Tuesday, May 27, 2014

Live Oral Auction versus Online Storage Auctions

In recent months, many of our managers, buyers and followers have been asking about “the latest" thing to pop up in storage auctions - “Online." Due to the variety of questions and myths surrounding the issue, we decided to give you our opinions on the pros and cons.

Storage Auction Experts is in a unique position to offer some advice on the subject. Why? It's because we are one of the very few companies to offer both types of storage auctions. A few businesses offer online storage auctions exclusively. Naturally, when advertising them, these companies make their service sound most modern and convenient. These companies show only the benefits of online services versus live auctions, and none of the negatives.

On the other side of the coin, the vast majority of storage auction companies offer only live auction services. Like the online companies they only give the value in live auctions.

Storage Auction Experts has conducted thousands of live auctions; however, because of the demand, we have recently expanded into the online auction business. Our company offers the best of both worlds, giving our managers the best information on the best type of auction for their unique situation.

One of the arguments for online auctions from a competitor is there are “no crowds to deal with.” This can be a positive or negative depending on the situation. If a manager does not like crowds or is intimidated by having people on their facility then an online auction may be the way to go.

The same competitor discusses “liabilities” in having large crowds on the facility. However, in researching the issue, Storage Auction Experts has not found one instance of a storage facility being sued by an injury occurring during an auction in California. This “liability" is nonexistent and therefore NOT a “benefit.”

One of the positives of a large crowd is the intensity of the bidding that often takes place. Buyers are competitive and often battle with each other in an effort to gain control of the storage unit. Others often get caught up in the frenzy of the bid and excitement of the auction. Here's the proof in the pudding: would buyers rather have small crowds or large crowds? All buyers know that they would rather have a small crowd rather than a large crowd because they can get better prices. With large crowds the prices are often driven higher and faster. Online may have lots of “views,” but this doesn't equate into lots of “buyers.” One online company brags of “thousands of bidders.” That's not quite true. Thousands of watchers are closer to the truth. If a bidder lives in Utah, what are the chances he's bidding on a unit in Florida? The true bidder number is determined by the distance, convenience and the value.

Another argument is that online auctions have a start and stop time that is guaranteed. This is true. Although other companies have had issues with “lateness,” Storage Auction Experts auctioneers pride themselves in an on time schedule. That's not to say we're not sometimes late. But, with our scheduling, contacts with managers and relationships with our buyers, they realize when we occasionally do run behind schedule they know the reason.

One of the fun things about live auctions is the “unknown factor." This is the treasure hunt aspect of buying storage units. Buyers will often bid higher anticipating the hidden treasure possibility. Ask any buyer who has seen a partially hidden safe. With online auctions photographs are often taken of opened containers, jewelry boxes, totes and other sealed objects in order to try and obtain the highest price for each storage unit. By opening containers this removes the unknown possibilities and actually hurts prices. Buyers will bid on a closed jewelry box not knowing what is inside. If the box is opened, the mystery is removed as well as the gamble.

In addition, some buyers are an extremely suspicious breed. It is their common belief that if someone was to open a jewelry box and see a valuable piece of jewelry, this jewelry would “vanish” before the inventory pictures were taken. This is a common suspicion with no finger-pointing at any business or competition. Buyers would rather gamble with the unknown (and untouched), than trust someone they don't know.

Buyers also know that if you want to sell something, you show it in its most favorable light. On eBay, vendors show multiple photographs of individual items to show the good, bad and ugly. With online auctions, a missing dresser leg, or a huge tear in a picture may not show up in their area photographs.

At Storage Auction Experts we obtain the names, ID numbers, resale numbers, addresses and phone numbers from the person, in person. If and when a problem arises, Storage Auction Experts is able to deal with these people directly. Although there's a remote possibility of false identification, this is greatly reduced when dealing with a person face-to-face.

Most of identity theft and stolen credit card issues occur online. How do we know? Before becoming an auctioneer, I was in charge of the Identify Theft/Fraud unit at Modesto Police Department in California. He's seen more than his share of these issues and has conducted seminars and lectures about Identity Theft. Online theft extremely exceeds “in person” identity theft.

Let's suppose a purchase was made with stolen credit cards or a stolen ID, online auction companies have very little recourse. Who are they going to investigate? What Police or Sheriff’s department has jurisdiction? A year and half ago, Storage Auction Experts was defrauded in Kingsburg. California. We took the suspect and his wife to small claims court and were awarded $1850 settlement against him. It was only because we had had face-to-face contact with this person (who provided us with a false name) that we were able to follow up and win a judgment against him for the Kingsburg facility and for Storage Auction Experts. [Fresno County Superior Court case# 12CESC00785]. This would not have and could not have happened if the auction was conducted online.

Here's a another reality in the online world. Who are you bidding against? Is it a “robo-bidder,” or a real person? If you ran an online company and after inventory, knew a unit was worth $500.00, why would you let it go for $20.00? You could have an automatic bidding set up to drive the prices. Or, maybe you would have your cohorts bid it up. If you lose it, your price was met. It you win it, you got a bargain. A win-win. Don't kid yourself into believing this doesn't happen. At a live auction, an auctioneer could have a cohort, but that person sees everything the other bidders see. There is really no advantage.

What happens to those garbage units that every facility has on auction day? I can't count the number of $1.00 units I've sold to the extreme delight of the management. Will online companies take pictures of this unit and try to sell it? Of course not. Their only option is to tell the manager it's their problem. 

How about the simple problem if an online buyer doesn't clean out the unit or abandons it? Storage Auction Experts deals with this situation in several different manners. Online auction services don't have the same options open to us. We personally guarantee satisfaction on unit clean outs. If Storage Auction Experts sells a unit at an auction, we will clean out the unit if the buyer doesn’t (except hazardous materials). 

Another important issue regarding online auctions is the settlement of the bill. An online competitor of ours took over a site in the Central Valley of California and conducted an adequate auction. At the conclusion of the auction, the managers (and later the owner) realized they had a dilemma The online auction company would not settle up on the outstanding account until they received their payment at the end of the following week. The issue? Who is now the lawful possessor of the storage unit that had been through the lien process, but not paid for? The management did not want to continue to bill the previous tenant, as the unit had been sold. And, they couldn’t take it off the books either, as the account was not settled. After two auctions of paperwork “nightmares,” the facility came back to us.

Online is not all negative. Occasionally a storage facility can benefit from these services. One is isolation. A facility in Susanville, a small community located several hundred miles away from other towns and cities could benefit by showing units to potential buyers that would not travel those distances for a live auction. Most facilities however, are located near populous areas, making it easy for buyers to follow the auctioneers throughout the day.

Another benefit with online auctions is if the facility encounters a unique situation. Recently a small foothill facility opened up two storage units containing piano repair equipment. The uniqueness of this equipment may have found additional bidders with proper online networking. Instead, this equipment went to the highest bidder in the area.

Storage Auction Experts believe that online auctions do have a small niche in the world of storage auctions. Online auctions (as a competitor claims) are not the “future of the storage unit sale industry.” Some things are just better suited for being done in person. Here's an example: Would you rather buy a car in person or online. As a seller, you get more views and potential buyers, when it comes to the sale, very few buyers’ trust 100% what they see online. In the end, buyers need to lift the hood, kick the tires, smell the interior and then fire it up. It's the same with storage units. If you don't trust what you're seeing in photographs, you probably will spend less.

We hope this offers a brief look at the benefits and negatives to both types of auctions. Storage Auction Experts is continually looking for the newest and latest ideas. While online auctions have their place, for maximum return, live oral storage auctions are still the BEST way to go!

Craig Plante, Auctioneer
Storage Auction Experts