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Life Lessons from A&E’s Storage Wars
Posted By Jim On 01/08/2013 @ 7:04 am In Personal Finance | 13 Comments
A few years ago, I attended a local storage facility auction  like the kind you see on A&E’s Storage Wars . It wasn’t nearly as interesting and the lockers didn’t go for thousands of dollars, like they often do on the show. It’s also not California here and the lockers were enormous, like some of the ones on the show.
When those lockers open, the characters on the show clamor to get a look inside and see what opportunities might be hiding within. To me, I see a lot of sadness. Those are lockers that belonged to people who could no longer afford to rent them. They fell behind on payments, couldn’t catch up, and now their things are being auctioned off. I don’t feel bad for the owners and I don’t see the bidders as vultures, I just feel kind of sad for the whole process. Sometimes that’s how life is.
So today, after casually watching a few of those episodes over the years, I thought I’d pull a few life lessons I’ve learned from watching the show.
When a locker opens up, everyone tries to get a peek inside to look for signs that the locker may be valuable. The pros point out little details here and there that, based on their years of experience, gives them an edge in guessing right more often than they guess wrong. Something that looks one way to a novice looks completely different to a seasoned veteran. Being able to tell the difference can put big dollars in your pocket. This is a good lesson to learn and one that has been handed down for ages… never judge a book by its cover!
I love a good cognitive bias and there isn’t one that gets crushed in early childhood like the just-world hypothesis. The just-world hypothesis is a cognitive bias in which you believe that everyone will get their just due, where morally noble actions will result in positive results and evil actions will result in punishment. It’s a fancy term for karma, which we all logically know not to exist.
How does this translate into the world of Storage Wars? It, like life, is not a level playing field. On the surface, it’s obvious because some people have deeper pockets than you. Some have greater knowledge about the value of items. Some have a better system in place to sell those items and extract the most value out of the items in a locker. What you’re willing and able to pay won’t be the same as someone with a stack of Benjamins and a consignment store to sell those items in. What looks like junk to you is a potential fixer upper that can be sold for great profits.
Whether it’s a locker full of stuff or a stock on the New York Stock Exchange, the money is made when you buy the asset and not when you sell it. Some form of that statement exists in any business and that’s because it’s completely true. Your cost basis in any investment will determine how much you make because that has the biggest impact on your profits. It’s a little silly when you think about it because it seems like something Yogi Berra would say … like “You can observe a lot by watching.”
The lesson this is trying to teach is that everyone thinks you make money when you sell something but it’s a mistake. You collect money when you sell something but how much you make depends on your cost basis. Choose your acquisitions carefully and you can maximize your profits. Don’t get greedy and twist yourself into accepting a less than stellar deal just to get one. You see this happen frequently on Storage Wars and the ones who last are the ones who don’t do it again.
Watch enough episodes and you’ll see people battling for lockers they don’t even want, jacking up the price with bids so the other guy has to take a smaller profit or, in unlucky cases, a loss on a locker. Unless someone is on your team, they’re out to get you because every dollar you make is a dollar they don’t get to make.
The show also highlights the importance of an affable personality. You can go in there with the tough guy attitude or you can play it cool and nice, hoping people don’t fight you out of spite. It’s a lesson in social dynamics and the importance of relationships in any business. It doesn’t take long for Dave Hester’s “yeaaaaap” call to get on anyone’s nerves. That said, if you can afford to fight because you have the muscle, it’s certainly one way to do it.
In the earlier episodes, you saw Jarrod Schulz and Brandi Passante just starting to get into the business with just a few years of experience and a need to stock their store. You also saw Dave Hester, a seasoned veteran with 15 employees and a massive operation behind it. The reality is that the majority of people buying storage auction lockers, in many popular areas, are businesses. This is their profession.
I watched a recent episode in which Brandi paid nearly $7000 for three ATVs. Unless you know how much an ATV is worth (and I didn’t) and know of a way to sell them quickly, it’s difficult to gamble $7000 on three ATVs that may or may not operate. She lucked out, each required just a new battery, and were valued at nearly twice her investment.
I always thought that Storage Wars filmed a ton of auctions and just showed you the interesting ones. But Dave Hester, who was recently kicked off the show, claims it’s rigged with A&E allegedly planting valuable items to make it more interesting. The real lesson in all of this is that life is mostly boring (at least to other people watching on TV) and you sometimes you need to add some embellishment.
I haven’t watched many of the newer episodes but they’re a slightly more entertaining version of Pawn Stars.
(Photo: michaelgoodin )
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