In light of the recent success rate of storage and repo auctions, I thought it would be a good idea to discuss some of the different tactics involved with the resale business. Yes, most everyone is following the rules and using self storage auctions as a way to make an honest living. But, unfortunately, like every profiting business, there are those who have found a way to cheat the system. So if you repo for profit, watch the shows, or know a friend who’s headed to an auction, be aware of those who aren’t playing fair.
How the Scam Works
Renters set up a self storage unit, generally under an alias so they can’t be identified. They may pay the rent for a few months to avoid suspicion, but then purposefully default on the unit. But, before their 90 days are up (renters who fail to pay their rent for three solid months have their items auctioned off to help pay back rent), the storage unit is filled with expensive-looking boxes. Flat screen TV cases, boxes for electronics, plain ones labeled “jewelry” or “collectibles” – anything that will give the illusion of value. This is especially dangerous because these types of boxes can be found anywhere: in trash bins behind electronics stores, or at the recycling plant. The boxes may even be weighed down with trash or rocks to avoid initial suspicion from the facility’s owner, as sometimes items are moved before an auction.
Once the 90 days have passed, storage auction attendees will be willing to spend big bucks on a unit that looks like it will turn a heavy profit.
Why it Works
Auction buyers are not allowed to go through items before a sale. They are simply shown the contents from a distance, and can then take their chances. Bidders can see the boxes and, thinking they have a lot to gain, will push the unit’s price higher and higher. And there’s no turning back; all auction sales are final.
After the money has been collected and the back rent has paid, the excess money is paid to the unit’s original owner to help recoup their losses. So, when the scam goes through as planned, the renter receives large amounts of cash, all for empty boxes and trash.
If you’re a regular auction attender, or even just watch the repo specials on TV, remember that not everyone is a renter down on their luck; many are out to trick others out of their hard earned cash.
Have questions or comments about the storage auction business? Let us know.