Self-Storage Auction (How Storage Unit Auctions Work)

Do you know how a self-storage auction works?

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If you’re considering bidding on a storage unit, it’s important to understand how the auction process works.

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Storage unit auctions are not like traditional auctions, and there are a few things you should know before you get started.

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Straight off the bat, here are a few key points on self-storage auctions:

• Auctions are held when a tenant has failed to pay rent on their storage unit.
• The contents of the storage unit are sold to the highest bidder.
• These are sold to recoup the unpaid rent and any other associated costs.
• Bidding typically starts at a minimum amount set by the storage facility.
• Auctions are usually open to the public - so anyone can participate.

Let's go back to basics and take a look at how self-storage auctions work.

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What is a self-storage auction?

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A self-storage auction is a process whereby the contents of a storage unit are sold by the storage facility owner, typically to the highest bidder.

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How do storage unit auctions work?

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Self-storage auctions are held when a tenant has failed to pay rent on their storage unit for an extended period of time.

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The auction is held as a way for the storage facility owner to recoup some of the unpaid rent.

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A typical storage auction is broken down into three stages:

• The pre-auction period
• The unit auction itself
• The post-auction period

Pre-Auction

The company will begin advertising the upcoming auction and hire an auctioneer to conduct the event on-site. Once you get things in motion, it’s important to follow the specific regulations in your state to ensure your auction is conducted properly.

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For instance, in some states, you are required to run a newspaper advertisement before the event takes place. The regulations are far from straightforward - and we recommend that you complete your own research to find out about the laws in your state.

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As you can imagine, running a newspaper advertisement is far from cheap. Depending on your area, the costs can really stack up. There has also been some regulatory confusion around which newspapers advertisements qualify as placements. It’s a minefield. 

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While some self-storage auction events take place online, most occur on-site. Storage Auctions and Storage Treasures are two platforms that are popular among operators.

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Unit Auction

Beginning with the classic cutting of the lock, the auctioneer will open the unit to reveal its contents. Bidders are then allowed to enter the unit and inspect the items inside.

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The participants can only bid on the entire unit, not specific items.

Post-Auction

After the event, the items must be removed from the premises within a set amount of time by the winning bidder.

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What happens when renters stop paying for storage?

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If you fail to make payments on your storage unit, the storage facility has the right to auction off the contents of your unit to recoup their losses.

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Self-storage operators will have different policies on how long you have before they auction off your belongings.

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You've probably seen storage unit auctions dramatized into semi-fictional television shows like Storage Wars, in which the contents of abandoned storage units are auctioned off to the highest bidder.

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Why do people abandon storage units?

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Here are just a few common reasons why people abandon storage units:

• They can no longer afford the payments.
• They simply forgot about the unit.
• They have moved to a new city or state.
• The unit contents are no longer needed.

While some people deliberately abandon their storage units, others simply forget about them.

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It's not uncommon for people to move to a new city or state and forget about their storage unit - especially if they've been renting it for a long time.

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For self-storage operators, it's important to have a clear and concise policy in place for when units are abandoned.

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This will help to minimize losses and avoid any legal complications down the road.

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Are storage unit auctions profitable?

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Once you have a clear understanding of how to proceed while abiding by state-specific regulations, you can begin to assess the profitability of your storage unit auctions.

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Depending on the state, the potential costs associated with a storage unit auction may be higher than others. For instance, if your state requires a newspaper advertisement before the auction takes place, this is an expense that you will need to consider.

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