It all starts with one delinquent tenant – there is nothing great about losing money. To collect on your losses, you are left with one option: running a lien sale. After you have sent your lien letters and posted the sale in the your public notice or newspaper, the fun part begins. But what is the best way to host your auction: live or online?
Well, that is just the question we hope to help you answer today to determine what is best for your facility’s needs.
Online Vs. Live Auctions
First, we should discuss the difference between the two types of auctions before breaking down the pros and cons to each.
Live auctions are seen more as the traditional way to hold a lien sale, involving an auctioneer or your storage facility manager at your store to auction off the past-due units to a group of bidders. Online auctions are a more modern take on traditional live auctions. Think if the tv show ‘Storage Wars’ combined with eBay, and that’s online auctions! Online auctions are held on a multitude of platforms across the internet and function in a similar way to eBay, allowing for online bidding until a decided upon end-date and at least 3 minutes with no further bidding activity.
Live auctions take up a day, and most facilities will elect to make sure the winning bidder cleans the unit within 24 hours of the end time. This ensures a high turn-over rate to selling and having the units cleaned and ready for renting. With live auctions you can also hire an auctioneer who will almost always bring a guaranteed following of bidders. These auctioneers will also handle the marketing for your auction.
Live auctions also offer the bidders the ability to see the units, bring flashlights, and even smell the units.
Live auctions bring a crowd of bidders to your facility, often affecting the day-to-day business of your facility, parking, and social distancing. The amount of people on your property will also prove to be a burden to your management staff. Your auction day could also be disrupted by the risk unpredictable weather, certain bidder collusion, and crowds (something we are all wanting to avoid now-a-days).
Online auctions are the modern day’s answer to the live auctions of old. Online auctions rely on the power of internet to draw in a larger bidder base. Views on individual units can often exceed 300 viewers and great units can reach over 1,000. No one’s parking lot is big enough for 1,000 cars and trailers. This can also include bidders in other markets who may normally be unaware of the auctions happening at your storage facility. Our data show that bidders will only be limited by the distance they will be willing to drive to claim their winnings.
With online auctions, you can also avoid the mess of bidders on your facility’s property. You will only need to meet with the winning bidder on the day scheduled for them to pick up the contents of the lien unit. Online platforms will also handle marketing for your auction, included within their services.
Truly, the only potential drawback to online auctions is that the winner of the unit will not be on your property when the auction ends.
What’s Best for Your Facility? Online or Live
Ultimately, when choosing between online and live auctions, you must determine what is most important to your facility and its needs. Some owners may feel like renting their unit to a paying tenant is much more important than building up 6 to 10 units to have a good auction day. If you are in a smaller market and need to reach more bidders, online may be wiser for your facility.
Now that you have an idea of what both live and online auctions bring to the table it comes down to what you feel is best for your business.
From a legal standpoint, have confidence in knowing both follow the same legal process and are reliable, legal options for your auctions.
Selecting a Vendor for Your Auction
Whether online or live, you will need someone to run your auction. With an online auction, you will need to select an online vendor, and with live auctions, you will need to hire an auctioneer or train your manager in how conduct an auction.
Make sure to keep three things in mind when considering hiring an auctioneer: cost, scheduling, and attendance. Auctioneers may charge a 25-35% commission with a minimum likely to be in place, a percentage of each sold unit or even both. Do the math to ensure the price of the auctioneer will not bring down your collections from the auction too much. Schedule your auctioneer as early as possible to ensure they are available to work your auction.
As mentioned before, many auctioneers have a “fanbase” of people that follow them to all the auctions they host. If you do not have a well-established bidder base, hiring a popular auctioneer would benefit you. Also keep in mind if your auctioneer will be hosting a caravan and where your facility will be in the caravan. If your facility is located further along in the caravan of stores the auctioneer will be attending that day, you may have a lower number of bidders than someone in the beginning of the caravan.
When examining online auction platforms, there are many factors you should investigate. The main factor you should keep in mind is the website’s presence online. Go to where your audience would be looking for an online auction, such as Google, and search, “Storage auctions near me.” Is the online auction website in the search results? How early does the platform appear on the page?
When looking at online auction platforms, it is also wise to keep in mind each platform’s pricing. Most platforms offer a 90/10 spilt along with cancellation fees for needing to pull a unit out of the auction. Some platforms charge a 20-dollar fee for cancellations often included into the tenant auction fee-schedule, should the tenant pay the past due rent.
It has been proven by thousands of operators that online auctions have been proven to receive higher bids.
Whether you use live or online, we all can agree that auctions are the ‘necessary evil’ of our business and essential to running a high performing facility.
If you ever want to know more about online auctions, or just want to learn more about StorageAuctions.com, be sure to give us a call at 866-944-8530!