The idea of storage units is hardly a new business approach. What started in the 1960s as a way for homeowners to store belongings in a cost-effective manner soon exploded in the 2000s when storage units seemingly lined city blocks in major cities and rural towns alike.
Although these storage units filled up, there soon became a downside to the business — delinquent renters. Thus began the concept of storage unit auctions to help business owners recoup lost earnings from tenets who failed to pay monthly rent. These auctions became so popular that television producers created two shows, Storage Wars and Auction Hunters, to detail this niche buying market.
What you see on TV is often far from reality, so we’re here to explore how storage auctions work, when they occur, and how you can make the most out of your buying experience.
As interesting and fun as storage auctions look on TV with fast-talking auctioneers and rare finds, they are actually a last-resort auction for storage companies in real life.
State laws allow storage company owners to place a lien — holding property until the debt owed is paid by the person — on a storage unit if a customer is delinquent and fails to pay monthly rent. Holding an auction for the contents inside the unit helps the storage company recover some of its lost costs from missed rent payments.
Auctions are often a last resort because it is time consuming to hire an auction company to hold an event that may only produce a few hundred dollars. If it doesn’t cover the balance, the remaining debt owed could be transferred to a collection agency.
In the event a storage auction does produce a profit once the owner takes his cut and pays for the auction, the excess money would go to the delinquent customer.
Most attendees at storage auctions are pawn shop owners or consignment shop owners. They purchase storage units to resell the goods at a profit.
If a tenant misses or fails to pay a self-storage rental for several months (some states are limited to a month), they have to come up with the money before the owner will place a lock on the storage unit and put a lien on the items.
Renters then will have between one and three months — this varies by state — to pay off the debt. The owner usually reaches out to the renter to collect payment without holding an auction. Unsuccessful attempts to collect the money this way will then result in auction.
Anyone over the age of 18 can attend and bid on storage unit auctions. As storage auctions have continued to grow, many are now offered online as a way to maximize the amount of bidders.
Buying from a storage auction is a straightforward process. Individual items aren’t for sale, rather, the entire contents inside are sold for one price. That means the highest bidder receives everything in the storage unit even if they don’t want some of the items.
If you secure the winning bid, you usually have a day or two to clear out the unit so the storage company owner can resume renting it out.
Winning bids are generally paid with cash, but some auctioneers may also accept cards or checks. Personal items, such as photos, documents, or bills, are not included in the sale and are usually returned to the owner.
It’s unlikely you’ll stumble upon treasures like they do on TV, but there’s still a chance you can find worthwhile items such as furniture, antiques, jewelry, and other collector items that can help your business.
To maximize your potential earnings, set a budget beforehand and have an idea of how much you want to spend. Storage auctions are a bit like bidding blindly, so you need to rely on your knowledge of particular items you see.
It’s important to know you can’t look inside boxes, only view from afar. So take note of any items visible to the naked eye. This is where online auctions can come in handy. If you see an item you think is of value, the ability to quickly access the internet can give you a better idea of what the item is worth. Online storage auctions also allow you to automatically set bids, track your favorite units available, and view photos without being on site.
For in-person auctions, bring a flashlight with you to examine items toward the back of the storage unit. It could be the difference in locating finer details of an item that may have value. Use your other senses as well. Off-putting odors may be a sign the items have molded and can’t be salvaged.
Stay up to date with our upcoming auction schedule or contact us at (405) 266-2709 if you’re interested in buying or selling old or unused equipment.
