This blog has spent a lot of time talking about the recent influx (well, at least two) of storage auction television shows, specifically SpikeTV’s Auction Hunters and the wildly popular A&E’s Storage Wars. Both of these shows have quickly found huge audiences and have been quickly renewed for second seasons (season two of Auction Hunters on April 5th!). But their popularity comes from the fact that they show storage unit lien auctions as a means to a quick buck and a potential huge return on your investment.
On Auction Hunters, Alan and Ton will frequently turn profits of over 100%! Because that’s exciting! And the Storage Wars cast will find treasures and antiques hidden in boxes and trash bags worth thousands of dollars. Because that’s exciting! Of course, just like you probably couldn’t stay in the same room with Snooki for more than 30 seconds much less 30 minutes, the reality behind “reality TV” is significantly less glamorous. Rather than speculate and glamorize the value and process of storage unit auctions, we thought we’d consult some actual experts and ask them what they’ve witnessed in their experiences and what’s changed in storage unit auctions since the inception of the “storage auction reality show.”
The process that a storage unit and its tenant are subjected to before they go to auction isn’t part of the television drama but you best believe it’s not very glamorous. But we can cover that in another post. Suffice to say, self storage tenants are given many opportunities to pay off the outstanding rent due on their storage unit before it’s auctioned off. Unfortunately, sometimes (actually only about 1-2% of the time) tenants are unwilling or unable to pay and the facility is forced to auction off the contents of their unit. This has been the process for many years but the popularity of storage auctions on television has changed the landscape of storage auctions significantly. Adrian Comstock, CEO of Storitz was witness to many self storage lien auctions during his tenure as VP and Director of Operations at Magellan Storage explains that the auctions were “a way for the abandoning tenant to make good on their debt, where we would apply any cash from the auction sale to the past due amount on the tenant’s account.” That is, even though the auctions on television are on display as an easy way to turn a profit (in addition to the drama inherent to the competitive nature of auctions in general) the point of the auctions is actually not to make a profit, but rather to recoup losses.
Lance Watkins, owner of number of Orange County self storage facilities in addition to other facilities throughout Southern California is also the founder of StorageTreasures.com, and has noticed that the crowds at his facilities are much larger since the inception of the shows. Daniel Pimley, founder of StorageAuctionDepot.com, notes that even before the television shows, the downturn in the economy had affected storage auction attendance with unemployed workers taking the auctions as an opportunity to do exactly what the shows depict: find treasure. Of course, the influx of bidders at the storage auctions has meant an increase in other traffic as well, including increased phone calls inquiring about the auctions and, naturally, an increase in the revenue recovered from every storage unit auction. Watkins estimates that on average, per unit revenues have doubled since the premiere of the shows. He also notes that the television shows, particularly Storage Wars which has filmed multiple episodes at his Storage Outlet storage facilities, had been effective in increasing brand awareness and website traffic.
It’s not surprising that reality shows about storage auctions would have an affect on the storage auction industry itself, but what about the self-storage industry at large? The popularity of the shows can definitely skew the public’s perspective on the self-storage industry in that they will think a unit being auctioned off is common place and something they might have to worry about if they ever decided to rent self-storage. But considering the fact that, as we mentioned, only 1-2% of all the rented storage units in the country ever go to auction, this really isn’t the case. In that way, Pimley suggests that the TV shows “are positive for the auction business but a negative for the storage facilities.” But that blanket statement may be a little too simplistic since another surprising consequence has been that, according to Watkins, the television shows have increased awareness of the lien and auction process they have “educated America that the storage industry lives within a set of laws that govern how we do business and out only resolution for dealing with delinquent or abandoned units […] and therefore the public are paying their bills at a higher rather than they were before”. In that way, the popularity of storage auctions could certainly be considered a boon to the industry since most facilities would much rather have every tenant pay his or her bill on time even if it means they never get to be on TV.
Finally, both of our experts have started websites meant to assist storage owners as well as storage auction bidders in the wake of these shows. StorageTreasures.com acts as a clearinghouse for self storage auctions all over the country so that potential bidders can actually evaluate auctions and units that are being put up to auction. Not only does this assist potential bidders, but also helps keep the numbers of bidders at auctions under control for the storage owners and generally streamlines the process for everyone involved.
StorageAuctionDepot.com actually hosts the auctions on their site so there is no need for bidders to even visit the storage facility. If an auction is listed on the site, bidders can actually bid on units through the site rather than physically attend an auction. Pimley explains, “the process enables the storage facilities to hold their public auctions without the enormous amounts of bidders showing up” which represents a liability to the facility.
The new and clearly burgeoning of online auction management is just another consequence of media saturation of storage auctions though self storage operators will definitely be glad to streamline the cumbersome and tedious process, no matter what the impetus was.
Will SARS (Storage Auction Reality Shows) have long lasting affects on the self storage industry? Will large crowds continue to come out for storage auctions? Will the shows even maintain their current popularity? It’s impossible to answer any of these questions with any certainty, but if other industries and fads are any indication, the initial surge in interest will probably ebb at some point, hopefully leaving behind the benefits its already created for auctions and for the self storage industry at large.
What do you think? Let us know in the comments.