The estate sale industry is growing, with a market size of $120 billion in 2017 to $477 billion in 2022, and is estimated to be worth $1 trillion by 2030. What strategies can leverage the new estate sale businesses to thrive in a competitive, evolving marketplace?
The estate sale business sector has grown from a market size of $120 billion in 2017 to $477 billion in 2022 and the market size is estimated to be worth $1 trillion by 2030.
In the United States, the number of real estate brokers and sales agents is projected to grow by 2% from 2023 to 2033, adding approximately 10,100 jobs over the decade. This growth is driven by the ongoing demand for real estate services.
Starting an estate sale business can be an exciting opportunity for those interested in helping others manage transitions and offering valuable services to the community. However, launching a successful estate sale business requires careful preparation, a broad skill set, and a strong understanding of the industry.
The estate sale industry caters to individuals going through significant life transitions, including downsizing, relocation, divorce, or the liquidation of an estate after a loss. Given the ageing population and the rising interest in secondhand goods, the industry has seen steady growth.
Despite increased competition, this field remains appealing due to relatively low barriers to entry. However, rising operational costs have caused a decrease in profit margins, making efficient business management essential.
This comprehensive guide outlines the steps to start and grow an estate sale business, from initial market research to obtaining licences and attracting customers.
Calculating initial startup costs
Starting an estate sale business involves several initial expenses. These include:
- Marketing and promotion: Launching an estate sale requires visibility, especially when starting out. Advertising can cost between £150 and £750 for online ads, social media promotions, printed flyers, and signage.
- Licensing and insurance: Securing the necessary permits and insurance is critical. Licensing fees can range from £50 to £400, while general liability insurance typically costs between £400 and £800 annually, depending on location.
- Office space and equipment: Many businesses start from home, but as they grow, renting a small office or storage space may be beneficial. Office rentals vary from £300 to £1,000 per month. Basic supplies like pricing tags, a point-of-sale (POS) system, markers, and display tables are essential.
With careful planning, an estate sale business can generally start with an investment under £8,000, making it accessible for new entrepreneurs.
Earning potential
Most estate sale companies generate income by charging a commission on total sale earnings, typically ranging from 20% to 50%. Commissions cover various services, including pricing, promotion, event management, and post-sale clean-up. Smaller estates might yield a lower commission, while higher-value estates with valuable items like antiques or art can attract higher percentages.
To improve profitability, some businesses offer additional services, such as cleaning, donation coordination, or rubbish removal. Additionally, specialising in high-value estates can allow for premium commissions, though this requires expertise in appraisal and building a network of collectors or industry contacts.
Step-by-step guide to starting an estate sale company
Step 1: Develop your business plan
Begin by conducting thorough market research to assess the demand for estate sale services in your area. This includes identifying local competitors, defining your target customer base, and determining the unique services you’ll offer. Your plan should outline:
- Market demand: Investigate the demographics and estate sales in your area to understand potential demand, focusing on clients facing life transitions (downsizing, relocation, etc.).
- Target audience: Decide if you’ll serve specific niches, such as high-value estates, smaller sales, or antique collectors. Specialising can help attract a loyal client base.
- Competitor analysis: Research local competitors’ services, pricing, and promotions to identify market gaps and best practices.
Step 2: Choose a business name and register your company
Choosing a memorable name that reflects the services offered is essential for an estate sale business. Once a suitable name is selected, it is advisable to check its availability through the state’s business registry and on social media platforms. Registering the business as an LLC is recommended, as it separates personal assets from business liabilities, offering legal protection and enhancing the company’s credibility.
Step 3: Register for taxes
The next essential step for an estate sale business is registering for taxes, which requires obtaining an Employer Identification Number (EIN) – similar to a Social Security Number, but for a business.
If the LLC was set up through a specialized formation service, this step might already be included for a small additional fee. However, it’s still important for business owners to understand their tax obligations, as these can vary by location.
In general, most businesses need to pay income tax, sales tax, and employment taxes at the federal level. Estate sale businesses, in particular, may need to handle self-employment taxes (for owner-run businesses) or payroll taxes (if they have employees). Additionally, depending on the location, city or county taxes may also apply.
Because business taxes can be complex, it is advisable to consult a professional accountant or business attorney for guidance.
Step 4: Obtain the necessary equipment and supplies
Running an estate sale requires reliable tools and systems for efficient operations:
- POS system: A POS system is essential for handling transactions smoothly, whether payments are by cash or card.
- Appraisal tools: If you’re appraising items yourself, consider tools like magnifying glasses, jewellery scales, and possibly security equipment for valuable items.
- Pricing and inventory tools: Tags, markers, and stickers are helpful for clearly labelling items. An inventory management system will assist in tracking items and monitoring sales.
- Transport: A vehicle is essential for transporting items and equipment, though a rental service can be used as an alternative.
Step 5: Assemble a team
An estate sale business requires significant planning and manpower, especially for larger estates. Consider the following roles:
- Estate organiser: Responsible for sorting, pricing, and staging items, this person is crucial to the success of each sale.
