If you go to a storage auction in your area, will the bidding resemble the storage battles you see on TV?
Generally speaking, it won’t, Arizona auctioneer Casey Jones said. Like most things, the “reality” you see on Storage Wars doesn’t match what takes place at real-life storage auctions.
Still, when understood correctly, storage auctions can be a worthwhile—and even entertaining—way to spend your time. “At our auctions, we have some banter back and forth,” Jones said.
How Self-Storage Unit Auctions Work
Self-storage unit auctions happen when storage tenants fail to pay their rent on time. After 30 days overdue, storage facilities can typically put a lien on the contents of the renter’s unpaid unit. Storage owners will also lock the renter out of the unit so they can’t take their stuff out without paying the past due amount.
Depending on state law, renters have between 30 and 90 days to pay the storage facility everything they owe and avoid an auction. During that time the storage operator will attempt o contact the renter and advertise the auction publicly. If the renters does not pay what’s due in time, the storage owner can proceed to auction off a unit’s contents to the highest bidder.
Storage locker auctions are typically conducted in one of two ways: live auctions or online. Online auctions have taken off in recent years, even more so since the COVID-19 coronavirus epidemic kicked into full swing. In both cases, the winning bidder must promptly pick up the unit’s contents and empty out the unit. Then, the winning bidder typically will attempt resale of the items from the unit and hope to turn a profit.
8 Common Myths About Self-Storage Auctions
Anyone can attend self storage auctions, and many come just to check out the action. For newcomers thinking about bidding on auctions for extra income, a good place to start is to attend and observe a couple of auctions before throwing out an opening bid.
There are many misconceptions about storage auctions out there. Before diving in, make sure you know the truth behind these eight storage auction myths.
1. Every unit contains valuable stuff.
Incredible finds are definitely a possibility when purchasing storage units, but “it just doesn’t happen quite as often as seen on TV,” said Travis Lane, founder of OnlineStorageAuctions.com.
To make the most of your experience, know where you can sell the items, Jones suggested. If you have an outlet in mind, you’ll be able to think through the value of goods, along with the profit to be made.
2. It’s impossible to tell what’s inside a storage unit.
While stepping foot into a storage locker isn’t allowed before an auction begins, you’ll be able to peer into it from the outside.
Bring a flashlight, Jones said, and “don’t forget to use your nose.” You might be able to spot collectible items that might fetch a nice price. You’ll also know, by smell, whether the previous owner smoked or whether some items should have been thrown in the trash.
3. Storage operators remove valuables before the auction.
“Like most conspiracy theories, this one is based upon the actions of a few bad apples,” Lane said.
In reality, auctioning off someone else’s belongings is a last resort, said James Grant, president and CEO of auction website StorageTreasures.com. By law, if a storage tenant stops paying for a unit, the facility must auction off the items inside to help cover the amount due.
However, you should keep an eye out for staged units. While rare, some operators have been caught faking auctions with worthless junk.
4. A credit card is all you need to buy a unit.
“Always bring cash,” Jones said.
In addition to the amount you bid, you’ll need to pay sales tax, unless you have a sales tax ID number.
You’ll also usually be required to pay a cleaning deposit. This amount, typically between $50 and $100, will be refunded as soon as you clear out the unit.
5. You must attend the auction.
Sites such as StorageTreasures.com and OnlineStorageAuctions.com allow you to bid on storage units from home. If you bid online, “you’re not dependent on the weather,” Grant said.
Furthermore, online auctions give you the chance to do a little research. For instance, if you spot a bike or a refrigerator, you can look online to see whether the item is selling for a certain price on eBay or another e-commerce site.
6. You can keep any memorabilia you find.
If you make the highest bid, you’re generally entitled to all of the contents inside a storage unit.
However, most facilities ask that you return personal items, such as photo albums, to the facility manager. “It’s just common courtesy,” Jones said.
7. Storage operators make a big profit from auctions.
By law, storage facilities can keep only the overdue amount of rent, as well as enough to cover the costs of the auction, such as lock-cutting fees. The remainder goes to the tenant.
Say a place has a delinquent tenant who owes $500, and a unit of the unit generates $1,000. The facility can keep just $500, plus enough money to cover auction fees. The rest is sent to the customer.
For storage facility owners, “it’s their last legal remedy to get back the storage unit to rent to someone else,” Grant said.
8. You can pick up everything at your convenience.
After buying a unit, you often have until the close of business the next day to clear out a unit, Jones said.
Some facilities might let you rent the unit for a month and remove the items during that time. The sooner you clean out a unit, the more time you’ll have to evaluate—and then sell—what you find.