Wednesday, January 12, 2011

On Storage Auctions

It all started a couple of years ago with an article in the New York Times.

URBAN TACTICS; The Right Stuff, but Usually the Wrong Stuff

AT 10 o'clock one morning not long ago, 14 men waited in a brightly lighted corridor of Access Self Storage in Long Island City, Queens, a company that shares a drab stretch of Review Avenue with a strip club, electrical generators and warehouses. The men were there to bid on the foreclosed contents of the first storage locker up for auction -- essentially panning for gold. Inside every sealed cardboard box is the possibility of a jewelry collection, a Civil War relic or a first-edition Superman comic book. Far more frequently, though, they find themselves the owners of items like photo albums and sex toys that are worthless -- at least to them.

When the manager opened the locker, a walk-in unit the size of a small bedroom, the men crowded in the doorway to inspect the merchandise. Along one wall were neatly stacked cardboard boxes. Leaning against another was a wooden bed frame. In the center of the room, a Tickle Me Elmo doll sat face up on the floor next to a box overflowing with comic books.

Among the buyers, in jeans and an untucked button-down shirt, was Nick Mermigas, a onetime Wall Streeter. As recently as a year ago Mr. Mermigas was trading gold options for the Comex division of the New York Mercantile Exchange, but business was not good. So he joined forces with a childhood friend from Jamaica, Queens, a onetime litigation attorney who was burning out in an 80-hour-a-week job.

''We were more or less cubicle jockeys,'' Mr. Mermigas said. ''Now we just work for ourselves.''

The men attend an average of eight storage auctions a week across the city, reselling the property of strangers online. Since starting in September, they have earned $12,500, supplementing their savings from their previous jobs. (Mr. Mermigas's partner would identify himself only as Bob, explaining that he worried that the lowbrow work would damage his chances of returning to the practice of law.)

Several months ago, the storage auction industry got an unexpected blitz of attention when Paris Hilton's overdue balance of $208 led to the sale of the things she had kept in a Los Angeles storage unit: sex tapes, photographs, diaries and prescriptions for the antiviral drug Valtrex, among others, items that can now be viewed online for a monthly fee.

The incident offered a glimpse into an industry that operates on the fringes of New York but is very much a part of it, and cast a spotlight on exactly what happens to possessions when people can no longer pay their storage bills.

This is a growing issue. As New Yorkers grapple with rising real estate prices and smaller living spaces, they are increasingly putting more belongings in storage, reflecting a national trend. According to the Self Storage Association, an industry group, space in storage units nationwide doubled to 2 billion square feet from 1998 to 2005.

At Access Self Storage, with 1,600 rooms one of the largest in Queens, and at all other self-storage companies in the city, potential buyers are legally forbidden to enter a locker or touch any of its contents before bidding begins. Bidders are not allowed to choose among items; a locker's contents are sold as a unit. Until the moment of sale, the contents belong to the renter, even if the items are in foreclosure. This often forces buyers to make a wild guess, estimating a unit's value from only a doorway view.

''It's a gamble,'' said Joseph Pauletich, a tall, soft-spoken buyer who owns a thrift shop called SoHo Treasures and has attended at least 50 auctions at Access Self Storage in his 16 years of bidding on units across the city. ''It's like going to Atlantic City; it really is. You have to look, and you see the quality of stuff, how they packed it, where the boxes came from.

''If it's a dirty person, I'm not so interested. If the people have money and if it was moved professionally, that will be something that I'm more interested in.''

Conducting the proceedings on this day was Don Bader, a professional auctioneer who has run this sort of event for more than 40 years.

When his call for an opening bid on the room containing the comic books yielded no immediate response, Mr. Bader said gruffly: ''Bunch of sissies -- don't strain yourselves, guys.''

A $150 offer was made and quickly countered at $200. The bids escalated until the contents of the room were sold for $400 to Mr. Mermigas and his partner, who in turn planned to sell the comic books online.

Although the auction seemed to be off to a promising start, any excitement fizzled fast. Two rooms containing an assortment of scattered, ripped boxes went for $10 each. Another two rooms, containing a pile of sealed boxes neatly stacked to the ceiling, sold for $55 and $95. A room containing stacked boxes and a closed trunk went unsold. The buyers were growing restless, even bored.