- Appraiser: For valuable items like antiques or jewellery, hiring an in-house appraiser can add value and attract higher-end clients.
- Sales staff: Storefront operators and cashiers are needed to handle the POS system and assist customers during sales.
Step 6: Build your network
Building strong connections with other professionals in the estate sales industry can greatly benefit a business. Networking not only provides useful insights and best practices but also helps to build credibility and trust for the company.
To start networking, joining a professional group like the National Estate Sales Association (NESA) or similar local organizations is helpful. These groups offer resources, education, and networking opportunities through events like webinars and conferences, providing a chance to meet experienced industry professionals.
Attending trade shows, auctions, and estate sales conferences is also valuable. These events offer opportunities to connect with others, potentially leading to partnerships, referrals, or mentorship.
Social media platforms like LinkedIn, Instagram, and industry forums are other useful places to network. Many estate sales professionals actively share advice and discuss trends on these platforms, making it easier to stay connected and informed.
Effective networking takes time, but building relationships with industry professionals can provide a strong foundation and valuable support for an estate sale business.
Step 7: Obtain licences and permits
Before conducting any sales, business owners should ensure they have obtained all the necessary permits and licences.
- Sales tax permit: Required for collecting sales tax, which is mandatory for all sales of physical products.
- Zoning permit: If you’re operating out of a physical location, a zoning permit may be necessary, particularly for residential areas.
- Home occupation permit: If working from home, this permit ensures that your operations comply with local residential business laws.
- Secondhand dealer licence: Some areas require a licence to resell second hand goods, which helps to regulate the resale market.
Step 8: Secure business insurance
Insurance is essential even for businesses structured as an LLC. Common types of insurance for estate sale businesses include:
General Liability Insurance: General liability insurance is essential for estate sale businesses because it protects against claims related to injuries, property damage, or personal harm that could happen during a sale.
For example, if a customer slips and falls or a valuable item in the home is accidentally damaged, this insurance can help cover medical or legal costs. The average cost for general liability insurance is around $42 per month or $504 per year, though this amount can vary based on specific business risks.
Errors and Omissions (E&O) Insurance: Also called professional liability insurance, E&O insurance covers legal costs if a customer claims that the business provided poor or incorrect services, such as a wrong appraisal or mishandling of valuable items.
For estate sale companies that handle appraisals and pricing, this insurance can be valuable protection. The cost of E&O insurance generally ranges from $500 to $1,500 per year for small businesses, depending on risk level and coverage needs.
Commercial Property Insurance: Commercial property insurance protects the physical assets of an estate sale business, such as equipment, tools, and office space, in case of damage from fire, theft, vandalism, or natural disasters.
Annual costs for this insurance typically range from $500 to $2,000, though prices can vary based on factors like location, risk profile, and the value of the property.
Workers’ Compensation Insurance: If the estate sale business has employees, workers’ compensation insurance is usually required by law. This coverage helps with medical costs and lost wages if an employee is injured at work.
The average cost for workers’ compensation insurance is around $45 per month, though this can vary based on factors like payroll and location.
Commercial Auto Insurance: For estate sale businesses that use vehicles to transport items or equipment, commercial auto insurance is crucial. It covers damages, liability, and other costs from accidents involving business vehicles.
Without this insurance, an accident could result in large expenses for repairs, medical bills, or legal fees. Small businesses typically pay between $100 and $500 per month for this coverage, depending on factors like the number of vehicles and driving history.
Final thoughts
Starting an estate sale business requires dedication, organisation, and effective management. By following essential steps and ensuring compliance with all legal and financial requirements, entrepreneurs can build a successful business that meets clients’ needs during transitional times. With thoughtful planning, strong networking, and excellent service, an estate sale company can become a trusted resource within the community.
Key takeaways
- The estate sale industry has expanded significantly, with an estimated value of £1 trillion by 2030, driven by demographic trends and demand for secondhand goods.
- Start-up costs for an estate sale business can be kept under £8,000, covering essentials like marketing, licences, insurance, and equipment.
- Businesses earn through commissions, typically between 20-50% of sales, with opportunities to specialise in high-value estates or additional services to boost profitability.
- Conduct market research to determine demand, target audience, and competitors, and craft a unique business offering to stand out.
- Compliance requires various permits (e.g., sales tax, zoning) and insurance types, such as general liability and E&O, to manage legal and operational risks.
- Building connections in the estate sale industry, joining professional associations, and attending industry events can foster partnerships and strengthen business credibility.
Himani Verma is a seasoned content writer and SEO expert, with experience in digital media. She has held various senior writing positions at enterprises like CloudTDMS (Synthetic Data Factory), Barrownz Group, and ATZA. Himani has also been Editorial Writer at Hindustan Time, a leading Indian English language news platform. She excels in content creation, proofreading, and editing, ensuring that every piece is polished and impactful. Her expertise in crafting SEO-friendly content for multiple verticals of businesses, including technology, healthcare, finance, sports, innovation, and more.
