Probably the most debated procedure of
the auction process is when the locks should be cut and the contents of the units
inventoried. We ask ourselves, should they be cut as soon as possible in order
to gain maximum profits from the tenant? Or should the locks be cut at the auction to
attempt to save the tenant money in fees and the purchase of a new lock? Some
managers suggest meeting in the middle, and cutting the locks just before the
newspaper advertisement is placed. There are reasons each facility has their
own preferences on this matter, but let’s go ahead and discuss some of the
benefits of cutting locks sooner rather than later.
Before we discuss which particular
method may be best for you, understand that there is more to the auction
process than when the auctioneer simply shows up to sell the units. Instead it
is initiated on the first day the unit is delinquent; gate access is no longer
permitted, phone calls are made, units are over locked as soon as possible, and
the pre-liens and liens are processed. Lock cuts, advertising, and staying in
touch with your auctioneers from Storage Auction Experts are a few ways you may
be able to maximize your overall profit and recovery.
First we should discuss the
auction buyers’ favorite part of the process, which is the process of cutting
the locks at auction. Yes, it does add excitement to the buyers’
imagination as they watch the locks being cut, and smell burnt metal in the
air. They love knowing that no one has seen the unit, and that anything could
come from behind those doors. Even the occasional empty locker that is cut
open, although at times disappointing, is still exciting, as it provides
further evidence that no one has seen the unit since the day of over lock. Sites
that do this method tend to be favored by auction buyers; however there
are some disadvantages to cutting locks at auction. Sites can miss out on many
opportunities of advertisement if there happens to be something extraordinary
in the unit. They also eliminate the possibility of renting out the unit to
potential clients if it is empty, along with the opportunity to collect lock
cutting fees; or the sale of a new lock to those who pay up before auction
time. Additionally, it is also very time-consuming to cut locks during the
auction adds pressure of speed and efficiency, and possibly permits more hasps
and doors to become damaged. Therefore this method is not recommended to
recover maximum returns from the auction process for sites with a large number
of delinquent units, or for those whom are over 85% capacity on any particular
size unit.
The most common procedure manager’s
use is to cut the locks before the auction, normally about 3 weeks in advance.
This is a practice managers feel safe doing. They feel they’ve given the tenant
every chance to avoid additional fees, while still saving enough time to do a
proper inventory and prepare for auction. This may also be preferred because normally
cutting the locks is the last attempt to “scare” the tenant into paying the
bill. The tenant then realizes their lock has been or will be cut and they need
to take this matter seriously before the next step: Auction!
Furthermore, cutting the locks
before the auction is also the preferred method simply because it enables you
to organize a smooth running auction on auction day, eliminating mayhem and
surprises. It saves wasted time on empty units, and most importantly allows you
to advertise and roughly appraise the merchandise and have a chance at making realistic
auction price expectations. We recommend this method because it may allow you
to better take advantage of the entire auction process instead of cutting locks
the day of auction. It is important to realize the auction isn’t just about how
many bodies attend, but the buyers that are present bid on the true quality of
each unit, and lost earnings from defaulted units are recovered as much as
possible.
We have found that cutting locks
as soon as possible reduces the amount of delinquencies as well as improving
the cleanliness of facilities, making it overall the most profitable measure.
However, it is tough to convince others of this. Follow the law strictly. There
is a reason the court system has recognized specific time periods for the
storage industry; they have been proven to work, take advantage of it.
Some ways you can help the process along are
to shut down gate codes from the beginning to force the tenant to walk into your
office and talk to you. You can’t legally deny them access to their unit, so
you’ll have to let them in, but you can shut off their gate code. Getting them
into your office increases the likeliness that they will either pay you the
rent and/or not leave you with a thrashed, picked over unit of garbage that
contains nothing sellable. Schedule someone to do overlocks on the 30th
day late assuming the pre-lien was sent out on time, or the first legally
permitting day early in the morning. Be sure to make a strict routine so time
doesn’t get past you. Get every delinquency in pre-lien and lien status as soon
as possible. If your pre-liens aren’t ready to be mailed by closing on the 15th
day then you are adding time to the process. The same goes with liens by
the 30th day. While this may cost some extra money the first couple
of months, it is possible to recover the money lost in your fees. Including
this process in your contract may not only make you money, but it can train your
customers to pay on time. Once they realize there are fees and consequences
they will take you seriously. Once all the paperwork is processed, schedule to
cut your locks within the same week, preferably with an outsourced insured and
bonded company like Storage Auction Experts.
While every facility has a
different procedure, cutting the locks at the first chance is strongly recommended.
It gives you a bat to swing when these tenants’ start throwing you fast balls.
You also make money by charging for the lock cuts and selling them new locks. Also,
you don’t have to settle as much because you have a rough idea of what is in
the unit. Take advantage of having the upper hand. If you feel uncomfortable
playing hardball, you can always provide a free lock to ease the blow. At least
you have the ball in your court, with all advantages in your favor.
By using a professional lock
cutting company your locks, you can help eliminate the possibility of the
manager being accused of stealing any valuables out of the units. Attorneys
will likely agree that by having a professional insured and bonded company
remove the lock will drastically reduce liability for the removal of the
tenant’s lock. We at Storage Auction Experts are not only insured and bonded, but
we have thirty years of auction expertise, which can only maximize your auction
experience!
Travis Regalo, Auctioneer
Storage
Auction Experts
