competitive rate.
Ask for references.
If you get someone who is huffy with your questions and requests, you probably have the wrong auctioneer. An estate liquidation is a big job, a good auctioneer needs patience and diplomacy, if they can't handle the interview without going into a tizzy, they surely can't handle the estate.
If you've interviewed a few auctioneers and an auction is not right for you, they will usually help with some good advice and referrals as to what to do. An auctioneer places great value on giving and getting good referrals and will usually be happy to give you some wonderful advice.
I welcome any questions you may have, but please use the comment section to do so.
Thanks and attend an auction this week!
AW
Thanks for your time,
Walt Kolenda aka auctionwally.
