Storage owners have enough to worry about when it comes to lien sales. Don’t increase your stress by hiring an auctioneer who doesn’t know the legalities of storage auctions or how to deal with troublesome bidders.
“The wrong auctioneer could cost you everything,” said Casey Cole, owner of BC Cole Auctioneers in Glendale, AZ. When hiring an auctioneer, look for someone who’s honest, dependable and “above all, knows the laws,” he said.
Before you hire any auctioneer “as is,” check out these seven pointers for finding the right professional to conduct your next storage auction.
1. Require self-storage experience.
It’s easy to run into trouble if you use an auctioneer who’s not familiar with storage auctions, said Thomas Hayward, owner of Thomas Hayward Auctioneers in Reno, NV.
“If I open up a storage unit and there are piles of medical records in it, I know right away that I can’t dispose of them due to HIPPA laws,” Hayward said.
An auctioneer who doesn’t know lien laws also could miss the significance of a stack of Army camos in a unit and violate the Servicemembers’ Civil Relief Act, a federal law that prevents auctioning units rented by tenants who are on active military duty.
Additionally, an experienced storage auctioneer will catch items that can’t be legally sold or simply thrown away, such as firearms, cremated remains and hazardous materials.
2. Look for a good reputation.
Find an auctioneer who has established a following in your area. Along with being reputable, he or she probably will draw a big crowd. Pretty much every region has at least one or two auctioneers who specialize in storage.
“You can usually get a referral from another self-storage facility,” Hayward said.
3. Ask for documentation.
Make sure any auctioneer you hire provides proof of being bonded and licensed (if it’s required in your state). If a lien sale goes to litigation and the facility owner hired an unlicensed auctioneer, the sale probably won’t hold up in court, according to Hayward. It’s also essential that the auctioneer is bonded to help cover financial losses.
An operator can check state-by-state licensing requirements by reviewing auction laws or consulting an attorney.
For tips on getting the most out of a storage auction, visit blog.selfstorage.com/self-storage-auctions/storage-auction-tips-2-4867.
4. Put it in writing.
It’s best to enter into a written agreement with the auctioneer, outlining roles and responsibilities of both sides regarding the lien sale, said Scott Zucker, an attorney for the Self Storage Legal Network.
Be sure to designate:
- Who is accountable for collecting sales tax, if applicable.
- Who will ensure that bidders sign in and agree to the rules of sale.
- Who carries the insurance for a wrongful-sale claim.
“None of these issues should be left unclear, and a standardized agreement should be used to address all of these issues and others prior to any third-party auctioneer being hired,” Zucker said.
5. Consider conflicts of interest.
Some auctioneers run auction houses and also buy goods at lien auctions to sell at their own businesses. “They’re sort of double dipping,” Hayward said. “A lot of bidders don’t like that.”
6. Inquire about recordkeeping.
Hayward maintains all records of lien sales for a “full audit trail,” he said.
Make sure the auctioneer keeps track of everyone who purchased auctioned items, including street addresses, email addresses and phone numbers, so that you can prove an auction was on the up-and-up. Tax documentation should be maintained in places that require collection of sales taxes.
Accurate records are especially important if a tenant files a wrongful-sale lawsuit. “If an auctioneer has all the records and somebody attempts to file suit, that will usually scare them off right away,” Hayward said.
For tips on conducting storage auctions, visit blog.selfstorage.com/self-storage-auctions/storage-auction-tips-3855.
7. Think twice before playing auctioneer.
Even if you’re not legally required to use a licensed auctioneer, it’s still a good idea to hire one for lien sales, Zucker said.
Experienced auctioneers generally handle issues such as sales tax payments and exemptions, difficult bidders and even unhappy tenants better than facility personnel can. Also, a storage auctioneer most likely will bring in more money than if the manager conducts the sale.
Hiring a storage auctioneer is “an extra buffer to keep the whole process honest,” Cole said.