ESTATE SALE CONTRACTS:POSSIBILITIES AND PITFALLS
We at McNeil Liquidations deal with estate attorneys, trust departments, probate judges, realtors, executors/executrixes, general beneficiaries, and a host of other legal arbiters, heirs, and fiduciary agents on a daily basis, and, well, we see more contracts than Carter sees Little Liver Pills.
Now, even though we’re not paralegals (let alone attorneys!), we like to think that we know enough about thorough reading and contractual matters enough to give you a few words of sage advice prior to your signing any contracts with liquidators.
First, ask the most glaringly obvious question — what qualifies you to conduct my estate sale?
(That’s a very good question, and I suggest that you ask it prior to even LOOKING at a contract.)
The answer of, “Well, I done done a couple and own twelve card tables and think this is sorta fun,” is NOT a satisfactory answer, nor is “Well, I’m a realtor and want to get this home sold.”
Ask to see any claimed credentials.
Ask to see credible letters of reference.
Check all online reviews and balance them carefully.
Call former clients.
DO YOUR FOOTWORK.
RESEARCH IS KEY.
Second, discover if there are obvious conflicts of interest to consider.
(Ask, “Are you a dealer?” “Do you own or operate a shop, else rent space somewhere to re-sell items?” “Do you work with online venues for re-selling somewhere on the Web?” “In short, are you doing anything that would prevent you from working in my best interest?”)
Remember that a good liquidator should work for commission alone, and that, at the end of the day, what’s good for you in an estate sale’s final total will, by definition, be good for the liquidator, too.
Third, “May I get your full legal name, and the name of your legally incorporated business?”
You have every right to do your research on the liquidator. Make certain that the potential liquidator isn’t entangled in nasty lawsuits somewhere, and feel free to do legal background checks. (This is, after all, someone you’re looking to hire to work in your home or business, else the home or business of someone else.)
Now, look at the contract itself.
Read, read, and then read again if necessary.
The contract should have been drawn up by an attorney, and should be fairly lengthy and well worded. (In short, it should be a comprehensive contract and leave no stone unturned.)
It should lay out the liquidator’s responsibilities AND your responsibilities.
(And yes, you’ll have contractually binding responsibilities, as will the liquidator.)
Whether we’re working on a $250,000 estate in Nichols Hills or a $35,000 sale in north Edmond, we’re going to rack up around four to five thousand dollars in expenses before we ever open the doors to the public. (Yup — labor, food, fuel, outside consultions, professional photographer, supplies, estimated credit card fees on the first $25K in sales, et cetera.)
All of those things we pay for? They’re clearly laid out in the contract.)
Who pays for advertising?
(The liquidator should pay for all advertising Don’t let anyone tell you otherwise.)
What about all labor?
(Ditto. It’s not your job to pay for labor!)
Do you accept credit and debit cards?
(The answer should be “the liquidator,” no matter what.
Eighty percent of all our sales every year is “plastic.” We take cash only on showcase purchases, though, due to past problems.)
Who pays for credit card fees?
(And again, this should fall under the liquidator’s purview. By the bye, it’s against the law in the state of Oklahoma to charge credit/debit card fees back to the consumer. Again, don’t let anyone tell you anything else.)
What about bad checks and c.c. chargebacks?
You shouldn’t have to worry about this matter — this is all within the liquidator’s bailiwick, not the client’s. (Do you really want to hire anyone who can’t cover a bad check or two? Think about it. Bad checks — for those who still take checks — can be written off, after all, and you shouldn’t be penalized for someone else’s bad behavior. At McNeil Liquidations, we solve that problem on both end by not taking checks AT ALL. As for charge-backs? They’re rare, and are easily fought in most cases. Again, though, this shouldn’t be your issue to resolve, and any good liquidator should have fund to cover such glitches.)
What about police officers during the sale itself?
(The liquidator should cover all security costs in most cases, but there may be exceptions for comparably small sales devoid of high value merchandise. Police officers and sheriffs in central Oklahoma average between $25.00 and $50.00 per hour.
McNeil Liquidations NEVER conducts a sale of any size without at least one officer of the law (preferably one with full jurisdiction, and usually in full uniform) on site from start to finish. (And guess what? We’re happy to pay for the officer — no buts about it.)
What about professional photographers?
Who arranges and pays for photography?
(Yup. You guessed it — that’s the liquidator’s duty.)
Sales tax remission?
THAT’S THE LIQUIDATOR’S RESPONSIBILITY. PERIOD.
(We suggest that you ask for a current and valid copy of the liquidator’s tax number and/or Articles of Incorporation. The collecting of sales tax on taxable merchandise at residential sales is non-negotiable in Oklahoma and Texas alike. It is, furthermore, the liquidator’s responsibility to collect all current and valid tax exemption permits to satisfy the Tax Commission if audited. Some states don’t require the collection of sales tax at residential sales, but Oklahoma and Texas most assuredly DO.)
