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How to Avoid Estate Sale Scams

How to Avoid Estate Sale Scams

Managing a loved one’s possessions takes a lot of emotional and physical work, especially during a period of grieving. For a house full of stuff, it makes sense to hire someone to sort, price, and sell the items for you in an estate sale. That way you can focus on what’s most important to you during a stressful time.

However, estate sales aren’t always as helpful as they seem. The industry is loosely regulated, and news stories about companies taking advantage of families in grief are not hard to find. Just this year, Texas investigator Bill Spencer tracked down the owner of a company who was accused of stealing more than $25k from her estate sale clients.

Not all estate sale companies are out to defraud their clients. Here are some ways to protect yourself when hiring a company to sell your loved one’s possessions.

Shop around

The best way to find a trustworthy company to work with is to get a referral from someone you trust. Ask your friends, bankers, lawyers, etc. if they know any companies they could recommend.

When you’re looking for a company on the internet, take your time to really understand who they are and how they work. Interview multiple companies. Compare rates and fees, processes for the sale, how they price items, and what happens after the sale.

Do your homework

When you’ve narrowed it down to a few companies, it’s time to do some research. Remember, you’re trusting these companies with your loved one’s property and prized possessions. You want to make sure you trust whomever you hire.

Follow these tips to identify any potential red flags:

• Check their experience: Find out how long the company has been in business and whether they have a solid track record.
• Review online feedback: Look up Google and Yelp reviews to get a sense of others’ experiences. Pay attention to both positive and negative feedback.
• Examine their online presence: Visit their social media profiles to see how active and engaged they are with their clients. A reputable business will maintain a professional and transparent online image.
• Verify with the Better Business Bureau (BBB): Check if they are listed on the BBB website. Look at their rating, any complaints filed, and whether they are BBB accredited.
• Check for professional credentials: Inquire whether the employees hold any specialized certifications or belong to industry associations, which can signal professionalism and credibility.
• Look for testimonials and case studies: Review their website for testimonials or case studies that showcase past successes and satisfied clients.

Request client references: Ask for references from past clients, and make sure to speak with them about their experience working with the company. This firsthand insight is crucial in evaluating trustworthiness.

Understand how pay and pricing works

Interview the company to get a good understanding of how they price items, what their commission rate is, and any other fees they charge. Some estate companies can charge up to 30-40% commission in addition to fees for trash removal, cleaning, staging, etc. Request all the details of commissions and fees and compare them to other estate sale companies. Shop around for the right fit.

Make sure you have the final say in what happens to the items in the sale. Set terms for pricing, discounts, adding or removing items from the sale and understand what happens to unsold items.

Read and reread your contract

Don’t sign anything you don’t fully understand. Read your contract several times over to make sure you’re absolutely clear on everything. If there’s something that is unclear or is written vaguely, ask the company to explain and revise it. If they promised you something verbally, make sure it’s in the contract. Lastly, make sure any terms you’ve agreed on are explicitly stated in the contract.

Don’t be afraid to ask an advisor or an attorney for help understanding the contract. It’s always okay for you to have someone on your side to check things out.

Negotiate your terms

Don’t think that you have to do things 100% their way. If a company is not willing to negotiate, move on to one that will. Protect yourself by negotiating the following terms:

• Request an itemized list of all items included in the sale, their price, and whether or not they sell.
• Discuss how and when you receive payment, including specific deadlines for payouts and when the company has to produce sale-related documents. Experts recommend that you be paid immediately after the sale ends.
• Negotiate penalties for the company if they fail to deliver on terms of the contract
• Request records of transactions for cash, credit cards, and checks.
• Block the company from bringing in their own items to sell during the estate sale.
• Demand that marked prices don’t get discounted without your consent.
• Identify what happens with the items after the sale.
• Optional: Reserve the right to be present at the sale or have someone present on your behalf to make sure the company isn’t violating the contract.

Take your time

It is more than okay to take some time to yourself before you start managing your loved one’s personal possessions. Estate sales are stressful, and you’re putting a lot of trust in someone else to manage and take care of your loved one’s things. Take your time to thoroughly vet the company you’re hiring, and don’t be afraid to ask for help.

Source: IlluminAge AgeWise, sources: KPRC2 Houston, Minnesota Attorney General