How To Find Deals in a Pawn Shop
STORY BY Reyne Hirsch
Published: October 10, 2013
“There are a variety of items you can find good deals on at pawn shops,” says Reyne Haines, an antiques/vintage expert who has been featured on PBS’ Antiques Road Show. She explains that many pawn shops sell deeply discounted electronics, fine jewelry, musical instruments and an array of collectibles or antiques that can net high prices in their respective niche markets.
This diverse inventory has to do with a pawn shop’s business model.
“Most pawn brokers are retailers by default,” says Stephen Krupnik, a former pawnbroker and current industry consultant who wrote the book Pawnonomics. Instead, shop owners make a majority of their profits off of the loans they hand on items used as collateral. These pawns are held for a short period of time -- typically between 30 to 90 days, depending on state laws -- with interest, which also varies by establishment.
Krupnik says the hope is that the pawn’s owner will either make good on or extend their loan and, while pawnbrokers also purchase items outright, a majority of what winds up on their store’s floor is merchandise that was ultimately defaulted on.
These products are typically priced at a steal.
“We discount it at a low price because we want to move the merchandise,” says Seth Gold, co-owner of Detroit's American Jewelry and Loan pawn shop.
Les Gold, the other owner of the American Jewelry and Loan pawn shop who co-stars with son Seth on truTV series Hardcore Pawn, says they hand out around 500 loans for every five items they buy outright. As a point of reference, their loans initially carry a 90-day redemption window with a 3% per month interest rate. There is also a $1 charge for storage.
“If we can make 10%, we’re happy,” adds Les, as the aim is to quickly bring in revenue to make more loans.
But it’s not just the need to liquidate that guarantees there will be some quality goods on sale.
“If you go into a pawn shop, there is always a lot of great stuff on sale, because owners wouldn’t have loaned money on it if they didn’t think they could make the sale,“ Krupnik points out.
How can you find the best items at the lowest prices? MainStreet asked the experts for a few tips.
Look for lesser-named brands or small-ticket items.
Pawn shop owners all have a certain amount of product knowledge so they can adequately price their loans or broker sales, but Krupnik points out “not all brokers are created equal.”
While most owners will be well-versed in big names like Apple, Tiffany, Cartier or Rolex, they are less apt to recognize or devote a lot of attention to smaller manufacturers, especially if they make lower-ticket items (essentially everything other than fine jewelry or electronics).
For instance, Haines says owners may not be overly familiar with Elgin watches (a brand popular amongst collectors), foreign manufacturers, sterling silver or costume jewelry. They’re also not always going to recognize an antique or vintage item every time they see one.
“A pawn dealer isn’t going to research every vinyl record that comes through the door,” she says.
As such, conscientious consumers can find great buys if they research a niche market they are visiting their local pawn shop.
“Knowledge is power,” Haines says. She suggests joining a collector’s club, visiting auction sites or buying an inexpensive book at the bookstore as way to better familiarize yourself with a particular item if you’re interested in some http://www.mainstreet.com/article/smart-spending/bargains/deals/trash-tr... trash-to-treasure steals.
Negotiate the price.
This is not to say that you can’t get a good deal on the big-ticket items as well. Krupnik says most pawnbrokers price merchandise at around one-third or half of the item’s retail value.
“We have price tags on all the jewelry, but these are negotiable,” Seth says. He advises first-time customers to “always throw out a price” on the items they are seriously looking to buy.
Customers can also barter.
“You don’t necessarily have to pay cash,” Krupnik says.
Those who aren’t accustomed to price negotiations can find other tips for how to do so in MainStreet’s ultimate guide to haggling.
Pay attention to the product’s condition.
If it is antiques and collectibles you’re seeking, it is important to check the item completely to make sure it is in good condition.
“Buy something as pristine as can be,” Haines says. This is because scratches, rust, missing paint or missing parts can all “take away a majority of the item’s value.”
Find out the shop’s return policy.
Reputable pawn shops will have a return policy, Krupnik says, so inquiring about its terms and conditions is one of the easiest ways to verify the establishment is on the up and up.
“If [a shop] has no return policy, you should probably refrain from doing business with them,” he advises, unless the item is being sold on clearance or there is a defect the shop owner is telling you upfront about.
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