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Many people, confronted with the overwhelming and unfamiliar task of disposing of personal property due to a family member or friend dying, have little or no idea what the key differences are between an auction and a tag sale (tag sales are sometimes called “estate sales”).
A tag sale involves, basically, a person hired by the fiduciary who will “price” each item with a tag, indicating that the item is available for sale at that price. Too, most tag sale attendees assume that there is room to negotiate, so a fair share of items marked with a price sell for less. Tag sales are sometimes spread over more than one day, where prices are systematically lowered on the second day, third day, and the like, to facilitate further sales. Typically, at a tag sale, a fair share of the items do not sell.
An auction involves, basically, a person hired by the fiduciary who will market and sell items “to the highest bidders.” Most auction attendees understand that items will be sold to the highest bidder, and that they will win any item where they outbid all others. At an auction of personal property, there is typically no set prices, and the market sets the ultimate selling price. Typically, at an auction, all the items sell.
Let’s begin with an overall statement in regard to the basic sales mechanism used by tag sales versus auctions:
- A tag sale uses a price discount model where items sell for, at most, the price tagged on the item, or less.
- An auction uses a competitive bidding model where items sell for whatever the highest bidder is willing to pay.
The other major difference between a tag sale and an auction is a tag sale service provider must know how to price every item being offered, or suffer less than optimal results. An auction service provider (an auctioneer) relies on the bidders to realize full price discovery.
Let’s use an example; an estate has a signed and marked Rookwood Vase dated 1921. However, this vase has an unusual scene on it, which is not documented in any Rookwood books or reference guides. At a tag sale, how is the tag sale service provider to price this vase? This presents the basic flaw in tag sale marketing:
- If this vase is under-priced, it will sell for less than market value.
- If this vase is over-priced, it will not sell at all.
This same vase at auction will sell. It will sell to the highest bidder. What will it sell for? Whatever it is worth — market value.
Then, there is the dark side of tag sale marketing:
- 1. Upwards of 80% of the items in a tag sale are sold below market value.
- 2. Upwards of 20% of the items in a tag sale will remain unsold.
- 3. 100% of the items will sell for no more than the “tagged” price.
- 4. Often times, items are under-priced and directed to other dealers, family or friends of the tag sale service provider.
- 5. Some tag sale providers over-price some high-end items until the final day of the tag sale, where they can contact other dealers, friends or family, and discount the item to them.
- 6. Almost always, the tag sale provider lacks the expertise to properly price all items, therefore full price discovery is not accomplished.
- 7. Regulation and licensing of tag sale service providers is almost nonexistent in the United States. A harmed seller would have no choice but to sue in court for damages.
- 8. Most tag sales lack sufficient marketing to attract the most qualified and interested buyers, therefore applying downward pressure on sales results.
An auction attracts large crowds of ready, willing and able buyers, through extensive widespread marketing, who have to compete to purchase items they desire. Full price discovery is accomplished, and nearly all items sell, and all items sell for market value.
When is a tag sale a preferred method of selling? An auctioneer had on his website the following two reasons why a client might prefer a tag sale over an auction:
- The X Factor: You are hesitant because of the “unknown factor” of what your merchandise will bring at auction.
- Control: You might like to have more control over the prices that you feel your merchandise should bring by providing some input or setting prices at which they are offered to the public.
We would ask the following questions about these two reasons:
- 1. What exactly is the “X factor?” In what market scenario does someone know what their item will sell for? At auction, it sells to the highest bidder. In a tag sale, it basically sells for less than market value, or doesn’t sell at all.
- 2. Control? How can someone control the price at which something will sell? Items sell only if a ready, willing and able buyer agrees with the price. Here again: At auction, it sells to the highest bidder. In a tag sale, it basically sells for less than market value, or doesn’t sell at all.
I would submit that a tag sale is never preferable to an auction. With a tag sale providing that an items will sell for less than market value, or not sell at all — an auction, on the other hand, virtually guarantees market value, and sellers can place reserves or minimums on items, if they so desire, further assuring them an item doesn’t sell below a certain amount.
We brought up a 1921 Rookwood Vase earlier in our story. This vase was purchased at a tag sale for $30 and sold six months later at auction for $3,500. This type of thing happens all the time at tag sales, estate sales, garage sales, and yard sales — where an item is sold at auction later for more. In fact, this would hardly be a record.
ABC News reported in October, 2009 of Teisha McNeal of Shreveport, Louisiana finding a Picasso painting for $2 at a yard sale, and later discovering auction estimates of nearly $2 Million. See the entire story here: http://abcnews.go.com/GMA/Weekend/finding-art-Picasso-treasure-trash/story?id=8904941
How does an auction compare to a tag sale or estate sale? Quite favorably.
Mike Brandly, Auctioneer, CAI, AARE has been an auctioneer and certified appraiser for over 30 years. His company’s auctions are located at: Mike Brandly, Auctioneer, Keller Williams Auctions and Goodwill Columbus Car Auction. His Facebook page is: www.facebook.com/mbauctioneer. He is Executive Director of The Ohio Auction School.
