The headline of the consumer complaint post was brash: “They literally stole our whole house: they sold $42,527 worth of items and gave us a check for $1,682.” The details of this homeowners’ plight were tragic: he had been “ripped off” by an estate sale company.
According to the story on ripoffreport.com (specific company/client has been redacted due to liability concerns), the complainant had a 10-room, five-bedroom home filled with expensive furnishings, including dozens of pieces of Waterford crystal, Hutschenreuther fine china, unique decorative pieces, a piano and fine furniture. The estimated market value of the contents was $42,527. Said the homeowner: “On the (liquidator’s) final report, 80 percent of the items were missing and unaccounted for—they just disappeared. They offered me a cash payment of $1,682 for the entire household and lame excuses and blatant lies for the missing items that I directly questioned them on.”
While I cannot comment on the veracity of the complaint, and I haven’t heard the liquidator’s side of the story, complaints against estate sale liquidators are commonplace and increasing at a rapid rate. The estate sale business is booming, and more new companies entering the field will result in still more complaints from consumers.
The EstateSaleNews.com reports that there were seven estate sale companies operating in a northern New Jersey area in 2007. Today, there are more than one hundred such companies operating in the same area. Such rapid growth is consistent throughout the United States. According to the Department of Health and Human Services, the 40 million citizens over the age of 65 rose 15 percent from 2000 to 2010. By 2030, it is expected that the number of Americans older than the age of 65 will rise to 72 million. The rising demand for estate liquidation services has caused many companies to enter the field, and many more will be added in the next decade.
Unfortunately, the estate liquidation industry is largely unregulated. Estate tag sale liquidators are not required to be licensed (other than having a local business license). Having a business license is not an endorsement of a company’s ability to effectively liquidate an estate; it is simply a legal registration so that the local municipality can send the business a tax bill. Some municipalities may require estate sale companies to be bonded, or to have a permit for a local sale. What is missing entirely from this formula—and sorely needed—is for estate sale operators to be licensed fiduciaries.
A fiduciary agent is “a person to whom property or power is entrusted for the benefit of another.” A stockbroker is a fiduciary agent; so are attorneys, real estate brokers, insurance agents and auctioneers (in 30 states). Fiduciary agents must take state-approved educational courses and pass a test on legal, ethical, and professional “best practices” in order to obtain a license. Licensed professionals must keep accurate records and are held responsible for funds and property entrusted to them. Licensees who abuse the standards set for their profession can lose their license and face fines, penalties, civil suits or jail time. In other words, if a fiduciary license is required in your state and you don’t have one, you can’t operate a business.
Estate tag sale operators are almost never licensed fiduciaries (auctioneers excluded). There is no accreditation, test or certification needed in order to open an estate tag sale company; anybody can do it. Operators who claim to have accreditation and certification have likely paid a website operator for an online course of study and to provide credentials. Such “accreditation” websites are not government sanctioned and have no authority to enforce standards or invoke penalties. Since most such websites require an annual fee in order to maintain a member’s credentials, it’s unlikely that they would take any action that would cost them a member’s fee.
Just as licensed fiduciaries do, estate tag sale operators must handle property, determine values, collect money, keep accurate records, maintain escrow bank accounts and remit proceeds to a client. Yet, there is no one to hold such operators accountable for their actions. Often, property owners aren’t around for setup and sale, and have no idea what property should actually sell for. Some further comments from a consumer complaint site about estate tag sale companies and their responsibilities state that certain estate tag sale companies:
• “…do not pay her clients. She has ripped off multiple customers and is a habitual liar. She could easily pay me the monies owing but has chosen not to. She is a fraud. She now thinks she can run and hide by changing the name of her online business.”
• “…for three months he refused to return our calls. Only after being contacted by a lawyer did he send us a small payment, AND NO ACCOUNTING. This payment was less than 8 percent of our estimated share AFTER his commission.”
Finally, from the website of the Minnesota Attorney General:
• “Three months after the estate sale, Jane still has not received the proceeds of the estate sale… and has received only minimal (reconciliation) paperwork. The company made vague excuses about the ‘delayed’ payment and accounting documents, and has now stopped returning her calls altogether.”
In all the above cases, a licensed fiduciary acting in such a manner would lose his/her license and be prevented from operating a business.
In fairness, let me state that there are more reputable estate tag sale companies in America than there are bad ones—by a huge percentage. Also, it’s true that some auctioneers are crooks as well, just as there are crooked lawyers and stockbrokers. The difference between licensed and unlicensed fiduciaries is that with the former a consumer has recourse to a state agency or professional organization, and may be able to put an errant operator out of business.
If you need to have an estate liquidated and you don’t know personally know anyone in this line of work, what do you do? Here are a few suggestions; apply them as your time and circumstances allow:
• States that require auctioneers to be licensed will have some sort of regulating agency. Here in Virginia it’s the Department of Professional and Occupational Regulation. The websites of such agencies often have a “License Lookup” feature where consumers can investigate any complaints against a licensee;
• Perform a Google search for the company in question. These days, you can find information on any established company on Google. If the company you are interviewing can’t be found on Google, don’t hire them;
• Attend several sales in your area; watch how the property is secured, displayed and priced. Note how helpful the staff is, and how the money is handled. If possible, locate the property owner and get their opinion about the company in question.
I know that my stance on licensing has annoyed some estate tag sale operators. My advice to them is this: if your state requires auctioneer licensing, go to auctioneering school, study hard, and pass the state test. Then you’ll be a licensed fiduciary and will be able to offer your clients a level of confidence that your competitors can’t offer. Along the way, you’ll learn some things about fiduciary responsibility that you won’t learn anywhere else. And, getting an auctioneer’s license doesn’t mean you will have to call bids at your sale; you can operate “as usual.” Both you and your clients will benefit.
Article by Wayne Jordan previously published by WorthPoint.com