Are you or someone you know dealing with the overwhelming task of disposing of personal property due to a family member or friend dying?
There are several options available to you including Estate Sales (commonly called 'Tag' Sales) and Estate Auctions.
A tag sale involves hiring someone or a company to come in and “price” each item with a tag. Most people that attend a tag sale assume that there is room to negotiate, so a good number of items marked with a specific price sell for less. Tag sales usually span 2-3 days and prices are lowered on days 2 and 3. Often, a great number of the items do not sell at all and you still have to pay the person or company you hired to do the sale.
On the flip side, an auction is where you hire a person / company who will market and sell items “to the highest bidders.” Most auction attendees understand that items will be sold to the highest bidder, and that they will win any item where they outbid all others. At an auction of personal property, there is typically no set prices, and the market sets the ultimate selling price. The goal of an auction is to sell all the items at the auction and generally everything is sold and removed the same day...alleviating time consuming packing, moving, storing, etc.
The two biggest differences between a tag sale and an auction are:
- A tag sale uses a similar practice to a retail store that may be reducing inventory or even going out of business, that is, items are priced high at the beginning and are reduced on each successive day. The most any item will bring is the actual day 1 price on the tag and the least is that the item doesn't sell at all. The cons to a tag sale is that the person hired to price everything must know how to price each item. If they price an item too low you will lose money, if it is priced to high it will probably not sell at all....and you still lose money.
- An auction utilizes competitive bidding where items sell for whatever the highest bidder is willing to pay. The pros to the auction option is that every item sells for whatever the high bidder is willing to pay and many times competitive bidding yields higher than anticipated prices.
Here are a few statistics from within the industry and available if you search online about tag sales:
1. Over 80% of the items in a tag sale are sold below market value.
2. More than 20% of the items in a tag sale will remain unsold.
3. 100% of the items will sell for no more than the “tagged” price.
4. Many times, items are under-priced and directed to other dealers, family or friends of the tag sale service provider.
5. Some tag sale providers over-price some high-end items until the final day of the tag sale, where they can contact other dealers, friends or family, and discount the item to them.
6. Almost always, the tag sale provider lacks the expertise to properly price all items, therefore full price discovery is not accomplished.
7. Regulation and licensing of tag sale service providers is almost nonexistent in the United States. A harmed seller would have no choice but to sue in court for damages.
8. Most tag sales lack sufficient marketing to attract the most qualified and interested buyers, therefore applying downward pressure on sales results.
An auction attracts large crowds of ready, willing and able buyers, through extensive widespread marketing, who have to compete to purchase items they desire. Full price discovery is accomplished, and nearly all items sell, and it is highly possible that many items will sell for market value or more.