Getting the most out of your online self storage auctions is an inexact science, but data suggests there are factors that can affect the number of bidders and final sale price. Reviewing your data will help you collect the most debt.
Are you getting the highest return from your self storage auctions?
There are so many variables that affect the price of a unit that, historically, it’s been near impossible to determine how to increase final bids.
Influencing factors include:
- Unit size
- Quality of contents
- Size of the bidder pool
- Local auction competition
- The amount of debt owed
- Facility location
- Day of the week
For many years, it was difficult to get as many as 10 people to show up at a facility on auction day. Most operators were just happy to empty the unit and didn’t bother trying to recover more debt. It was relief enough just to recover the rentable space.
All of that changed when Storage Wars debuted on television and stirred curiosity about self storage auctions. Suddenly, hundreds of people started showing up at sales.
Many buyers were in the resale business, mining storage units for inventory. Units started to sell for hundreds and even thousands more than they had before reality TV. Of course, once the novelty began to wear off, crowds returned to a more manageable size. Though unit prices didn’t necessarily return to pre-Storage Wars lows, facility operators began to seek other ways to generate higher bids.
The Online-Auction Boom
Around this time, online self storage auctions gained in popularity. They delivered large, virtual crowds that weren’t a burden to facilities on auction day. They also eliminated the fear of holding lien sales in the rain or sweltering heat.
For operators who have sought to increase their lien-loss recovery, online auctions have not only provided a larger audience, they’ve provided data to help minimize many of the nagging variables involved in auctioning units.
For example, have you ever wondered if the day on which you hold an auction has any impact on unit price? Do photos have an impact? What about other factors?
My company has been collecting data from its auctions to study these and other trends. The following observations, based on statistics from the first and second quarters of 2018, might prove useful when scheduling your next online auction.
Number of Days Online
There seems to be a correlation between the number of days an online auction is active and the bid amount. Most providers have been using auction-listing websites and other advertising methods to attract buyers to your units. Typically, the longer they have to accomplish this the better, but how many days is enough?
Measuring the average views and sales price based on the number of days a unit was listed had interesting results.
Units listed for only one day brought an average sale price of $149.71, while units listed for seven days earned an average price of $218.01. Most operators have been listing their units between seven and 14 days.
The average sale price goes up more the longer a unit is listed. Some units will sell for a low price regardless. These are likely units with no contents of any real commercial value. Unfortunately, there’s no avoiding these units occasionally.
Number of Photos
It might seem silly to think the number of photos included with an auction listing would affect the average sale price, so long as the images are high-quality; but the data indicates a higher photo count impacts not only average sale price but average number of views. Most operators list units in the first 10 days of the month. Since the average sale price increases when there are fewer auctions available, we can surmise that a simple principle of supply and demand is in force here, in conjunction with the number of photos listed.
Day of the Week
Have you considered holding your online auctions on the weekend, wondering if it would increase unit prices or affect the number of bidders?
Interestingly, most days are similar in terms of views and average unit price, with one exception—Sunday!
In the data sampling we collected, Sunday had the highest average unit price and number of views, despite just 400 auctions sold. In fact, the highest average unit price achieved during the months studied occurred on Sunday, ranging from a low of $397.14 on March 11 to a high of $906 on January 21.
Another factor impacting the overall auction-sale price is if the amount of time an operator gives a winning bidder to clean out the unit. It makes sense that it would be harder to sell a full 10-by-30 unit if you require the winner to clean it out within 24 hours. After all, many bidders buy multiple units at a time, so it may not be possible for them to achieve a 24-hour turnaround.
Data indicates there may be some correlation between required clean-out time and number of bidders. Our data suggests there are slightly more bidders and a higher average unit price on units that allowed 72 hours versus 48 and 24 hours.
Receiving the highest bid possible during an online auction is an inexact science, but data indicates that you can implement strategies to improve bidding conditions. Length of marketing, number of images, day of the week and even the amount of time you allow bidders to clean out their units all appear to be factors. The longer online auctions are conducted, the more data providers will have to identify buyer behavior and trends. For now, this insight should help you create a plan to recover as much money as possible.