Auctions, House Clearances and Estate Sales: Where the Trade Buys

This is written to be used rather than admired. Each section below is a decision about the upstream supply of used goods, and each one has a default.

The chain from house to shop

When a household is cleared, the contents typically go to a clearance company, a general auction, a charity, a skip or some combination of all four. The clearance company's contract is usually to empty the property by a date, and value recovery is a secondary benefit rather than the objective. Anything with obvious resale value is separated first; the rest is disposed of, because storage costs more than most items are worth.

General auctions then sell the separated goods in mixed lots to dealers, who sort them again and place items into the market where each sells best. By the time an item reaches a shop window it may have been handled four times, and each handling has been paid for.

Why mixed lots exist

Auctioneers sell in lots because cataloguing individual low-value items costs more in staff time than the items realise. A box containing one good piece and thirty poor ones is efficient for the auctioneer and is where dealer margin is generated.

Sorting the donation bags, the buyer is being paid, in effect, to do the sorting, storage and disposal the auction house declined to do. That disposal cost is genuine, and new entrants routinely underestimate what it costs to get rid of the remainder of a lot. Buying a mixed lot without a plan for the unsellable eighty per cent is the standard beginner's mistake.

Specialist versus general sales

Specialist auctions attract specialist buyers, which is why a piece sells for more in the right sale than in a general one. The corollary is that the general sale is where an underappreciated item can be bought cheaply, because the people who would pay more are not present. This gap between venues is the main structural inefficiency in the used market and is what most dealing exploits.

Sorting the donation bags, online bidding has narrowed it considerably by letting distant specialists bid in provincial general sales. It has not closed it, because listings still depend on someone describing the item correctly enough to be found.

Fees on both sides

Auction houses charge the seller a commission and the buyer a premium, and the two together can be a substantial share of the hammer price. Additional charges for lotting, photography, storage, unsold-lot handling and payment processing appear in terms and conditions rather than on the estimate. The practical consequence is that the hammer price is not what either party actually pays or receives.

Buyers who calculate their maximum bid without including the premium routinely pay more than they intended to.

Read the terms once for any auction house you plan to use repeatedly, since they differ more than people expect.

Estate and probate sales

Selling the contents of a home after a death is emotionally and logistically difficult, which is why families frequently accept the fastest offer available. That urgency is precisely why goods enter the market below value, and it is worth being conscious of when buying at this stage of the chain. Executors in many jurisdictions have a duty to obtain reasonable value, which is why formal valuations exist for anything substantial.

Items of real value are usually identified by a valuer; ordinary household goods almost never are. The interesting buying is therefore in the ordinary goods rather than in the pieces everyone has already looked at.

Volunteers cost an organisation time to train, so short-term help is not always help.

Whether to buy upstream at all

Buying nearer the source is cheaper per item and requires transport, storage, sorting time and a route for disposing of what does not sell. For a household buying for itself, the saving rarely justifies the volume, since you only need one of most things.

It makes sense for a specific search, for anyone furnishing an entire property at once, or for a group buying collectively. Community reuse projects use exactly this route, which is how they obtain stock at a cost that lets them supply it cheaply. For everyone else, the shop floor is where somebody else has already absorbed the sorting cost on your behalf.

The takeaway

Every hand an item passes through has been paid; buying upstream means doing that work yourself.

Passed on beats recycled, and both beat replaced.