Bidding is a key component in running a successful buy-sell storage auction business. If you bid too high, you’ll end up paying more for a unit than what it’s really worth, which can cut into your profits or eliminate them altogether. On the other hand, bidding too low may prevent you from winning a storage unit, at which point one of your competitors will scoop it up. So, how do you know what to bid at a storage auction?
First and foremost, it’s important for newcomers to understand how storage auctions work. While each and every self-storage facility is different, most of them auction off the contents of abandoned and/or delinquent units. If a tenant hasn’t paid his or her bill in several months, the facility will sell the unit’s content in an effort to recoup some of the lost funds. State laws typically require self-storage facilities to run an ad in the local newspaper, announcing upcoming storage auctions, which is a good place to start for newcomers to the business.
Many first-time storage auction hunters are surprised to learn that they are prohibited from snooping around in units before placing their bids. When the auctioneer cuts the lock (assuming there’s still a lock on it), bidders will have just a couple of minutes to scan the contents from afar, without touching or rummaging through it. This rule is in place to create a fair bidding environment in which all bidders have equal opportunity to win.
You might be wondering how you’re supposed to properly valuate a unit without going through it. Well, there are a couple strategies that have been known to work, one of which is to add up the value of only the items you can see. As long as your bid is based strictly on the items you can see, you should be able to turn a profit relatively easily. Simply scan the unit, add up the fair-market depreciated value of each item (to your best judgement), and don’t bid higher than the total amount.
Another strategy is to base your bids on “signals” of valuable items. If a unit contains heavy duty plastic totes instead of cardboard boxes, for instance, it has a greater chance of housing valuables as well. Look for other signals to determine whether or not a unit is valuable, such as its cleanliness, the presence of name-brand products, etc.