How to Estimate Your Net Proceeds From an Estate Sale

What net proceeds means, and the one formula

Net proceeds is the money that reaches you after everything has been taken out: the commission or the minimum, whichever is larger, and every fee the contract allows the company to charge. The formula is one line, and every step below is a way of filling in one of its pieces honestly.

The formula is simple; the difficulty is that two of its inputs are guesses. Nobody knows the gross until the sale is over, and nobody knows what will be left to clear until the buyers have been through. That is why this guide asks you to run the estimate three times, at a gross that would disappoint you, at the gross the company expects, and at a gross that would please you. A single estimate at the expected figure is the one families usually make, and it is the one that hides the minimum, the fixed fees, and the way a poor sale takes a far larger share of the gross than the headline rate suggests. Our guide to estate sale commission rates explains why the percentage alone tells you so little.

Step 1: Estimate the gross under three outcomes

The company's estimate after its walk-through is the best starting point you have. Ask every company you speak to for one, and ask how it arrived at the figure: which rooms and which pieces it expects to carry the sale, and what it thinks will not sell at all. A company that can name the twenty items it expects to account for most of the gross has looked properly; one that produces a round number with no reasoning has not.

Then set your three figures. Take the company's estimate as the expected outcome. For the poor outcome use half of it, which is not pessimism but the ordinary result of bad weather, a competing sale across town, or a family member removing the pieces that were meant to draw the crowd. For the good outcome add half again. If you have two estimates that differ widely, use the lower as expected and the higher as good; the gap between them is telling you something about the estate, and a low estimate is the one you are protecting yourself against.

Resist the urge to price the house yourself and add it up. Families reliably overvalue formal furniture, china and collections and undervalue tools, kitchenware and the contents of the garage. What sells best at estate sales gives an honest picture of where the money usually is, and appraisal vs. estate sale pricing explains why an insurance valuation is not a forecast of what a shopper will pay on a Saturday.

Step 2: Apply the commission and the minimum

Multiply each of your three gross figures by the company's rate. If the company quotes a sliding scale, apply each tier to its portion of the gross; if it quotes a different rate on individual high-value pieces, work those out separately and add them. Then compare each result with the minimum commission in the contract, and take the larger. That larger figure is what the company keeps.

This is the step where the poor outcome changes shape. At the expected and good figures the percentage usually exceeds the minimum and the minimum is irrelevant. At the poor figure the minimum frequently overtakes the percentage, and the company's share of a small gross becomes much larger than the rate on the quote. There is nothing improper in that, since setting up a sale costs the same whether it succeeds, but you need to see it before you sign rather than at settlement. If the contract has no minimum, this step is simply the multiplication.

Check one detail while you are here: whether the commission is calculated on the gross before or after card processing fees and sales tax. The contract should say. If it is silent, ask, and write the answer on your sheet.

Step 3: Subtract every separately charged fee

List every fee the contract allows, with the figure or the basis for each, and work out what it comes to at each of your three gross figures. Some fees are fixed and do not move with the gross: a flat clean-out, a permit, a set-up fee, a day of security. Some are a percentage and shrink with a poor sale: card processing, a specialist's commission on a single piece. The fixed ones are what make a poor outcome so much poorer, because they take the same dollars out of a smaller total.

If a fee is described as “expenses” or “as incurred” with no figure, you cannot put it on the sheet, and that is itself the finding: ask the company for a figure or a cap before you go further. Estate sale fees explained describes each of these fees and what a fair one looks like, and the contract checklist shows where each should appear in writing.

Step 4: Account for what does not sell

The house will not be empty when the sale ends, and the estimate has to allow for that in two ways. The first is cost: if the clean-out is charged by the load or by the hour rather than as a flat sum, a poor sale leaves more behind and costs more to clear, so the clean-out figure in your poor column should be larger than in your good one. Ask the company what it would expect to remove under each outcome and price it accordingly.

The second is value. Whatever is left has some worth, and the contract decides whose it is. If the company keeps unsold items, your estimate should count the value of what you are giving up, and it is fair to ask for a lower clean-out fee in return. If the items are donated, a receipt may be worth something at tax time; that depends on your situation and is a question for a tax professional, not this guide. If they come back to you, you have the cost of dealing with them yourself. Estate clean-out services covers how each arrangement is priced.

A worked example, on one sheet

Everything below is an illustration. The figures are round numbers chosen to show the arithmetic clearly; they are not typical, not an average, and not what your house will bring. Commission varies by region and by estate, and so does everything else on this sheet. Use the layout, not the numbers.

Suppose a company quotes a rate of 35 percent, a minimum commission of 2,500 dollars, a flat clean-out of 900 dollars, an agreed 150 dollars of extra advertising, and passes on card processing that, with roughly half the shoppers paying by card, comes to about 1.5 percent of the gross. The company expects a gross of 12,000 dollars. Poor is half that; good is half again more.

Three things are visible in this table that are invisible in a quote. In the poor column the minimum has replaced the percentage, so the company's share is not 35 percent but nearly 42. The fixed fees are the same 1,050 dollars in every column, which is a sixth of a poor gross and a seventeenth of a good one. And the share reaching the family moves from under two-fifths to nearly three-fifths across a range of outcomes that would all be within a walk-through's margin of error. The rate on the quote never changed; the result did.

Comparing two companies on the same sheet

The sheet earns its keep when you have more than one quote. Run each company through the same three gross figures, not through its own estimate, because a company can make its quote look better by expecting more. Use the lower of the estimates as expected for both. Then read across the poor row first. That row tells you which company protects you if the sale disappoints, and it is where a low rate with a high minimum and hourly clean-out often turns out to cost more than a higher rate with a flat clean-out and no minimum.

Beside the numbers, put two things the sheet cannot hold. Which company is likelier to reach a higher gross at all, which is mostly a question of its buyer list and how it advertises; and which will pay out sooner and with a fuller accounting. A few hundred dollars less on paper can be the better deal from a company that empties the house, gives you a donation receipt and pays within a week with an itemized statement. How to get and compare estate sale quotes covers running that comparison without wasting anyone's time, and flat fee vs. commission shows how to put a fixed-price quote on the same sheet.

What the estimate cannot tell you

A sheet like this is a tool for reading a contract, not a forecast. A few things sit outside it and deserve a sentence each.

• The gross is a guess, and the biggest lever on it is yours. The single most common reason a sale comes in at the poor column is that pieces were removed, donated or thrown out before the company arrived. What not to do before an estate sale is worth reading before any of this arithmetic.
• Timing has a cost the sheet does not show. A house carried for two extra months costs utilities, insurance and sometimes a mortgage. A company that can start sooner may be worth a higher rate.
• Taxes are outside the sheet. How the proceeds are treated depends on the estate, the items and the state, and rules vary; this is not tax advice. Do you owe taxes on estate sale proceeds gives the general picture and says when to ask a professional.
• The settlement statement is where the estimate is checked. Keep your sheet and compare it line by line with the statement when it arrives. When you get paid after an estate sale describes what that statement should show and what to do if it does not arrive.

What to do next

Draw the sheet before you speak to anyone, with three empty columns, so you know what you are asking for. Then describe the estate once and local companies will reach out to you, free, or browse companies near you and ask each one to fill it in. The commission guide explains the largest number on it, and how much an estate sale costs puts every other cost in context.

Frequently asked questions