How to Start an Estate Sales Business
The purpose of estate sales businesses is to liquidate clients’ estate assets for commission. It can be a highly lucrative business, but to set one up effectively, you need the right approach.
This post discusses how to start an estate sales company, including how long it takes and whether you need a license. We also explore how much money you could potentially make.
How to Start an Estate Sales Company
Starting an estate sales company is surprisingly easy. Startup costs are low, and unlike many other related business opportunities, there are relatively few regulatory or compliance requirements. You can work when you choose and, if you do well, you can quite easily scale your business model.
To set up an estate sales company, you will need to:
- Plan your business model and work out your costs, including expenses for labor, advertising, and office space. Most people can start an estate sales business for less than $10,000.
- Form a legal entity, usually an LLC
- Register for taxes with the IRS and get your EIN number
- Open your business bank account and get a credit card to improve your cash flow
- Hire an accountant to keep track of your business accounting
- Obtain the permits and licenses you need, depending on your state.
- Draft a service agreement you can share with clients before working with them
- Get comprehensive insurance for your business, including General Liability Insurance and Workers’ Compensation Insurance if you hire employees
- Promote and market your brand, create your business website, and set up your phone system so you can take calls from multiple customers simultaneously
How Much Money Can an Estate Sales Company Make?
How much money an estate sales company makes depends on the value and volume of merchandise sold. Most operators charge their clients between 25 and 50 percent of the value of their items, with an average commission of 38%. Therefore, if you sell $50,000 worth of property for a client, you could potentially make anywhere from $12,500 to $25,000. And that’s just one client. If you have a dozen clients on account in any given month all selling similar volumes, you could generate between $300,000 and $1.3 million per year.
Do you need a license to have an estate sales company?
Like any other business, you may be required to obtain licenses and permits to start, the state and city the business is located in will play a factor in this. Some of the potential requirements are as follows:
- Health and safety licenses from the OSHA
- Doing business as (DBA) permits
- Local and city-based permits
How long does it take to start an estate sales business?
If you already have existing business structures, such as an LLC, insurance, and the relevant permits, you might be able to start operating your estate sales business immediately. If these aren’t in place, then the amount of time it takes to get going will depend on the bureaucracies serving you. Most entrepreneurs in this segment are able to begin generating sales legally within three months.