How Storage Auctions Work: A Guide for First-Time Bidders (2024)
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When a renter fails to make payments on a self-storage unit for an extended period of time, the storage facility can auction off the contents to cover its losses. This process to recoup funds is called a storage auction, and you may have seen the auction process on TV or streaming app shows such as Storage Wars. Below, we’ll explore how storage auctions work, including what to expect before, during, and after the bidding process.
Part 1: Pre-Auction
As a prospective bidder, you must register in advance to participate in a storage auction, which are hosted online or on-site. Registration involves filling out a form with basic information, such as your name and contact details, and agreeing to terms and conditions set by the storage company. You may also be required to pay a cleaning deposit, which you will get back after you clean out the unit or pay to rent it.
The size of the storage unit will be revealed as the auction approaches; however, you may not have the opportunity to inspect items thoroughly. Touching or closely examining items is typically off-limits until you’ve won the bid.
Part 2: The Auction
Storage auctions commonly involve live bidding rather than silent or sealed bids. The auctioneer presents a sealed unit and offers a brief overview or glimpse of the contents. Bidders then compete to place the highest bid. Bidding can be fast-paced, so bidders need to stay focused and set a maximum bid beforehand to avoid overspending.
Online storage auctions work differently. Dedicated platforms such as StorageTreasures and StorageAuctions.com allow bidders to create a profile and bid remotely from the comfort of their homes. Sites typically provide photos and a brief description of the contents of the unit. While bidding remains open longer, the bidding pool is larger, which means prices may climb higher than they would for live auctions.
Remember that you’ll bid on the entire unit as a whole, not individual items.
Part 3: Post-Auction
If you’re the highest bidder, you will need to pay promptly. For an in-person auction, this typically means paying the full purchase price plus a cleaning deposit. Most companies require you to pay in cash, but some may accept debit or credit cards. You may be charged sales tax in addition to your winning bid amount, depending on state law.
If you win an online auction, the auction site will charge you a buyer premium or bidding fee, which is 10% to 15% of the purchase price. The auction website may also collect a purchase deposit or down payment. These fees will be charged to the credit card on file with the site.
Once you have paid your winning bid and any deposits or fees, you will be given limited access to the unit, typically within 72 hours. State law and facility rules may require you to return personal belongings and records, such as photos and legal documents.
Storage Unit Auction Tips
Here are a few helpful tips for participating in storage unit auctions:
- Arriving early gives you an advantage: Being punctual gives you the chance to observe other bidders, understand the auctioneer’s style, and learn about the units.
- Budget trumps emotions: Avoid bidding based on emotion, adrenaline, or curiosity. Set a budget beforehand and stick to it.
- Many auction bidders are professionals: Many bidders will be professional resellers, though you should expect some new or casual bidders, too.
- Research is important: You should research the storage facility and its rules and regulations before the auction.
- Turning a profit takes work: Finding truly valuable items is rare and requires preparation. You must research the value of items and the best place to post them for resale.
- You can’t keep everything: State law typically requires you to return any personal items and records, such as photos and legal documents, to the facility.
- You should bring a few tools: Have a flashlight, gloves, and basic tools with you to help you sort through a unit.
Why Are Storage Units Auctioned Off?
Storage units are auctioned off due to non-payment of rent. When the original renter fails to pay for an extended period of time, the storage facility has the right to auction off the unit’s contents to recoup their losses. State law lays out a detailed process and timeline that the facility must follow to give renters ample notification and time to settle their debt.
After the storage auction, also known as a lien sale, the storage facility will put the money toward the original renter’s debt. If that debt exceeds the winning bid, the remaining debt may go to collections. If the winning bid exceeds the debt, lien laws typically require the storage facility to forward the excess to the renter.
Why Storage Lockers Get Abandoned
Storage lockers may be abandoned because of a renter’s job relocation, financial hardships, or other life changes. Sometimes, the original renter may have died, leaving the unit unclaimed.
Our Conclusion
If you’re intrigued by the prospect of storage unit auctions, make sure you plan and research before diving in. Be sure to adhere to a budget and prepare for the unexpected. Bidding on abandoned storage units can be thrilling, but you’ll only manage success if you exhibit sound judgment and remain well informed.
FAQ About Storage Auctions
What are the pros and cons of storage auctions?
The pros of storage auctions include the potential to discover valuable items at a fraction of their market value. The cons of storage auctions include the unpredictability, risk, pressure, and time involved.
Do people actually make money from storage auctions?
Yes, some people actually make money from storage auctions by finding collectibles or other valuable items and posting them on eBay, Craigslist, or other online marketplaces. Turning a profit requires a lot of time and research.
How do you know if the person who abandoned a storage locker is a criminal?
It’s difficult to know whether the person who abandoned a storage locker is a criminal. If you have any questions about the legality of the contents, you can contact law enforcement.
How long is it before a storage unit is typically auctioned?
A storage unit is typically auctioned after 30–90 days of non-payment.
What are the best ways to make money from storage auctions?
The best ways to make money from storage auctions involve a combination of research, strategic bidding, and effective resale. Understanding market trends, having a keen eye for valuable items, and establishing reliable channels for resale can help you turn a profit.
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