Reader Question: Are Storage Auctions For Real?

Today’s reader question, from Samantha, baffled me at first, until I started poking around and found out that she’s not the only one wondering if storage auctions are actually real! Of course, this seems curious to me, having prepared and run storage auctions myself, but I realized that many folks who normally would never have anything to do with self-storage in the first place have started visiting properties and learning the lingo solely because of their money-making interests in delinquent locker sales. This got me wondering exactly how many people are on the fence about public storage auctions in general and how many folks aren’t sure if this whole thing is just an elaborate scam or actually a way to earn a decent side income. Let’s hear Samantha’s take first:

[quote] Aloha! I have been reading on your site for a while now and I saw some parts of Storage Wars the last time it was on TV. I have never used a storage locker before and I don’t think I’ve even been to a facility. What I want to know is if these storage shed sales are real or if they are just made up like some reality shows. Also, if they are real can anyone come to them or do you have to have a license? Thanks! [/quote]

Thanks for your question, Samantha. I think there are two things going on here that we should disentangle first. First, you are asking about storage units, the lien laws, and delinquent locker sales, and second you are wondering about the popular storage auction television shows like Auction Kings and Storage Wars. Let’s start with the first part.

Yes, storage unit auctions are entirely real, legit and semi-regular. They occur because sometimes a tenant will move into a new unit, fail to pay their monthly rent on time, not be in contact with the property manager, and eventually fail to answer or show up at all. Meanwhile, the company is still out the space they rented to this person because they cannot take on a new paying customer in that same spot – the delinquent tenant has their lock on the unit and is basically getting the service for free because they won’t pay.

It might not seem like a big deal to have a few tenants that don’t pay on time or who are actually several months behind on their rent payments, but in fact this is quite damaging to the storage company, which relies on timely monthly payments to pay for their own, often considerable monthly expenses. Depending on the ownership status of a given property, a self storage company may need to pay a costly mortgage, as well as steep utilities (think $100 a day for electricity in some states), commercial insurance, rental truck costs, salaries, benefits, maintenance and upkeep fees and advertising expenses to name a few.

Essentially what this means is that when a tenant fails to pay their rent for several months in a row they are actually causing financial damage to the company. In order to protect self storage companies from these damages, the state lien laws provide the companies with a means of seeking reparations by first denying the tenant access to their belongings, so as to encourage them to pay, then by repossessing the delinquent locker in its entirety, and ultimately by selling its contents at a public auction in order to make up some of the money they are owed.

So yes, to answer the first part of your question, storage auctions are very real. They happen quite frequently throughout the many states where self storage facilities are operating.

Now, to address the second part of your question, I think what is confusing to many of you that have never attended a real public storage sale is whether or not the reality shows like Storage Wars and auction kings portray the process accurately. Are public storage sales going to enable you to browse oceanfront mansions for sale in mexico? The answer to this question is yes and no. They do show the basics of an auction, the arrivals, the preparations, the crowd of bidders gathering, the manager opening up the door for the bidders’ brief inspections, and the intensive bidding action, correctly. This is pretty much how it goes down at any given public auction.

What doesn’t necessarily happen at any given storage auction is some of the great scores and big finds they record on these shows. For example, you’re not going to find a vintage coca-cola glass bottle vending machine worth $40,000 in every 10×20 you buy, though the frequency of the big scores on these shows might lead you to believe otherwise.  There are a few good reasons for this. Number one, the shows need to be entertaining in order to be successful. Therefore they lump together all the biggest scores to make their episodes more exciting. The shows’ creators have stated that they film many, many more auctions than they include in their final cuts. You can be sure that they are leaving some of the more trashy and less valuable auction units out of the series.

Now there’s another major way that the shows omit something that can and does happen at un-filmed sales. You can someday expect to find the actual owner of the storage unit at the auction, trying to get back their belongings by re-buying them! Sometimes this goes smoothly, either with the tenant winning their things back and leaving happy or with the tenant simply going quietly after they watch someone else outbid them for their own things! Sometimes it’s less than pleasant, and you can imagine the arguments that arise when a delinquent tenant starts hassling the strangers trying to buy his things. Now, the shows’ producers have stated in interviews that they avoid this kind of drama like the plague. If something unpleasant like this goes down during a sale, they simply stop filming and move on down the line to the next storage shed on the chopping block.

Some of the television shows’ embellishments are more self-evident. No, you do not typically see people wearing night vision goggles to peer into the dark units. No, you do not typically see midgets standing on their buddy’s shoulders to get a better view. No, couples don’t typically hold public arguments on whether or not the male half should still be bidding on units due to his inveterate gambling problem. This is the typical trumped-up fare of “reality” TV. It is designed to titillate the viewers at home so they will stay tuned.

My personal 2 cents is that the shows are primarily designed to be pieces of entertainment. You can take them or leave them as you like. The real business of buying up delinquent storage sheds and flipping their contents for profit remains what it always has been, a good way for a dedicated person to make some extra cash on the side, and possibly get lucky from time to time by landing a big score.