Storage Auctions: Realities for Managers
Even Anderson Cooper is paying attention to Storage Wars these days. But the reality of storage auctions may mean something different to individual managers at their facilities.
John Cruz, manager of Chelton Self Storage in Colorado Springs, Colo., has held about nine or 10 auctions since around 2009. He believes that auctions have become more popular recently. “People get excited by what they might find. Perhaps they’re persuaded by the TV shows…then they buy at lower rates, it just depends on how much they bid on it,” he says.
Chelton has had two recent auctions. One in March had about 50 attendees who bid an average of $50-100, while one in May had over 80 attendees bidding an average of $200-300. Cruz says that the increase in attendee and bid numbers is because “in previous auctions people started realizing the fact that the items were worth the bid—money well spent.”
Cruz finds that some auctions are beneficial for his business, while some are not. He says, “I really don’t make much money out of auctions – it’s to try to cover our expense. 90 percent of the time I don’t cover my losses. One unit may have cost me $600 and the person bids at $400, so my revenue has still suffered a loss.”
On a Self-Storage Talk thread, other storage managers commented on the pros and cons of having auctions.
Senior SST member A-Team says, “An unpaid unit does not make any money. The sooner the delinquent tenant can be moved out, the sooner a paying tenant can move in.”
SST member TimburrWulf says, “Personally, I do not like auctions. I’d rather the past due customers paid or moved out. TimburrWulf’s facility does auctions once a month and only on units that are “far past due,” she says.
A Credit Slips article and comment forum raise questions about how Federal and State lien laws function when tenant belongings are sold at auction. Several managers commented on the SST thread about this issue and how it specifically pertains to their business.
TimburrWulf says: “I don’t feel [auctions] are unfair to [delinquents]. As a manager, we still have the ability to work out something with the tenant…so they can keep their items (i.e.: settlement agreement where they pay three-quarters of what’s owed and get to use the truck to move-out). What is not fair is holding onto a delinquent tenant and let them continue to be late and accrue month upon month of fees and past due rent.”
Joe Krezdorn, manager of Dak Self-Storage in Leesport, Pa., says, “We have a sale every three to four months or longer depending on delinquency. I feel I am more than fair as I go above and beyond the letter of the law. I try to work out a payment schedule with them. Sometimes it works out, sometimes not…Since 1998, maybe two [tenants] have called after sale….I tell them [when] you go to your attorney take a copy of your lease. Never hear from them. Pennsylvania law seems bulletproof.”
Cruz also says that he’s had few incidences of tenants returning to reclaim auctioned belongings: “Out of 1000 units we’ve auctioned in five years, I would say maybe two people have come back and I extend an explanation…I think I’m pretty fair [to delinquents]. If I was to shove and say, ‘If you don’t give me payment within 30 days, we’re going to auction your items’…it’s just not a business scheme for me. I prefer to work with our customers and try as much as I can to have them keep their personal belongings. But, there’s always a line we have to draw. We let them know what their status is as far as their units being in lien and the proceedings. We send them a letter by certified mail. 90 percent of the time working with the customers we get our money back.”