LET US $HOW YOU THE MONEY
By now, you’re frothing at the mouth and ready to go to your first auction. And, there’s no better way to learn than jumping in and doing it yourself. Before you do, let us tell you how not to make the same mistakes many have made. We’ll tell you how to do things the right way.
This blog will show you step by step how to profit off of self-storage auctions. Consider it your “Insider’s Guide” written by someone who has years of experience doing just that. When it comes to self-storage auctions, we have been on both sides of the game as a buyer and as auctioneers. We will tell you our insiders’ secrets about what to look for and what steps to take to make the most money.
You should also know that self-storage auctions are not all gold and treasure; they require a lot of hard work and time both the day of the auction and during the reselling of merchandise. However, if you follow our suggestions, you CAN be profitable.
CHAPTER ONE: LEARNING THE BASICS
TYPES OF STORAGE AUCTIONS
The most common type of storage auction you’ll run across is the live auction where participants openly bid against one another. Once, the storage door is opened, the auctioneer starts the auction by asking for a dollar amount. The auction ends when there is no one willing to bid further and the highest bidder wins. You just can’t beat a live auction to really get your blood racing.
Occasionally, you’ll run into a sealed bid or “silent” auction. In this case, the door is opened and all bidders simultaneously write down their sealed bids so that no participant knows the bid of any others. Then, the highest bidder wins and is notified on the spot or sometimes at a later date. The disadvantage of a sealed bid is that you only get one shot to name your price and you can’t adjust your bid according to what the other participants are bidding.
I would shy away from any storage auctions that are sold with “reserve prices” or subject to owner conformation. That is where the seller sets a minimum price that they will not let their items sell below. If the reserve price isn’t met, they are not obligated to sell. This type of practice works in other types of auctions, but for storage auctions it usually means trouble.
At any auction, if you win the bid, you may have to pay a buyer’s premium or charge to the auction house on top of what you bid. So if you buy a lot for $100 and the buyer’s premium is 10% then you would pay $110. It is simply a charge to do business with that auction company.
Remember that income from any type of auction and consignment sales is taxable unless certain exceptions are met. Income from these sales is subject to sales tax the same as any other retail or service business. You must report a gain from the sale whether or not you operate a business. This is the income above the original cost of the item. Always consult a licensed accountant for tax advice on the matter.
IT PAYS TO KNOW THE BIDDERS
The more you bid, the more you’ll get to know who you’re up against. And, with good fortune, you’ll find out that some days the right players aren’t there to raise your bid.
Like the luck I had one day. The door was raised on a particular storage unit and it was gondola shelving as far as you could see stacked from floor to ceiling. The shelves were packed with items from a dollar store that had gone out of business. As luck would have it, none of the thrift-store owners were there to bid that day and no one else knew what they were worth or wanted to do the work.
I won the unit for 25 dollars and loaded up. As soon as I got back to the shop I slapped the items on Craigslist. The very first caller that day said to hold them; they were on their way to pay cash. I didn’t even have to unload.
It’s not usually that easy, but the point is that you can really benefit by knowing whom you’re bidding against at an auction. By learning what other bidders are interested in or not interested in, you’ll have an idea of how high they might bid on certain things. It also might help you sell some of the merchandise that you’ve won on spot without ever having to load it up.
Once, I was at a storage auction and the only thing you could see when they opened the door were stacks and stacks of chairs. So, I took a chance, bid on it and won it for $100. Then I turned around and sold the chairs to someone else there for $100. Everything else in the unit was going to be my profit.
After they cleared out the chairs, there were Titleist golf clubs, dozens of packages of Titleist prov1 balls, two video projectors and more. Score! I made around $2,000 selling it all on eBay. Turns out it had belonged to a church that had closed.
You can always bargain with other bidders after a sale. If you’re interested in furniture and they’re interested in books, you can offer to take the furniture off of their hands for a good price.
They make some of their money back on the spot and you get a good deal on furniture without having to mess with the books.
Don’t be afraid to speak up and talk to the other bidders. Although they may not be too friendly the first few times, they will warm up
to you when they see that you are a serious buyer. You’ll get some good deals and great ideas that way.
Some people like to gather any information they can on the owners of the storage unit. Before any storage unit is auctioned, a legal notice must be placed in the newspaper listing the owner’s name. Some buyers “profile” or try to find out as much as they can about the owner like what they did for a living or what type house they lived in. That may give you some clues as to what they might have kept in their storage unit and what value it might have.
See part 3………