Premiums & Fees: The Hidden Costs of Storage Auctions in Georgia

Summary: Online storage auctions offer bidders the opportunity to get their hands on high-quality merchandise at reasonable prices. But storage auctions come with hidden costs. It is important to understand them before you bid.

From vintage collectibles to valuable merchandise you can resell online, Georgia storage auctions offer incredible opportunities to savvy buyers. Platforms like Lockerfox have made online bidding accessible to anyone with a smartphone or laptop. But first-time bidders might hesitate because they fear unexpected fees or hidden costs.

There are always hidden costs and fees to consider. Just know that "hidden" does not necessarily mean bad. It just means you need to understand them so that you can apply them to your total cost of doing business.

Understanding the financial mechanics of storage unit auctions eliminates surprises. It allows you to bid with confidence, knowing that once you calculate your maximum bid price, you will remain competitive without going over budget. Let's take a look at those financial mechanics, especially as they apply to auctions in Georgia.

The Georgia Self-Service Storage Facility Act

Before we get into the actual costs that come with storage auctions, it is important to understand how these auctions are conducted in Georgia. Storage units in the Peach State are governed by the Georgia Self-Service Storage Facility Act. This act is a legal framework that establishes the rights and responsibilities of storage facility operators whenever a tenant defaults on rental payments:

• Lien Attachments – Georgia law allows storage facility operators to obtain a legal lien on all personal property inside a unit when rent goes unpaid. The lien allows the property owner to recover losses by selling storage unit contents.
• Proper Notification – Before a storage unit can be auctioned, the property owner must provide proper notification to the tenant. Georgia also requires that auctions be publicly advertised in a commercially reasonable manner.
• Ownership Rights – After paying for a storage unit following a public auction, all the unit's contents become the rightful property of the buyer. Ownership transfers free of prior liens.

Georgia law makes auctioning off unpaid storage units pretty straightforward. As for bidders, it is a simple matter of understanding the rules and applying them correctly.

The True Costs of a Storage Auction Unit

With state law out of the way, let us look at the actual costs that come with bidding on storage units. Those costs extend beyond the amount you pay in terms of your bid. There are three additional costs to pay special attention to:

1. The Buyer's Premium

A buyer's premium is an platform fee in addition to the final price of an auction unit. It's an administrative fee charged by the auctioneer or online platform. Normally, it is based on a percentage of the total amount of the winning bid. Buyer's premiums are what allow us to keep things going at Lockerfox.

2. Refundable Cleaning Deposits

Although there are exceptions to the rule, nearly all storage facility operators require bidders to pay a refundable cleaning deposit. This deposit ensures that the winning bidder cleans out the unit in a timely manner. Do the following three things and you are virtually guaranteed to get all your deposit back:

• Remove every item and leave the unit broom clean.
• Haul away unwanted contents (don't use facility dumpsters)
• Adhere to the agreed clean-out time frame.

When the unit is empty, notify the property owner and arrange for an inspection. Once the unit has been inspected and cleared, you should get your deposit back.

3. Sales Taxes in Georgia

In Georgia, state sales tax applies to personal property purchases. This includes storage unit contents bought at auction. The base state sales tax is 4%. However, some local municipalities and counties charge additional taxes that could increase the total to as high as 9%. The bidding page of online storage auctions should show the sales tax percentage, if any.

Note that you will not have to pay Georgia sales tax if you are a reseller with a valid tax certificate. In other words, if you bid on storage auctions and resell the items as a business, your business tax certificate eliminates your sales tax obligation. You will have to present your certificate if you attend an auction in person. For online auctions, platforms typically ask you to bring a copy of your certificate to the selling facility or provide a copy to the owner/operator at the time of purchase.

Other Costs to Keep in Mind

Once you make a full payment on a storage unit, it is time to schedule clean out. Making plans will not cost you a dime. However, implementing them probably will. For starters, you're going to burn fuel driving to the storage facility. There is a hidden cost. You'll burn more fuel driving home or to your warehouse.

Sorting through the contents to determine what you will do with each item costs time. Whether you are doing this as a hobby or a full-time business, your time is still worth money. Don't forget to include it in your margin calculations. If you don't account for your time, you might miscalculate just how profitable your operation is.

Other costs to keep in mind include:

• Garbage bags and trash cans.
• Trash removal service.
• Marketing and advertising.
• Shipping (if you sell items online)

Every dime you spend to purchase, clean out, sort, and sell storage unit contents goes against your overall profitability. Nonetheless, bidding on storage auctions can be quite profitable if you are careful about what you do. Making good money is really all about understanding the business and applying industry best practices.

Helpful Hints From Lockerfox

Ideally, we want every Lockerfox user to turn their auction bidding adventures into profit. We get that some will make more profit than others, but we also know that it is not too hard for anyone to earn a little extra cash. With that in mind, here are some helpful tips:

• Calculate a maximum bid and stick to it.
• Calculate state sales tax and include it in your maximum bid.
• Review and verify cleaning deposits.
• Make sure you have access to multiple payment methods.

Abandoned storage units are profit-making tools just waiting to be used. Whether you live in Georgia or elsewhere, we invite you to take a look at the Lockerfox platform. We make bidding on online auctions easy and fun.

FAQs

Why do auction operators charge buyer's premiums?

Whether online or in person, auction operators incur costs to run an auction. Those costs have to be paid for. A buyer's premium does just that.

How are buyer's premiums collected?

It depends on the auction operator's policies. Here at Lockerfox, the buyer's premium is charged automatically to the customer's credit card on file.

Why do facility operators require cleanout deposits?

Facility operators want abandoned units cleaned out as quickly as possible so that they can be rented again. A cleanout deposit ensures that winning bidders do things in a timely manner and leave their units broom-clean.

How much is the typical cleanout deposit?

Deposit amounts can vary significantly from one facility operator to the next. On average, expect deposits of $50-$200 per unit. Deposits are fully refundable if the rules are followed.

Can I utilize a storage facility's dumpsters?

No, storage facilities do not allow winning bidders to use their dumpsters. Their properties are monitored with video cameras as well, so using a dumpster in violation of facility policy can cost you your full deposit and suspension from the online platform.