Storage auctions made the news a few weeks back in a New York Times article highlighting the growing number of storage auctions amid our housing crisis. A storage auction is similar to a foreclosure in that the leaseholder loses the rights to use the storage unit. What’s unlike a foreclosure is that the storage facility’s recourse is that they are permitted to sell the contents of the unit to the highest bidder. What’s been happening, according to NYT, is that there is a growing number of individuals unable to make lease payments on the units and thus find their belongings being auctioned off, oftentimes for only a few hundred dollars.
Enterprising bidders are hoping to score something big when they bid on these units because you can’t closely examine the contents of the storage unit. Most places will only let you take a cursory look from the outside and then the bidding commences. Since this is a pretty standard practice across the board, it seems like the storage facilities know that forcing bidders to bid sight unseen will yield them higher returns. This also tells me that unless you’re willing to work hard at selling off stuff, chances are you won’t be hitting a gold mine with 99% of auctions (though you always hear of miraculous finds at garage sales).
To find out more, rather than just read off the internet, I attended a storage auction being held locally. I called up the three storage facilities near my home and learned that the latest one was being held at the end of May, so I marked it on my calendar. The easiest way, if you don’t know where your local storage places are, is to look in your local newspaper because storage locations will usually publish auction dates there. They want as many people attending as possible, so they generally will give that information freely.
My Auction Experience
So at 2:00 PM on May 27th, I appeared at the Fort Knox Storage Facility located in Columbia, MD to revel in the sights and smell of American capitalism (I brought my camera but it was out of juice!). Joining me were five other capitalists, all of which were easily in their forties or fifties. Not many young capitalists are trying to find their fortune at a storage facility on a Tuesday afternoon – just means more fortune for me! I noticed that they all drove minivans or trucks, though one person drove their Jaguar to the affair, and carried locks and flashlights. I later learned that after the auction is over, the facility gives you a limited amount of time (it’s negotiable, it’s always negotiable) so sometimes you put your own lock on it to come back later.
Auction 1: The walk over to the first unit was pretty long, easily the length of the facility, and there was an air of eager anticipation in the air. The facility owner snipped the existing lock, lifted up the door and behold… an office chair, some old clothes, and the saddest looking subwoofer you’ve ever seen. Oh, and there was some trash in there too. The bidding was fierce but the winner walked away with the chair and the sub for $20.
Auction 2: This one actually held some good stuff but most of the attendees were turned off by the beat up pool table. There were four couches, some mattresses, a desk, that pool table, and who knows what else inside. The winner paid out $10 for the haul and it was uncontested, though everyone was immediately turned off by the prospect of dealing with the pool table.
In both instances, the facility operator was really obliging, letting everyone look inside and poke around. There aren’t really any “rules” to this auction thing, the facility just wants to be rid of it and the capitalists are looking to profit a little from getting the stuff in the first place. The operator offered the services of a moving company associate of his, to the winner of the pool table, but she said she’d just give it away online (probably through Craigslist) to anyone willing to haul it.
Like tax lien auctions, this one has a significant personal element involved and I think my fortune can be made without tempting karma. I know the content owners have fallen behind on their leasing obligations, I know they are rightfully losing their property, but I think that there’s a measure of karma involved in buying someone else’s possessions on the cheap and trying to turn a profit from them.
What stops the facility from cherry picking the good stuff for themselves? They often know the contents beforehand because they can watch someone move in (the locks are not the facility locks, hence the cutting) but I suppose there’s a sense of trust involved.
Ultimately, I think this would make an entertaining hobby or help someone get some furniture on the cheap, but it’s likely not going to make you a fortune. Every once and a while you’ll hit a jackpot but it’s like the lottery, you play a lot and hope you get the big score… good for entertainment, bad for paying the bills.