Archive - 2013

You might be surprised to find out that many of the storage units you come across at auction once belonged to other auction-hunters.

In some ways, the storage auction community can tend to be a bit self-feeding. When you buy a unit at auction, you have the opportunity to either remove the items or simply take over the lease on the unit.

As long as someone’s paying rent, the storage facility doesn’t care. For the buyer, though, this can be a bit of a pitfall. It’s easy to get overwhelmed with a unit and choose to pay for storage rather than dealing with its contents.

If your resale business falls on hard times, you might find your hard work up at the next lien sale.

There are a lot of benefits to renting storage space for the items you buy at an auction, but there are also a lot of drawbacks. It’s up to you to weigh the pros and cons and decide whether a storage facility is the best place to keep items you can’t sell right away.

Pros:

• You don’t have merchandise taking up space in your house

• You can run a resale business from a small space, like an apartment, without limiting what you can buy

• It’s more convenient to rent a storage unit than clean it out right away

• You can consolidate the contents of several units into a single unit for convenience

• You can hold onto items for a long time until they become worth more; for example, you can store Christmas ornaments that you find throughout the summer and sell them in December

Cons:

• It’s easy to get overwhelmed and end up with more stuff than you can reasonably resell

• You have to factor in the cost of a storage unit into your business overhead

• If your business goes slowly, you might lose the unit altogether

• You’ll have to drive out to the facility and load up items to sell them

• You can start to forget what you even have stored and lose out on sales opportunities

Ultimately, it all comes down to organization and control. As long as you keep your storage unit rent inside your budget and don’t let yourself get overwhelmed, storing things at a facility can be a smart idea.

It’s certainly better than letting your goods fill up your home with clutter. On the other hand, you don’t want to lull yourself into believing that you can afford to keep more stuff than you can reasonably ever sell.

Practice restraint, buy only what you can sell for a profit, and don’t let your excitement cloud your judgment.

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The key to making a profit from storage auctions is to never pay more for a unit than you can get out of it in sales. Of course, this isn’t always possible.

Sometimes you get burned with a bad unit, and sometimes the sales market shifts so rapidly that something you thought would make a good profit turns out to be impossible to sell.

All the same, the key to smoothing over these occasional upsets is to ensure that you stick with a conservative budget and a safe bidding strategy that will help you stay in the positive.

When it comes to bidding, there are a few simple rules to follow: Only bid on what you can see, only bid on items you know how to sell, and avoid the temptation to get into a bidding war. As long as you do those three things, you should come out ahead more often than not.

The other crucial part of keeping your auction purchases reasonable is to set a budget and stick to it. Decide how much money you realistically have to spend for a week’s worth of auctions, and determine how much of that you’re comfortable setting down on a single unit. Here are a few things to consider when creating a budget:

• How much disposable income do you have? Don’t gamble with your rent money. You need to be able to possibly lose everything you bid if things go badly without putting yourself in a bind. Don’t bid with money you don’t really have, whether it’s credit or cash you need to spend on other things.

• What overhead costs do you need to account for? Remember that you’ll need to factor in gas prices, time, and storage space for any items you win. You might also need to pay for space at a flea market, buy licenses or have other similar expenses. Don’t cut your profit margin so close that you end up losing money on these expenses.

• What is the unit worth? You may need to adjust your budget to meet an individual unit’s needs. If the unit is filled with valuable, easy-to-sell items, you can afford to spend a bit more on it. If you can’t get much money out of it, you shouldn’t put much money into it.

Once you calculate a budget, stay with it. If someone outbids you, let the unit go. Another one will come along. One way to help keep your budget in line, especially while bidding online where you have instant access to your bank account, is to use a separate account for your auction buying.

People who run official resale businesses need to keep business accounts anyway, but even hobbyist buyers can benefit from having dedicated auction accounts.

This way, you can keep track of your expenses and put a cap on your spending.

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Nearly anything can be sold if you can find the right buyer. Some items have more interested buyers than others, however, and recognizing these items will save you a lot of time and hassles when it comes to reselling. Any time you look at a storage unit, you’ll want to keep an eye out for these easy-to-sell items:

• New, high-quality electronics including flat-screen televisions, gaming systems and good computers. You need to be fairly well-versed in technology in order to identify the high-quality new items from those that are outdated, however. A recent, high-powered computer can be resold for several hundred dollars. A computer that’s a couple of years old might be worth less than $50, and an old-fashioned rear-projection TV is pretty much worthless.

   

• Collectible items. This almost goes without saying since it’s the bread and butter of all the storage auction TV shows, but it’s true: If you can find a bona fide collector’s item in a storage unit, you can probably sell it for a decent profit if you can find the right collector. Not all collectibles are worth the same amount, though, and some can be a bit obscure. Obvious collections that were cared for by their previous owner will be easier to sell for a profit than assorted bits and pieces.

   

• Exercise and sporting equipment. A lot of people buy exercise equipment only to decide they won’t use it, which means a lot of this equipment ends up in storage units. Fortunately, they tend to resell quite well as long as you have the ability to haul and store it. Things like treadmills, elliptical machines and stationary bikes all sell quite well on Craigslist, especially around the beginning of the year when people are making New Years resolutions. Bicycles can also be worth quite a bit of money and tend to hold their value if they’re well made.

