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Dread Reduction: Online Auctions Ease the Self-Storage Lien Burden

For most self-storage operators, going through the lien process on a delinquent unit is a burdensome, unrewarding endeavor. Guest blogger Justin Jones used to circle auction day on his calendar with dread, so he decided to experiment with an online auction. If youre on the fence about pursuing the online route, youll want to read this detailed account and assessment.

Teri Lanza

September 20, 2013

5 Min Read
Dread Reduction: Online Auctions Ease the Self-Storage Lien Burden

A guest installment by Justin Jones, Moderator, Self-Storage Talk

As the owner/manager of a self-storage facility in California for the past 25 years, Ive had my share of experiences going through the lien process to auction. There is nothing enjoyable about auctioning off the contents of a unit. Not only are there concerns associated with adhering exactly to the legal process, the lost income from the unit and the fact that youre selling someones belongings, but the logistics of holding a live auction on the property is something I dislike most. Parking issues, trip-and-fall liability, adequate bathrooms, facility security, trash collection, time out of the office, additional staffing, missed phone calls, etc., all add to the hassles and dread of auction day. It was a day I circled on my calendar, and not for good reasons.

I had been reading some threads (Online Auction Website; Heres the Test, What Would You Bid?) on the Self-Storage Talk online forum about the growing use of online auctions to sell the contents of delinquent storage units. This was intriguing to me, as it could eliminate the most labor-intensive portion of the whole lien process and allow business as usual to continue while the units received bids passively, 24 hours a day. Nearly all of my advertising budget is spent online, and most of my customers find me online. I primarily communicate with them online and receive a large portion of rental payments online, so I figured it was time to take the auction process online, too. Being in the San Francisco Bay Area, my market is well trained in the use of computers and comfortable with online transactions.

My next step was asking other facilities what their experience had been like with online auctions, or if they had even tried them. Only one of my competitors had tried one, and a few minutes spent discussing that managers experience was invaluable in helping me determine if it was right for me. I concluded that the minor hiccups that operator had experienced could be overcome, and I decided to go ahead and contact the auction company they had used, RL Liquidators LLC of Sacramento, Calif.

After meeting with the representatives from RL at my facility and confirming that online auctions would satisfy the requirements of the California storage lien law, I contracted with RL to handle my online auction. The lien sale consisted of 14 units, and RL handled every aspect of the actual auction process from that point forward. They took video and still-picture inventory of each unit, and after closing each unit door, they installed a numbered, tamper-proof seal through the latch. The seal assured the winning bidder that the unit had not been opened since the video and pictures were taken.

All of the delinquent units were uploaded to the RL website and made available for previewing (videos and pictures) for a week prior to the bidding going live. I placed the auction notice in my local newspaper as prescribed by state law, but instead of noting a date and time of the live auction at my facility, I listed the URL of the online-auction site and stated the date and time of the sale closing. I found myself actually enjoying the process; it was exciting to check in each day to see how many more views the units had received from the previous day.

As soon as the units opened for online bidding, the bids came in quickly. Within the first day, more than half the units had bids for more money than I would have expected to get with a live auction at our facility. This was thrilling! I had none of the concerns of strange people on the property, and these online bidders were offering more money. For the next three days, I was frequently on the auction site checking the bid amounts, amazed at how easy all this had been to that point.

When the auctions closed, every unit had received multiple bids. This was great news; it meant I wouldnt be hauling away the trash units to the dump, using my time, money and employees. I had never held an auction where there wasnt at least one unit that received no bids, leaving me to handle the mess and dispose of the contents. It was a relief to know that, at the very least, all auctioned units would be emptied and ready to start earning income again.

A few of the units sold for more than Ive ever seen at one of our onsite auctions. The RL people were right: The online auction generated a lot more money than any live auction Ive ever held, and with a decrease in auction hard costs.

Within 48 hours of the auctions closing, every unit was paid for and claimed by the winning bidders. Many of the bidders came from more than two hours away from my facility, proving the wide reach of online advertising. I doubt many found the auction site due to the newspaper ad I placed, and Im confident the buyers emerged from the hundreds of customers already in the RL database. Each auctioned unit was left broom clean and ready to rent.

The online auction process exceeded my expectations in every way: More money to offset losses, with less liability, time, hassle and expense. Unfortunately, Im sure Ill have to auction delinquent units in the future, but when I do, it will be done online. Ill circle that day on my calendar again, but not for the same reasons I did before.

Justin Jones has been a self-storage manager and owner in the California Bay Area since 1987. He loves the storage industry because of the time it allows him to spend with his wife, four children and new granddaughter. He has been a moderator on Self-Storage Talk, the industrys largest online community, since 2010.

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