We’re all familiar with estate auctions. They are typically conducted on behalf of the family of a deceased individual. They are traditionally open to the public, and sometimes the family attends on bids on items against the public. However, within the last month, we conducted an estate auction for the family that was completely closed to the public, and only open to four family members. Let’s take a look at the results of each scenario.
This spring we had an excellent estate auction that included the real estate and all personal property. In my consultation with the family, we discussed how it was to their advantage that all the property be on the auction, and if they were interested in an item, to be present at the auction and purchase it there. Not only would allow all interested parties an opportunity to purchase, it also would set a fair market value for items in which the family was interested. Not surprisingly, the family was interested in the large items (guns, boat, motorcycle, appliances, et cetera). Interestingly enough, at the auction, the family purchased very few of the larger items (a few guns, some coins, and not much else). Needless to say, the auction was a success. There was a large crowd, prices were strong, and the larger items were hot commodities. Values were based on supply and demand, and very little emotion. In the end, the overall results were close to what I expected.
Fast forward to the last month. We were contacted by a family to conduct an estate auction. The catch, as I mentioned, was that the auction would be closed completely to the public, and would only be open to four family members. The family set the auction up just as normal, except nothing was removed from the house. Everything was put on tables, beds, any flat surface we could find. Each family member was given a fixed amount to spend, or not spend at the auction. Any funds not spent were part of their inheritance. What transpired that night was truly amazing. Value was based primarily on emotion, and very little on supply and demand. Items that normally would sell for good money at auction, sold for little to nothing, while items that normally wouldn’t sell very well sold for amounts that far exceeded the typical market value. In the end, the overall results were close if not more than I would have thought the sale would have totaled.
Would we do the private, family only, estate auction again? In both cases, we were paid for our services, and provided staff to work the auction. Our overhead was much smaller for the private estate auction. However, our fees were smaller than a typical estate auction and based on a flat fee. For the work we did, it was worth the effort. In a public estate auction, our overhead is much greater as we need more staff, but our fees are higher and based on a commission. Again, for the work we did in the above example, it was worth the effort.
Heading into the private, family only, estate auction, I wasn’t sure what to think. Looking back, I’d say we’d conduct another one if asked. It’s a nice little income stream, and it’s another tool in our toolbox to help the seller solve a problem. In fact, the family is thrilled with the results. Each family member had a fair opportunity to purchase items from their parent’s estate, and each had a level playing field of money. Our business is about solving problems, and we’ve now learned that a private estate auction is a viable tool in the toolbox.