Flat Fee vs. Commission Estate Sale: Which Is Better?

How each model works

Under a commission, the company keeps an agreed percentage of gross sales and pays you the rest, less any separately itemized costs. You pay nothing up front. If the sale brings in fifteen thousand dollars at a rate of thirty-five percent, the company keeps a little over five thousand and you receive the balance. Quotes commonly fall somewhere between roughly a third and a half of gross, and the rate varies by region and by estate; the guide to commission rates explains what moves it.

Under a flat fee, the company names a fixed sum for a defined piece of work before anything is sold, and that sum is what it is paid whether the sale takes in five thousand dollars or fifty. The fee is usually set after a walk-through and reflects the company's estimate of the days of labor involved. It may be paid in advance, at settlement out of the proceeds, or in parts.

Most companies work on commission, and most estates suit it. Flat fees are less common and tend to be offered for particular situations, which the rest of this guide describes. Some companies offer a hybrid: a smaller flat fee plus a lower percentage, or a commission with a different rate on the most valuable items.

When commission favors the family

Commission is the default for good reasons, and the strongest one is that the company is paid only if the sale succeeds. Its money comes from the same place yours does, so its interest in a well-advertised, well-priced, well-staffed sale is the same as yours. That alignment is the whole reason the model dominates the trade.

• You do not know what the contents are worth. This describes most families. A commission means you are not guessing at a fair price for the company's work before anyone has seen what will sell. If the sale disappoints, the company's fee shrinks with it.
• There is no cash to pay up front. The estate may have no liquid funds until the house sells. A commission is paid out of the proceeds and costs nothing before the sale.
• The estate is ordinary. A house of everyday furniture, kitchenware, tools, clothing and decor is priced item by item and sold to hundreds of buyers over three days. That is labor the company is paid for through the percentage, and there is no single item large enough to distort the arithmetic.
• The company is good at drawing a crowd. The percentage is a share of the gross, and a company with a big mailing list and a habit of photographing every room sells more, and under commission you share in that.

The weak point is a small estate. Below a certain size, the percentage does not cover the company's fixed cost of setting up, and companies protect themselves with a minimum commission. The guide to minimums and small estates explains how a minimum works and what to do when the estate is too small for any commission company to take.

When a flat fee favors the family

A flat fee suits an estate where the percentage would pay the company far more than its work is worth, or where the work is a defined task rather than a whole sale.

• A few items account for most of the value. If a painting, a collection or a single piece of furniture is likely to bring in a large share of the gross, a percentage on that item rewards the company beyond the labor of selling it. A flat fee for running the sale, with the top pieces sold separately or at a lower rate, keeps more of that value with the estate. The guide to finding out whether something is valuable is how you learn whether this is your situation before you sign anything.
• The scope is defined. Some companies will price, tag and stage the house for a fixed sum and leave the sale days to you, or will run a one-day sale of a small, known set of items. That is a flat fee for a defined piece of work, and it can be the best of both: professional pricing without a percentage on every sale.
• The estate is too small for commission. When commission companies decline, a flat-fee service for a small sale, or a flat-fee clean-out with a few pieces sold separately, may be the only practical route. Knowing that early is better than waiting for a call that never comes.
• You need a known figure. An executor answering to several heirs, or a family with a fixed budget, may prefer a cost that is settled before the sale over one that depends on the outcome.

The condition on all of these is trust. A flat fee is paid whether the sale goes well or badly, so you are relying on the company's professionalism rather than its self-interest. That is a reasonable bet with a company whose references you have called and whose past sales you have looked at. It is a poor one with a company you found yesterday.

The incentive problem in each model

Every way of paying somebody creates a reason to behave in a particular way, and it is worth being clear-eyed about what each model encourages, because the company has thought about it even if you have not.

Commission rewards gross, not net, and rewards speed. The company earns the same percentage on every dollar, so it has no particular reason to hold out for the best price on any one item. On the last afternoon, when the house is half-empty, a company on commission would generally rather sell a piece at half price than not sell it, because half of something is more than all of nothing. That is usually your interest too, but not always: a family that would rather keep an heirloom than see it sold for twenty dollars needs to say so in advance.

