8 Estate Sale Mistakes That Can Cost You a Fortune

3. You don’t consider taxes

If you hold an estate sale to sell off unwanted items, typically you are getting pennies on the dollar for what you or your loved one paid for the items — unless, that is, you dig up a proverbial Picasso. “For the items that you sell for less than cost, there is no income tax on that sale,” says Elizabeth Buffardi, a certified public accountant (CPA) and founder of Crescendo Financial Planners Inc., a financial planning firm in Oak Brook, Illinois. “For the Picasso, or anything else you sell for more than you paid, you are supposed to report that on your personal income tax return.” It is, after all, a capital gain, and should be taxed.

You do not have to disclose any money you made on items that were sold for less than what the deceased person paid for them, nor do you need to add sales tax to items on an estate sale in most states. Since inheritance tax doesn’t kick in until around $13.6 million, unless you dig up something hugely valuable among your loved one’s belongings, you’re probably safe from Uncle Sam. Consider consulting a tax advisor if the estate items are very valuable.

4. You’re not prepared to negotiate

Before the sale, while you’re tagging everything, create a spreadsheet to track each item’s starting price and decide how low you’re willing to go if you don’t receive a full-price offer. “Create a set of rules and then stick to your guns,” Harris insists. If you’re holding a three-day sale, consider lowering prices on the second and third days to move remaining inventory, Harris suggests. “During the last three hours of the last day, we’d say, ‘make me deal,’ ” she says. “We want everything to sell, ideally.”

5. You don’t set the scene

An estate sale should be a positive experience not only for you but also for shoppers. One ground rule: Don’t hover over potential buyers. A second: Don’t overcrowd items. Harris suggests renting or borrowing tables where you can display sundries and smaller items for visitors to rifle through, as well as clothes racks, shelves, jewelry staging pieces and a locked jewelry case for valuables.

Many shoppers want to touch items that are on display, which experts say is reasonable  — these are used wares, after all, and there are no returns, so shoppers typically want to “test” items out before they buy them. Exceptions are fine jewelry or sterling silver, since these items are usually small and can be easy to steal. “We put those on our cash-out table or in glass cases, so that shoppers have to ask to see them,” Harris says.

Beyond that, make the walkways clear for people to meander through and ensure items that shoppers are allowed to touch are easy to access. 

6. You don’t accept a variety of payment methods

Oftentimes estate sale shoppers don’t carry cash. Being prepared to accept forms of digital payment, such as Cash App, Zelle, Venmo and Apple Pay, as well as credit cards, can help broaden your pool of potential buyers.

To prepare for cash shoppers, consider buying a cash register that you can lock. Make sure the box is prestocked with a variety of bills. “We have been known to need more in the middle of the day and sometimes have to run to the bank,” says Harris.

7. You don’t protect yourself

Be mindful that bad actors could show up looking to get a five-finger discount. Harris hires people for $100 per day to monitor the event — though these roles can also be filled by family or friends. If you’ll be holding the sale inside the house, go through the home and clear out any sensitive documents, such as the deceased’s passport or birth certificate, along with any medications, before the sale begins.

Make sure to take down directional signs after the sale. “(Someone) might break in knowing” the house is vacant, Harris warns.

8. You don’t prepare emotionally

Unloading a loved one’s cherished property can be overwhelming for some people. That’s why Harmata conducted his mother’s estate sale while his sisters were busy. “My sisters wanted to keep everything,” he says. 

Chris Coy, cofounder of Coy-Krupp Estate Sales in Chicago, who holds around 50 estate sales a year, says he begins the estate sale process by asking families to decide, as a unified group, what items they want to keep. “Decide amongst yourselves and then remove those items sooner rather than later,” he says.

Done right, preparing an estate sale can be a bonding and healthy grieving experience for families. If some family members can’t be there in person to go through the possessions, you could meet over video chat to ensure that everyone walks away feeling the process was equitable.

You might be tempted to put certain things in storage until you decide what to do with them, but Coy cautions against it since storage fees can be costly. According to Move.org, the national average for a storage unit ranges from $100 to $300 per month, or $840 to $3,600 per year, depending on the size and location. “If you’re storing (something) thinking one of your kids want it, in my experience they don’t want it,” Coy says. “And, remember, the condition of (certain) things does deteriorate, so they don’t come out the way they went in.” In other words, it’s best to go through this difficult process once, rather than several times because you put things in storage.

Andy Harmata learned this lesson firsthand, from his decision to wait six years to sell most of his mother’s collectibles. “Unloading all of this is actually a great feeling,” he says. “I know my mom would have enjoyed seeing her things being put to good use.”