Depending on how patient you are, you can also make a decent profit off selling small items that other resellers aren’t as interested in. When bidders see a unit full of clothes, small appliances, dishes and other household wares, they often overlook the units entirely because they’re just not very flashy.

If you can secure one of these units for a cheap price, though, you can often make a profit selling these small items individually through yard sales; over time, the profits really do add up.

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The storage auction business is often one of trial and error. There are no guarantees that you’ll make a profit reselling every unit that you buy, or even that you’ll always break even.

As you start buying units and selling their contents, you’re bound to make a few mistakes, and learning from these mistakes is how you become a pro in this business.

All the same, you can give yourself the best chances of success by a voiding a few common newbie errors:

• Buying more units than you can handle. If you’re just starting out, it’s a good idea to start small. You don’t want to end up with more items than you can store, and you definitely don’t want to be stuck with more units than you can clean in a 24-hour period. Start off with one or two units a week and move up from there if you’re comfortable with the amount of work required.

• Buying units full of items you can’t resell. It pays to do research on the items in a storage unit before you buy it. This is one place where virtual storage auctions offer a clear advantage over traditional in-person auctions: You can look up the resale value of items in the unit before placing your bid.

• Getting caught in a bidding war. Don’t let your excitement and eagerness to win a unit overshadow your common sense. Set a budget and stick to it. If bidding goes past your limits, let that unit go and focus on the next one instead of letting your pride get in the way. In online auctions, bidding wars can quickly escalate out of hand. It’s much smarter to wait until the auction is winding down to place the winning bid rather than bidding up the competition early on.

• Buying units full of junk. Some storage units are filled with garbage of little to no value, and the hassle of packing it up and hauling it away can be a real pain. Even if there are a couple of decent items in the unit, cleaning out all the trash might make it not worthwhile. Remember that you’ll need to pay fees for the dump and other related expenses; factor these into the cost of any unit you buy and avoid the ones that become too pricy.

• Acting like an amateur. Even if you don’t make any obvious mistakes in the buying of a unit, you can still come off as an obvious newbie at an auction, and this can make other auction-goers hostile toward you. Newbie behaviors include bringing your kids to an auction, being overly chatty with other attendees, asking a lot of obvious questions, and wearing inappropriate clothing such as dress clothes. If you’re attending a live auction, you’ll want to make yourself seem as inconspicuous as possible as some veterans like to bid up newbies to scare them off. Of course, if you’re bidding online, you don’t have to worry so much about keeping up appearances.

Because storage auctions are such a competitive business, it pays to appear as professional as possible. Putting your best foot forward and avoiding these common pitfalls is a good way to give yourself a head start toward success when attending storage auctions.

The fewer newbie mistakes you make, the better your chances of sticking with the business and getting along with your fellow auction-goers.

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Reality television rarely paints a particularly realistic picture of anything it depicts, and that’s certainly true of storage auctions.

Despite the popularity of auction shows like Storage Wars and Auction Hunters, these shows bear little resemblance to real-life events. Of course, if you’re looking at these shows simply for entertainment, that doesn’t make any difference.

If you want to learn more about storage auctions, however, there are a few things you need to know before your first sale.

First and foremost, the items found in real storage auctions are rarely as nice as those seen on the shows. Even the reality shows put up a disclaimer that these auctions are representing only the “best finds” for the auction hunters, and even that is generous.

The fact of the matter is, in a lifetime of storage hunting, you’d be lucky to come across just one or two truly valuable items, much less priceless collector’s items and antiques.

Instead, the majority of the items found in a storage unit will be the kinds of things found inside most homes: furniture, appliances, clothes, old toys, tax records and photo albums. Many of the things you find inside will hold only sentimental value for the original owner, not monetary value for you. Quite often, storage units are also filled up with worthless trash items.

In order to make the storage shows more exciting, the units are often staged. The film crew will shoot the auction, then take a pause after the unit has been opened to fill it with a few rare items. When filming resumes, the “buyers” will pretend that no time had passed. Long-time auction hunters had long suspected that this was going on, and Dave Hester’s attempted lawsuit against A&E confirmed the activity.

Aside from the items found inside the storage unit, there’s another important difference between real storage auctions and those seen on TV: Real auctions are nowhere near as dramatic.

The shows try to amp up the excitement of the program by adding arguments, personal vendettas, bidding wars and other bits of high drama. In reality, these things rarely ever happen, and they’re usually not a big deal even when they do.

The truth of the matter is that most storage auctions are frequented by a mixture of newbies and veterans. The veterans all know each other and will usually have a mutual respect, if not friendship. The newbies usually get ignored. If any fighting breaks out, the offending bidders will usually be escorted out quickly for disrupting the auction.

All of which is not to say that real storage auctions can’t be exciting. There’s something absolutely exhilarating about bidding on a unit and searching through it for the first time.

It’s a kind of excitement that a television show simply can’t replicate, so the shows rely on cheap tricks to get the idea across. To know for yourself what a storage auction is really like, you’ll simply have to attend a few.

Please leave your insightful thoughts in the comment box below.