Then the door of the final room was opened. Gleaming in the fluorescent light was a refrigerator-size soft-serve ice cream maker, flanked by a pair of shiny cappuccino machines.

Outside the doorway, buyers impatiently nudged one another aside for a chance to inspect the machines. The beams of their flashlights reflected off the shiny chrome. One happy buyer made off with the equipment for $400.

Mr. Mermigas and his partner, however, went home empty-handed. As it turned out, the owner of the storage locker full of comic books paid the money he owed at the last minute, and their purchase was revoked.

''There were a lot of people,'' Mr. Mermigas said, summing up the event, ''and not a lot of rooms.''

That was published the first year I was in the Self Storage trade. At that point, I had a couple auctions and would call my supervisor with stupid questions like: "How many people have to be here to hold it?" or "What's the lowest possible bid amount acceptable?" I also got a little tougher about who I leased units to, because I realized there were people leaving their stuff on my facility that found it less expensive to do so than take it to the dump. After this article came out, more people showed up, the kind of people that got into the whole 'flipping houses' scenario, that were looking to take advantage of the misfortunes of others. The office phone started ringing fairly steadily the day before the scheduled date and when I had an auction, about 15 people would show up.

That's changed again already with the new television programs about people in the business of attending auction and 'making a killing at it'. Now my phone rings daily. I often have to educate people who call what happens in real life at an auction. What tell them is 'This isn't television'. In fact, my company recently told us to remind people of this at auctions.

My tenants have become close to me, I know their histories for the most part and I spend extra time making them aware what is happening. I suppose if I had been doing this for ten or twenty years I may not be so concerned with more than doing my jobs, but I hope that I never get that way. With the way of the world economically speaking at this time, my concern focuses on the ones without a permanent address. I currently have four homeless people leasing my units. They seem to do fairly well, they are working, somewhat limited, but they are focused only on this 'bill' and for the most part seem to do fine. I have a few people I know are without jobs. I encourage them not to be late enough to accrue late fees, because at that point, their fees are too costly and can become overwhelming. I have advised a few of them that they can pay in advance so that it would be easier to stay on top of, but nobody has yet taken me up on this plan. Because this is not a necessary bill, like the mortgage payment or the power bill, there are quite a few that brush off my efforts to help them stay on top of this, to the point where I'm being ignored entirely. Those are the ones I have to advise to move out. I've basically called them several times a week, without contact, sent letters that are returned or e-mails without replies, they have accrued late fees, given me every lame excuse (for example: One young woman told me she couldn't make her monthly payment because she had a new puppy).

So, when a unit is at the point of auction, it is because the owner of the contents didn't care anymore, meaning that usually the contents weren't worth caring for. It's not a lifetime coin collection or the comic book collection of the middle-aged guy who still lives at home. The next thing new auction attendees don't see is that the old-timers know they are new and will squeeze them out by making sure they don't get anything or out bidding them. I've seen that happen, but the guys have told me they do it, too. It tickles them to pick on the greenies.

Lately, in my area, the auctions have about 150 to 200 people showing up, so I can imagine it's pretty slim pickings. Plus there's a lot of restrictions, for instance, about the personal photos and documents left in the units, which vary from state to state. In my company, the winning bidder has only 24 hours to empty the unit, also nothing can be left behind or disposed of on the facility and it's cash only.

There is a sweet misconception, that as a manager of the facility, I'm keeping all the stuff left behind. Hey, I don't even look twice. I'm pretty sad about what I know is the history of these units (so many sleepless nights, stomach aches and grey hairs with each one). . . some child's lost toys, the stuff Grandma wanted family members to have but was not even very sentimental to the recipient, medals and award certificates, pictures with the governor or other dignitaries and famous people.

The horror stories of what's left behind that I see on the internet for this industry is all believable for what I know personally. Most of it is just too sad, but apparently a burden that couldn't be carried any longer. That's the part I try to focus on when it's over and done with, that the person I tried to work with will no longer have me to bother them, or the bill looming over their heads.

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