Live auctions can be exciting, loud and fun, but they’re also a must for self-storage operators who need to manage abandoned units and delinquent accounts. Because lien sales are a necessity, governed by state statutes, you must take certain measures to ensure their success. Here’s a brief how-to on hosting live events.
Follow the Law
The most important step is to follow your state’s lien law. To stay current, consider joining your state or national self-storage association. These organizations provide members with updated information when lien-law changes occur.
Most states provide a step-by-step process outlining when you can deny unit access to tenants, charge late fees, send past-due letters, advertise the auction and sell the contents of the unit. Several have recently updated their statutes, allowing operators to send documents to tenants via “verified mail,” which is cheaper than Certified Mail. Check the most recent version of your state law to see if it has been updated.
Once all your legal ducks are in a row, it’s time to schedule your event. Week days are best for live auctions, with mid-morning to early afternoon being the optimal window. Of course, this assumes cooperative weather. It’s often beneficial to wait until you have multiple delinquent units before hosting a sale, as bidders are more likely to drive to your facility if there are several units on which to bid.
During the height of the reality TV show “Storage Wars,” drawing a buyer pool wasn’t a problem. Large crowds were common, which created headaches from parking (lack of), litter and overall disruption to daily business. Now that the craze has calmed, auctions are reverting to lower attendance numbers. In fact, it’s sometimes hard to attract the three unrelated bidders required to have a “commercially viable auction.”
The auction industry has a saying: “It only takes two people to have an auction.” The problem is they have to be the right two. Both have to want to buy the same items. Since most units up for bid don’t contain attractive items to advertise, you have to attract buyers any way you can.
Every auctioneer knows the key to a successful sale is a large crowd of motivated buyers. The best way to draw one is to advertise. You need to think beyond the traditional newspaper classified ads and venture online:
- Allow bidders to sign up to receive auction information through your website.
- Post a calendar on your website showing the days and times for each upcoming event. In addition to drawing interest from buyers, this will help with your search engine optimization, something all storage operators need.
- Venture onto social media platforms. Include photos of unit contents, as images catch the most attention on these sites.
- Look for popular websites unique to your town or state. Many localities have online marketplaces and community boards that can help provide exposure.
- Some online-auction websites will even allow you to advertise live events to their bidders. In these instances, you can usually post on a dedicated calendar. Marketing on these sites can grow your bidder base immensely because it provides exposure to people from all over the country.
Another sound strategy is to collect the names and e-mail addresses of buyers who attend or ask about your auctions. Send them announcements and reminders about upcoming auctions and include pictures. During the height of “Storage Wars,” people would call our facilities every day asking when we were going to host our next auction. Those calls made up about half of all our incoming calls, and the list of names grew to more than 250 bidders in one market alone.
Keep in mind that advertising your auction is a mandatory requirement of many state lien laws, which may dictate where you must post ads as well as how many days prior to the sale. For public notices, include the date, time and location. You may also want to hint at what you’re selling in case people are on the hunt for specific items.
Hosting the Event
While attending auction school, I learned some valuable strategies on how to structure and manage the sale. On auction day, start with one of your better units to engage the crowd and get the money rolling. Spaces containing furniture, tools and contractor equipment typically draw high interest. Also, save a great unit for the end to conclude the event on a good note.
Someone must lead the auction, whether it’s you or an auctioneer. The three most important things to keep in mind when hiring a third party are cost, scheduling and attendance. Auctioneers may charge a flat fee, a percentage of each unit sold or both. Do the math to minimize the impact this cut will have on your collections. Schedule the auctioneer as early as possible to ensure he’s available when you need him. Many auctioneers have a fan base that follows them to all the events they host. If you don’t have a well-established bidder pool, hiring someone popular can be beneficial.
Most storage operators insist that winning bidders clean out their units within 24 hours, though arrangements are sometimes made to allow more time. A deposit is usually required from all winners, and then returned once the manager has verified the unit is completely clean. Deposit amounts may vary, but make sure potential buyers understand these terms up front.
To ensure people keep attending your auctions, supply water on hot days or provide coffee and donuts if your event is in the morning. Following these basic tips should attract more bidders and create more profitable sales.
Lonnie Bickford has developed and owned five Appletree Storage facilities in Greater Baton Rouge, La., and is a board member of the Louisiana Self Storage Association, where he’s worked closely with the national Self Storage Association to make changes to the state’s lien law. He’s also the founder of StorageAuctions.com, a provider of online self-storage auction services. For more information, phone 866.944.8530; e-mail [email protected]; visit www.storageauctions.com.