A flat fee rewards finishing. The company's income is fixed, so every extra hour of research, staging or advertising is a cost to it with no return. A conscientious company does the work anyway; a less conscientious one prices quickly, advertises minimally and gets through the three days. Nothing in the arrangement stops that except the company's reputation, and you have to check the reputation yourself.

Hybrids split the difference and add complexity. A smaller flat fee plus a lower percentage gives the company a floor and a stake in the upside, which is a fair structure. A sliding scale, where the rate falls as the gross rises, does something similar. Both are fine as long as you can compute the result yourself at any total. If a structure is presented as too complicated to write down, it is doing work you cannot see.

What else changes the arithmetic

The headline number in either model rarely settles it, because the same three things sit underneath both. The guide to estate sale fees covers each in detail.

• Minimums. A commission with a minimum behaves like a flat fee on a poor sale: the company is paid the percentage or the minimum, whichever is larger. A quote with a low rate and a high minimum is not the low-rate quote it looks like.
• Separately charged costs. Set-up fees, clean-out, card processing, advertising extras, permits and disposal can be charged under either model. Two quotes with the same fee or the same rate can differ by a thousand dollars once the house has to be emptied.
• What happens to the unsold. Under either model, the contract should say who owns what does not sell and what it costs to remove it. A company that keeps the unsold items has, in effect, an extra fee whose size nobody knows.

Then there is the question neither model answers: how much will the sale bring in? A company that sells more at a higher rate can leave you with more than one that sells less at a lower rate, and the same is true of a flat fee. Ask each company what it expects the sale to gross and why, and look at its past sales to see whether its expectations have been right before.

How to compare the two on one sheet of paper

The reliable way to compare a flat fee against a commission is to work out what each would leave you with under the same assumptions, at three different outcomes. It takes ten minutes. The guide to estimating what you will actually receive walks through the same arithmetic with more detail.

1. Write down three gross figures. A poor outcome, the lower of the companies' expectations, and a good outcome. Use the same three for every quote.
2. For each quote, at each figure, take off the company's fee. For a commission: the percentage or the minimum, whichever is larger, with any sliding scale applied. For a flat fee: the fee itself.
3. Take off every separately charged cost the company has named. If it has not named them, ask, and do not finish the sheet until it has.
4. What is left is your net, three times per quote. Put them side by side.

Here is what the sheet looks like for two illustrative quotes on one estate: a commission of thirty-five percent with a fifteen-hundred-dollar minimum and a four-hundred-dollar clean-out charge, against a flat fee of three thousand dollars with the clean-out included. The figures are made up to show the method, not what any company charges.

The sheet shows what the two words hide. At a poor outcome the commission protects you, because the company's fee shrank with the sale. At a good outcome the flat fee leaves considerably more with the estate. Somewhere between is a crossover, and the question is which side of it your sale is likely to land on. If the outcome is genuinely uncertain, the commission is the safer bet; if the company's own expectation is well past the crossover, the flat fee looks better, provided you trust the company to work as hard for a fixed sum. Your numbers will differ; the shape of the reasoning will not.

Questions to ask about either model

Put these to every company. A company that has good answers ready has been asked before and has nothing to hide; the guide to getting and comparing quotes explains how to collect them without wearing yourself out.

• Is your fee a percentage, a flat sum, or a combination, and can you write it down for me?
• Is there a minimum, and how much is it?
• What costs are charged separately, and how is each one calculated?
• What do you expect this sale to gross, and what was the gross at your last three sales of a similar house?
• If an item turns out to be worth far more than expected, what happens to it and what do you earn on it?
• Under a flat fee: when is it paid, and what if the sale is cancelled?
• What happens to what does not sell, and who decides?
• What will the settlement statement show, and can I see an example from a past sale with names removed?

Whichever model you choose, the answers belong in the contract. The contract checklist shows where each one goes and what is missing when it is not there.

What to do next

Get two or three quotes and put them on one sheet at three outcomes. Before you do, find out whether anything in the house is worth enough to change the arithmetic, because that is what decides which model suits the estate. Then read each contract against the checklist.

When you are ready to hear from companies in your area, describe the estate once and local companies will reach out to you, free. You can ask each one how it charges in the first conversation, and a company that works on either model will tell you which it recommends for your house and why.

Frequently asked questions