How to Host a Storage Auction
Auctions have long been an effective option for storage service proprietors, but they can be even more lucrative now thanks to the success of shows like Storage Wars and Storage Treasures. Your auctions can attract serious prospectors and casual guests alike, but your auction won’t just fall into place. There are steps you have to take to facilitate auctions both in an effective and legal manner, and you need to be mindful that you may be limited by the law. Some states, for instance, won’t let you turn a profit.
Lien Laws Differ Between States
This is crucial to protecting yourself and your business: lien laws vary from one state to the next. Know what those laws are in the state in which you’re operating. These laws can be complicated, so if you have any doubts, consult with an attorney. Most states have specific rules for storage auctions, and be mindful that these sales are taxable. Know the tax rate, and charge auction winners accordingly.
Set the Rules in Advance and Let Them Be Known
In other words, make the rules clear, and let people know what they are. Post them on your website, and have flyers available for people attending your auction in person. Don’t make things difficult on auction-goers and winners, but protect yourself. For instance, many storage sites will charge a $50 fee that’s reimbursed once the storage lot is cleared out. This discourages a bid winner from leaving the trash behind for you to clean. If you only accept cash, make that known, and if you have to charge tax on winning bids, make sure attendees know what that number is in advance.
Your Tenants Require Notice
The law dictates how much notice you must give your clients. Not only should you adhere to the letter of the law, but you should document every step you take. At the end of the day, if they’re not paying, you’re losing money, and so auctioning their items is a necessary evil. Also, don’t be too quick to auction. Be lenient, if possible, and give the tenant every opportunity to pay. Be mindful that even in instances where one is allowed to make a profit, storage providers rarely recoup all their losses.
This Is an Event. Market It!
The biggest mistake storage services make is not promoting their auctions. This is a sale. The more people who know about it, the better the chances that people will bid. By not marketing, your inviting only those who are in the know, such as the professional storage hunters. A big ad in the paper not only draws out the casuals but also the newbies who’ve seen the show and want the experience. Another good idea is to participate with one of the many popular online storage auction websites.
Finalize the Auction Immediately
The shows often make it seems like there’s non-stop action, but that usually isn’t the case. In fact, many operators will process each auction as soon as it’s done, and that’s a good model to follow. Have a system in place that ensures all state and local laws are adhered to, and always take the winning bid and have the winner sign any necessary documentation as soon as possible.