Do you carry liability insurance? Moving insurance? What are you insured for? Are you bonded, and for how much?
Don’t hesitate to ask to see copies of any corporation’s current and valid insurance policies, and also be certain to understand that the liquidator might, in turn, ask to see trust documents, wills, insurance policies, etc. from YOUR end.
Be advised, though, that it’s the liquidator’s right to ask to see copies of YOUR current and valid insurance policies. (In fact, we require this much from our clients prior to signing any contracts.)
Who pays for supplies?
(The liquidator should pay for everything, from lighted showcases and risers to tape to tags to . . . well, you get the picture. Buying necessary supplies? Just one of the many costs of doing business.
Who pays for outside professional consultations during set-up and pricing?
(Once more, the liquidator should. Our gemologist, for example, averages around $75.00 an hour for consultations, and our firearms expert charges $95.00 per hour. Who pays for all required consultations? WE DO.)
Is there going to be a set-up fee?
There should never be a set-up fee for an estate sale. To be more broad, well, NEVER should you pay money of any kind up front for an estate sale. Again, estate liquidators work on commission, and should have the requisite capital to pay for all expenses during the preparation and execution of your estate sale.
Auctions, though, are very different beasts. (Auctioneers may charge lower commissions, and may establish an advertising budget up front. (And the client usually pays some $ prior to work beginning. That said, auctioneers also have fewer labor expenses and generally charge lower commissions than full service estate liquidators do. Still, ASK QUESTIONS BEFORE YOU SIGN ON THAT DOTTED LINE.)
Is there a cancellation fee in place in case things don’t work out?
(There should such a clause in place for both parties. No good liquidator wants an unhappy client, and no good client wants an unhappy liquidator.
Also, both parties need to be prepared for inclement weather, personal tragedies, etc. (You know, sometimes life just happens. )
We had a large sale in Quail Creek scheduled for April of 2017, but the home sold quickly, and for cash. The buyer wanted a three-week closing, and so we were happy to release the client from her contract, and we even referred a superb colleague who was able to help her in her timeline. (This is just one example. Furthermore, we have never enforced our cancellation fee — NEVER. Furthermore, we hope to never have to enforce that clause which our attorney put in our contract so many years ago.)
What about scheduling and/or acts of God?
Both parties need to be realistic about the fact that, again, life can happen.
May I be on site during my sale?
We encourage you to be on site during your sale if you wish to be there, but won’t tolerate your getting underfoot nor upsetting customers during the same. This is clearly spelled out in our contract. (Remember, you’re hiring someone to sell merchandise on your behalf. There’s no reason to be counter-productive on those days that actually MAKE both parties money.)
What about setting reserves?
We touch on this in our contract, and any good estate liquidation contract should tell you what the firm’s policy on reserves is going to be.
We don’t fancy reserves, but can and do understand that they’re sometimes necessary. (We’re very, very judicious about reserves, though, and seldom encourage their placement in a contract.)
Will I be charged commission if I remove anything from the estate sale inventory after I’ve signed a contract with a liquidator?
(There should be, yes, so don’t be coy about asking beforehand. I mean, you don’t sign a contract with a realtor and then start removing pieces of the real estate without obvious consequences. No one likes bait and switch tactics, after all.)
Do you keep scrupulous paper records, and may I audit the books?
We’re all about carefully maintained paper records, and maintain total transparency here at McNeil Liquidations.
Never hire a liquidator who doesn’t write paper tickets for all purchases made.
Never hire a liquidator who won’t let you audit his or her records.
We keep contracts and all paper records for seven fiscal years.
What happens to what’s left over?
Whose stuff is it once the sale ends?
It’s always YOUR merchandise, and never belongs wholly to anyone else. Anyone who tells you otherwise is trying to “pull a fast one” on you, and should be avoided like the proverbial plague.
At McNeil Liquidations, we have our clients do walk-throughs (in person, else over the phone) after each sale.
Although we use four different default charities to pick up post-sale remnants, the client’s always welcome to keep some or all of that which may be left, else to select his or her own c(3) or c(4) for post-sale pick-ups.
Please feel free to call me (Matt McNeil) at (405) 820-2814 should you have any questions.
I’ll be happy to answer your queries to the best of my abilities, else to refer you to family and/or estate attorneys who can work on your behalf prior to your signing any contract.
P.S.: Remember that contract laws are fairly universal in the U.S., but CAN vary from state to state.
Be smart as you read.
Be quick to ask questions.
Be cautious if you encounter red flags.
Be happy with the contract you ultimately sign.
Leave a Comment