When helping clients declutter and downsize, they often wish to sell possessions that they no longer need or want. When placing items for sale, there is often confusion about an item’s value and worth. First, let’s look at a few definitions.

Definitions

Market Value

This is simply the most probable price that people pay for an item in an open marketplace at a specific point in time. For example, a new car has a sticker price (market value) of $60,000.

Fair Market Value

It is like market value, but it considers economic activity. It is the price that prospective buyers and sellers agree to when they are knowledgeable, behave in their own best interest, and are not under pressure to complete the transaction. Using the car example above, a dealer may sell the car to an interested buyer at $57,000 after negotiation.

Appraised Value

This is a professional, unbiased estimate of what an item is worth. The appraised value may be different from the fair market value. Appraisers can estimate the fair market value if you want to sell your item or the replacement value so you can purchase adequate insurance coverage.

Replacement Value

This is the cost to replace your item with an exact (or as close as possible) replacement. For example, if your antique Tiffany lamp is destroyed, you could replace it with another antique Tiffany lamp. There are other types of replacement values that insurance companies often use.

• New: If your antique Tiffany lamp is destroyed, you can replace it with a brand-new Tiffany Lamp.
• New, less depreciation: If your two-year-old car were destroyed, you would get a replacement car that was the same value as your two-year-old car.
• Reproduction: If a moving company destroyed one chair from your antique dining suite, the insurance company would pay to build a replica using the same techniques and materials as the original.

Liquidation Value

This is the price of an item when a sale is rushed. The buyer needs to sell items as quickly as possible and is motivated to accept prices lower than fair market value. We see this often when companies undergo financial restructuring or are facing bankruptcy.

Salvage and Scrap Value

Salvage value is the value of the item’s remaining, usable parts. You can often sell older working appliances or cars for parts. Scrap value means that only the materials used in the item’s construction have any value. For example, you could sell the steel cabinet of an old washing machine for scrap metal.

Sentimental Value

This considers the emotional attachment to that item. The owner determines how much it is worth. I wrote about one of my most treasured possessions – a small statue my father’s customers gave him. What is its value and worth? The statue’s fair market value is probably zero – worthless to anyone else. But to me, the figurine is priceless. I wouldn’t sell it for thousands of dollars.

Worth

There’s an old saying that goes something like, “You can say your item is worth whatever you want until you want to sell it, then it is worth whatever someone will pay for it.”

What we value personally is not what someone else or the marketplace values. And the price you paid for an item a few years ago, or even a few weeks ago, is not the same amount as you would receive if you sold it today. A car in mint condition depreciates 20% in the first year even if you never drive it.

When downsizing and selling your possessions, it is important to adjust your expectations of their value and worth. Times change, and styles change. Different generations have different lifestyles, and kids don’t want their parents’ stuff. Even geography makes a difference. For example, you will probably get a better price for used downhill skis in Whistler than in Saskatoon.

Another old saying goes, “One person’s junk is another person’s treasure, and one person’s treasure is another person’s junk.” In fact, there may be items you own that you might think are worthless but someone else considers valuable. To illustrate that a unique object can be a treasure to someone somewhere, MaxSold created a list of 15 weird things sold in their auctions.

A Few Tips to Increase Value (Selling Price)

If you’re ready to downsize or declutter, here are a few tips to help you get a better selling price for your goods.

• Avoid selling under pressure. As mentioned above, when you must clear an estate on short notice, you’ll most likely get liquidation value for your possessions. The longer you can exhibit your items in the marketplace, the more likely you’ll get a higher price. If you need to have a short-notice sale, online auctions (e.g., MaxSold) can expose your goods to a broader audience and create competition among buyers and increase sale prices.
• Sell unique pieces in specific markets. If you have art, musical instruments, jewelry, or custom-made furniture, consider selling them in defined marketplaces. Often consignment shops or auction houses have clientele looking for and willing to pay for what you have to offer.
• Clean and repair items. Before selling your items, make sure they are clean and in good condition. Paying for a minor repair may significantly increase the sale price of your item, so that is something to consider.
• Sell items separately. You might be able to get a higher price if you sold items as separate pieces rather than altogether. For example, instead of selling a bedroom suite for one high price, sell the bed as one item, the chests of drawers as another item, etc. You could also separate a set of fine china into several lots, such as the tea set, the serving pieces, and three sets of four place settings.
• Sell similar items together. Group lower value items into one large lot to fetch a higher price. For example, place a few Lego sets with other types of toys. Likewise, group several figurines into one lot and various pieces of costume jewelry into another lot to get a higher sale price.

Value and worth can mean different things to buyers and sellers. When Out of Chaos works with clients, we work with them to find the balance between getting the best price possible and working within the time limitations of the downsizing process. For more information on how we can help you downsize, contact the Out of Chaos team today.