Have you heard of local storage auctions and the bargain hunters who make extra cash off them? A new series of reality shows like Storage Wars and Auction Kings are popularizing a special secret that, up until now, only the most savvy bargain hunters knew about. Self storage properties retain the right to enforce their state’s lien law on any tenant that fails to make their monthly rent payment for an extended period of time. Usually after 48 days of non-payment, a company can enforce the lien law in order to repossess a tenant’s delinquent storage locker and ultimately resell all the goods inside via public auction.
A public auction must be announced in a newspaper of general circulation at least 2 days prior to the date of sale. This allows the delinquent tenant one final chance to remedy their situation, but also gives bargain hunters everywhere a chance to be notified of the upcoming auction. In addition, some dedicated storage auction buyers prefer to subscribe to premium storage auction listings so that they won’t miss out on lucrative repossessed locker sales.
Contrary to popular belief, everyone and anyone is invited to the local storage auction. Even the previous owner of the repossessed storage locker can come to make a last ditch effort to reclaim their belongings. This does not always occur, but it is possible. Sometimes the previous owners get lucky and win back their belongings for far less than their total storage bill!
Once the storage auction begins, everyone in attendance gets a chance to peek inside the delinquent storage sheds in order to size up the goods and decide whether or not they want to bid on the entire unit. This is the point at which you will see some savvy bargain hunters brandishing powerful flashlights to illuminate the entirety of the storage unit, in hopes of identifying that one special item lurking in the background. Once the bidding begins, the action happens quickly. The auctioneer will do their best to drive the price up as high as possible so that the self storage company can recoup the greatest amount of money possible.
Bidders will compete back and forth for the repossessed storage locker, and there is no limit to how high the final price can soar. Usually, auction attendees will only fight for units they truly believe are valuable or worth their time. Perhaps they have noticed a few expensive tools inside, or they happen to know that the collectible items sitting on the shelf can be resold for a healthy profit. Sometimes, bidders will have little more than a powerful “gut” reaction to go on. Some undefined intuition will tell them that there is hidden treasure tucked away inside.
Once the dust settles and the highest bidder is declared the winner, the entire process repeats itself until every repossessed auction unit on the property has either been sold off or passed over. Now comes the time when the winning bidders must settle their bills with the auctioneer. Paying by cash or credit card in full will allow the winning bidders to receive a gate code so that they can pass freely through the property as they go about claiming the goods inside their purchased unit.
What many newcomers to storage auctions do not realize is that winning bidders are required to empty the entirety of all purchased units, even if they do not necessarily want anything found inside. Placing full responsibility for the purchased units on the new owners is one method that self storage companies use to ensure they will not be stuck with a garage’s worth of junk and trash! In order to ensure that the buyers will fulfill their obligation to empty and clean the units, many self storage companies will secure a cleaning deposit at the time of purchase, which will only be returned to the buyer once they can show their unit is totally empty and swept out.
After a storage auction buyer has removed all of their winnings, it’s time for them to decide what to do next. Most storage auction buyers that are in the game to make a profit will begin processing their new inventory for resale. This involves a lot of careful attention and research. All viable items, electronics, and collectibles must be cleaned up and researched in order to determine an optimal selling price. The reclaimed goods can then be sold via online auction sites like eBay or through local yard sales. Some storage auction buyers will approach local pawn shops with the oddball items that they cannot otherwise sell. So long as the storage auction winners exert special care to buy their auction units at low prices, and resell their winnings for medium to high prices, they can ensure themselves a healthy profit.
With popular storage auction television shows like Storage Wars and Auction Hunters sensationalizing large and tantalizingly lucrative repossessed lockers, some viewers have come to expect that every auction unit is incredibly valuable. Unfortunately, this is not the case. While especially valuable repossessed units do exist, they are definitely not the norm, and the new culture of reality television programs that popularize storage auctions has set up more than a few newcomers for disappointment.
In fact, self storage property managers all over the country have remarked on the rapid influx of new storage auction hunters, who largely self-identify as Storage Wars and Auction Hunters viewers. This new surge of public attention has had both positive and negative effects on the self storage industry. For example, auctioneers and self storage property managers have noticed that the new television culture has led to auction units being sold for more money, since larger crowds of excited buyers are willing to compete more than in the past. While property managers and facility owners appreciate the increase in foot traffic and the generally higher auction sale prices, they simultaneously lament the higher frequency of property damage due to crowded auctions, as well as disagreements and incidents that can arise due to unrealistic expectations and heated emotions.
Owners and property managers that have been in the industry for years are somewhat puzzled by this new trend. What was once a poorly known legal tool of storage companies struggle to handle large amounts of bad debt has become a televised auction buying craze. It’s not surprising that some industry insiders wish the frenzy of attention would die down so that everyone could return to business as usual. The fact of the matter is that most self storage property managers and facility owners do not relish having to sell off someone else’s belongings in order to satisfy a delinquent rent bill, but circumstances often leave them no other choice.
Self storage companies rely on their monthly revenue streams, the majority of which are made up by their tenants’ rental payments, in order to meet their own financial obligations. Each month, self storage companies must cover utilities, maintenance, costly repairs and renovations, hefty management software licensing fees, payroll for their employees, legal retainer fees, and marketing and advertising expenses just to name a few. Most companies will have additional expenses if they offer special services like rental trucks or after hours payments via robotic kiosks. None of this is to mention the fact that storage properties which were not purchased outright are financed by a bank or lending company via a mortgage!
For this reason, it is absolutely essential that self storage companies be able to rely on a steady monthly income. Storage auctions are not only a means of recovering non-paid rent, but also of deterring tenants from falling too far behind into delinquency. Before an auction can even be discussed, however, the self storage company and its property managers must follow an exhaustive list of steps documenting their constant attempts to contact the late tenant and work with them to resolve the issue. Should a company fail to follow through with their state lien law’s extensive procedures, they could become vulnerable to a wrongful sale lawsuit.
The auction process actually begins with the first late fee. When tenants fail to make their monthly rent payment within a certain number of days, they will receive a late fee which is added to their total amount due. This, too, is used as a deterrent to falling further behind. Should the tenant still fail to pay their rent after the first late fee, they may incur a second late fee or even a pre-lien fee. Pre-lien fees mark the beginning of the legal repossession process. Should the company issue a pre-lien fee after a certain number of days, they must send an official letter detailing all the charges and the consequences for further delinquency to the tenant.
In order to prove their regular attempts to contact their delinquent tenant, the self storage company must keep detailed records, along with time-stamped copies of all outgoing and incoming correspondence, in the event that they should ever have to go to trial and prove that they acted with due diligence in processing a delinquent tenant’s unit for auction. This is part of the reason that property managers and storage company owners do not enjoy auctioning off units. For one thing it is a lot of work! Additionally, should any gross errors be made in terms of the legal process, losing a wrongful sale lawsuit can be catastrophic.
With storage auction TV programs showing no sign of slowing down production, many in the industry are anxious to see whether this surge in public interest will continue or begin to wane with time. Despite the uncertainty surrounding the future of this trend, there is no doubt that the world of self storage auctions, and the public’s awareness of them, have been changed forever.