Delinquent storage units have been getting auctioned to the general public ever since the inception of self-storage. The common misconception is auctions are a revenue source for storage facilities. Reality is auctions are nothing more than a mechanism to make available a unit for rent. Over the years many laws have been written to protect renters. The facility almost never recovers what was owed in rent, and in some states any profits from an auction must be surrendered to the State. Consequently, storage auctions are widely viewed as a burden among storage facility owners.
Onsite storage auctions have many disadvantages:
- The number of the bidders at the auction is a function of the auctioneer’s following, the geographic convenience of the facility relative to the potential bidders, and the number and type of units for sale is weighed in a potential bidder’s decision whether to attend your auction.
- Auctioneers typically have a minimum payment for just showing up.
- For the above reasons, storage facilities will often delay auctions and allow delinquent units to remain unrentable in order to accumulate enough units to hold an auction.
- Many of the same bidders attend these auctions so they have the temptation to coordinate bids, or dissuade newcomers in order to maximize their profit by minimizing yours.
Online auctions came about to address these issues. Convenience and number of units auctioned are no longer a variable in attendance, thus, in theory, more people attend the auctions. Facility owners no longer need to hold onto unrentable units longer than they need or want to. The revenue from online auctions, on average, is typically higher.
It’s no wonder why the developing trend is for facilities to switch to online storage auctions. Consequently, there were quite a few at the 2019 Inside Self Storage convention in Las Vegas and I expect to see even more in 2020.
Here are some tips on how to choose an online storage auctioneer for your facility.
- Make sure the storage auctioneer has a significant following within 20 miles of your facility. 20 followers is good, anything over 50 is great.
- Check ease of use for the bidders as well as ease of use for the facility owner.
- Look for the hidden fees. It is common to charge for a unit that doesn’t sell, setup fees, marketing fees, etc.
- There should be real storage auctioneers running the auction site.
- Promote the storage auction site at your facility. Often people will ask office personnel about auctions, be sure to tell them about the website you’re working with.
My favorite online storage auctioneer from the convention is StorageAuctions.NET. This site is designed and run by the “Storage Wars” auctioneers. Great nationwide following, lots of storage auction experience, no fees, fabulous customer support and robust online and app platforms. They are best in class, by far. Check out the video clip below.