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Terry Mangum said:
Very well said Mike, may I quote your article on our web site? (Most certainly will give you full credit and a link to your site.)
mbrandly said:
Thanks, Terry. Yes, certainly use as you wish. Mike
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Heather Kaspar said:
GREAT post!!
-Heather
Martha said:
Next door home is selling at an auction sale. Zillow has home valued $265k. Do bidders look this information up and keep bidding until the price will be, both a good investment and/or allow a re-sale good deal?
Does it mean that the market value will be met at auction?
Thank you,
Martha
Mike Brandly, Auctioneer, CAI, AARE said:
Martha,
I think it’s likely that market value will be realized at the auction, if the auction is adequately advertised and property conducted. However, that doesn’t mean that it will demand $265. Actual market value is what the home demands while Zillow’s estimate (or any other estimate) is just that — an estimate or more accurately a guess as to what market value is.
Jacob said:
Mike: how do fees charged at the end compare between a tag sale and an auction?
Mike Brandly, Auctioneer, CAI, AARE said:
As I’ve traveled around the United States, I’ve found that the fees for an auction are generally less than the fees charged by most tag sale companies.
B. Schumacher said:
From what i have seen over the last 20 years, fee charged by auction style far outwiegh tag sale fees, property owners will always put more money in their pockets by doing a tag sale with a knowledgible company, tag sales are a huge trend and definatly the way of the future! Customers prefer them as they don’t have to sit at an auction all day.
Mike Brandly, Auctioneer, CAI, AARE said:
I’ve traveled all over the United States. It appears to me that auctioneers and tag sale personnel charge the seller very similar rates in terms of commission.
The more tangible difference is in net return and overall dispersal.
Prices at tag sales are often less, and a considerable amount goes unsold. Therefore, even with a lower commission, the cost is greater — and it’s not “all gone.”
Carl Schwarz said:
There is no need for the owner to sit at the auction. In fact, I don’t recommend it.
Deb k said:
You didn’t mention the fact–and it is fact– that too many auctioneers divert items, have buyers at the auction or just plain steal from people. That’s why I did a tag sale for my moms stuff, though later I did find an honest auctioneer to sell the rest of the estate.
If I had him at first, I’m sure I would’ve doubled or tripled my take. But I was afraid! There are a lot of bad apples here in central Indiana, sadly.
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William said:
I really believe that it depends on the items being sold, I routinely see standard furniture, decorative items and appliances sell for pennies on the dollar of what I get for them at my estate sales vs. auctions. It seems that 90% of the items in 90% of the homes are along these lines. However, when an item is of higher quality or even ‘unknown’, I also agree that auctions can be a better venue. When I research my items, I typically look at auction results and price accordingly, auction results vary greatly on the same items depending on the auction house, location and date, whereas at an estate sale I only need one buyer (not two) to appreciate the item in question and pay my asking price..
Mike Brandly, Auctioneer, CAI, AARE said:
Largely, it would depend on what duties that Ringman was performing. Relaying bids? Probably not. Discussing the property, financing, etc. then probably so.
Jana said:
Where would I find a reputable auctioneer?
Mike Brandly, Auctioneer, CAI, AARE said:
Where are you located? Are you looking to buy or sell?
Jerry E Wetzel said:
HA, funny stuff. And your expertise on estate sales and estate sale company qualifications/knowledge is based upon what? I’ve been running an estate sale company full time for over 9 years. This after a career in antiques and sales and marketing. Most of what you state is incorrect or at least not nearly correct. I recently took one of my estate/tag sale clients to an auction to see the prices different pieces “command”. She was shocked at how low this sold for. Mahogany chest of drawers, sold at auction for $25. I would have tagged and gotten at least $125. And yes, it was a quality auction house.
Carl Schwarz said:
One other consideration is that tag sales usually take place on the premises of the home. Crowd of people you don’t know and can’t control. Auctions usually at the auction house. Many auctioneers will do both–have a monthly auction for more valuable items, and tag sale at his premises for the lower-value items, donating the rest (with tax deduction) and trashing what is left.
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Rebecca Gardner said:
It’s helpful to know that all the items usually sell at an auction since there’s no set starting price. I want to do what I can to help my family clear out my deceased aunt’s estate since she never married and didn’t live nearby. Thanks for sharing this info and helping me see that an estate clearance auction might be the best fit in our situation.
Zoe Campos said:
Thanks for helping me understand the differences between an auction and a tag sale. Still, my favorite part is where you mentioned that almost all items involved in an auction would be typically sold off. It might be a good idea to look more into it and see if we can include some of our real estate properties in these events.
Shaylee Packer said:
It was mentioned that estate sales often times will last a few days in order to be able to sell more items. My grandmother recently passed away, and she had two houses full of things. Is there a way to hire someone to come in and objectively price the items to sell at an estate sale?
Mike Brandly, Auctioneer, CAI, CAS, AARE said:
There are people who could possibly do that, but those items are only worth (market value) what you can get for them, and thus an auction might be a better solution.
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