Don't Lose Your Shirt

A storage auction is a pretty straightforward affair, but those who don't know what they're doing can lose big by overpaying. Collectibles and secondhand goods are illiquid markets, meaning that finding a buyer willing to pay the price you want may be difficult.

People who don't pay their rent on lockers wind up losing their belongings after a 30-day to 60-day waiting period. Storage facilities hold auctions to recoup their losses. As on Storage Wars, auctioneers don't let buyers inspect the merchandise before bidding on it. According to Colorado auctioneer Rich Schur, that's for liability reasons, so that there are no potential worries about theft. In addition, buyers must pay for their locker purchases in cash.

Many storage buyers own secondhand stores (like Schulz and Brandi Passante on Storage Wars) or auction houses (like Hester) so they have room for their merchandise. Those who don't will need to find a place to haul and store their "hidden treasures," which can create problems for buyers who don't plan ahead.

"It's a big issue," says Schur, a board member of the National Auctioneers Association who regularly conducts storage locker sales.

The Slim Odds of Striking Gold

Cleveland auctioneer Neal Grossman says that buyers have 24 hours to dispose of their items -- and failure to move them quickly means some buyers are forced to rent the lockers that they purchased. Many buyers also have more trouble than they expect unloading their merchandise on eBay (EBAY) or Craigslist. "You have to be realistic," Grossman says, adding that many lockers contain household stuff "that no one wants."

Of course, there are often valuables in these lockers, such as diamonds or sports cards, which is why buyers are eager to embark on a treasure hunt. The odds of finding a "score" are better the more lockers someone buys, which is why seasoned buyers purchase numerous units. Even so, the chances of finding a "treasure" are remote. "It's hard work," says Schur. "This is not a get-rich-quick scheme."

Experts note that the values for merchandise that are discussed on Storage Wars are theoretical and may not be what the buyers eventually sell the items for. "Some items can be sold today," Sheets says. "Some that are collectible take awhile."

As with any business, storage buyers also have to pay their share of taxes. But for the lucky few, it can be a good living. Sheets estimates that about 80% of lockers are profitable "if you know what you're selling and how to sell it."

Jason Byrge of Cleveland, who buys about 20 storage lockers a month, disputes Sheets' figure. He estimates that about 20% of his auction purchases are profitable. "Maybe California is different, but it's pretty bad in Ohio," he says, adding that he has been a storage buyer for three years. Schur, though, defended Sheets, saying his figures sounded accurate to him. "It depends on your definition of profitability," he says. "Are you going to double or triple your money? Probably not."

Storage auctions happen all the time at the 50,000 or so self-storage facilities in the U.S. There are several Internet sites that list them. Schur even wrote a primer on them.

If you're still tempted to become a buyer, Schur advises you to go to an auction in person to see what they're like. If you still want to bid, make sure that you set a limit and stick to it, something that the cast of Storage Wars has difficulty doing.

An even safer bet is to leave storage auctions to the pros. New episodes of Storage Wars will air starting Nov. 15 on A&E at 10 p.m. Eastern.

Motley Fool contributing writer Jonathan Berr doesn't own shares of any of the companies mentioned in this article. Motley Fool newsletter services have recommended buying shares of eBay.