When a parent or other relative dies or enters a nursing home, selling assets and disposing of a wide variety of possessions is a huge chore that can easily turn into a nightmare.
The contents of a house and personal possessions are likely to present the biggest challenge. These items are considered “illiquid” because they don’t come with a set price tag and even experienced appraisers can arrive at vastly different values. Commissions and fees on sales can be quite high, or are hidden. This contrasts with “liquid” assets, such as stocks or mutual funds. Assets that fall into this category have a finite value because they trade actively on established exchanges, and sale commissions are usually reasonable and fixed.
Here’s a brief rundown of what you need to know about valuing and selling common types of liquid or illiquid estate assets:
Securities. If you inherit liquid assets such as stocks, mutual funds, or certificates of deposit, the brokerage firm or bank will provide either a “date of death” value, or a fair market value on an alternate valuation date. This alternative date is generally either the date the shares were distributed from the estate after death or six months after the date of death, whichever is sooner. A tax advisor or attorney can help you figure out which is the best option.
Home. An appraiser who specializes in real estate can determine the value for estate tax purposes. Real estate agents are another good resource for a written value estimate, and they may be willing to do it for free to drum up business. Viewing comparable sales in the area on Zillow or at another real estate website can help ensure estimates are an accurate reflection of what’s going on in a particular area. Using the actual sale price as the reported value for the IRS is another possible option.
Valuable items. Another option, particularly for more valuable items, is an auction house. Here, furniture and other items are typically removed from the home and bidders determine the selling price of items either online or at a physical location determined by the auctioneer. Fees for items sold at auction vary, but typically range from 10 percent to 25 percent for the seller.
Some companies are set up to handle both estate sales and auctions, depending on the customer’s needs. Some sellers prefer this all-in-one solution since an estate often includes some valuable items that would probably fetch a better price at auction, as well as more mundane ones that are better suited for an estate sale. Hiring a separate estate liquidator and auction house is preferable if you suspect there may be some particularly valuable items in the mix, such as artwork or antique furniture. Many auction houses, including auction powerhouse Sotheby’s will provide auction estimates of value based on e-mailed photographs.
Jewelry. Jewelry, including estate sale engagement rings, is a highly specialized category. Because it is often just a sideline for many auction houses and estate liquidators they may not attract a broad pool of knowledgable or professional buyers.
Another common route is to sell estate jewelry to pawnshops or jewelry stores. Pawnshops are notorious for “going low” on values. Surprisingly, even reputable jewelry stores often do the same thing. When local jewelers buy things like a branded watch or a diamond ring, they will normally sell them to a dealer, who will then sell them to a wholesaler. With three levels of profit to split there’s a strong incentive for a jeweler to offer the lowest price possible. If the store sells something on consignment, the seller only gets paid if and when the item is sold.
There is a better way…
Worthy provides a better alternative by replacing opaque, risky, or high cost alternatives with a process that is transparent, secure, and sensibly priced.
Here are the five easy steps in the sales process:
Describe the item on the submission form.
Based on this description, Worthy conducts a Market Value Analysis. From there, send your item to its secure facilities using a pre-paid, FedEx-insured shipping label.
Once Worthy receives your items, experts will clean and photograph it before bringing it to one of its professional grading partners for evaluation. At this stage, you will be asked to set a minimum price and “a buy it now price”. Meanwhile, prospective buyers are sent an alert on the items about to be auctioned.
The auction begins, allowing qualified and targeted buyers a set period of time (up to 48 hours) to compete for the item.
Upon acceptance of the high bid, the payment is processed almost immediately – and funds are transmitted to you.
Fees range from 5 percent of the sale price for items with a transactional value over $250,000 to 18 percent for items valued at $5,000 or less. It’s all outlined on the website, in plain English, so you don’t have to wonder about “hidden fees.” And because Worthy is used by thousands of professionals worldwide who know the value, prices reflect the true worth of your treasured heirlooms.
Marla Brill has been a personal finance journalist for over 30 years, writing about money topics for Reuters, The Boston Globe, Financial Advisor Magazine, MarketWatch, PBS’s NextAvenue, and other publications.