The Truth About Pawn Shops

 

Pawn shops are an interesting place in many ways, and very confusing as well.  The crowds are usually abundant, and most of the people selling their items are in need of quick cold hard cash.  After all, we know we are selling our items at a discount just so we can have cash in hand that same day.  People in need, some desperate, can make for an interesting environment.  It can also make for a very profitable business.  Unless you have been living under a rock for the past few years, I am sure you’re familiar with Pawn Stars on the History Channel.  Granted it’s a bit overacted and played out, but I find it interesting none the less.  They aim to buy items at half of what they intend on selling it for, which is perfectly fine since they have overhead costs and the time value of money to consider. 

Over the summer my fiancé and I went to American Jewelry & Loan inDetroit.  Sound familiar to you? Well it’s the location of Hardcore Pawn on Tru TV.  She had a couple of old rings she didn’t wear anymore, and we were just generally curious about the experience, so we decided to stop in and sell the rings.  To make a long story short, we ended up going to a less crowded pawn shop to sell the rings so that we could say we “pawned” something in our lifetimes, but we did peruse the store first.  I overheard heated negotiations (not quite as heated as you see on the typical episode) and items being undervalued, as well as overpriced items on the sales floor.  I kept thinking to myself, “this is a pawn shop, shouldn’t everything be cheaper?”.  Well I’ve done some research on pawn shops, and there is a lot to consider if you are in need of selling your items, so read below to make sure you get the biggest bang for your buck.

If you are selling jewely, and you have an appraisal, bring it with you!  I can’t stress this enough.  Yes often times pawn brokers have some formal training in determining the value of jewelry.  However, sometimes their knowledge is to the extent of weighing the gold, and knowing very little about the stones in the jewelry.  If you have ever shopped for a diamond ring you know how many variables go into the value of a single diamond.  An appraisal from an accredited company can be worth its weight in gold, no pun intended.

Ok, so I know this should go without saying, but never pay the sticker price!  Pawn shops haggle when buying and selling items.  Just as they make their living by bargaining you down on your items, you can shave a little off the top when buying theirs.  I saw used televisions being sold for retail prices.  They expect you to bargain with them heavily, so much so that they in fact may double the price they are willing to sell at in order to meet you in the middle.  That way they get what they wanted, and you feel like you saved a few bucks after some shrewd negotiations.

Remember that we are in the 21st century now, and the brick and mortar pawn shops are only one way to go.  Online pawn brokers are becoming more popular, and the best part is that they don’t carry the same overhead costs.  Lower costs to the shop equals savings to the consumer.  Consider the benefits of purchasing electronics online as opposed to Best Buy, you can often save yourself quite a bit of money, I know because I always shop this way.  Do a Google search on online pawn brokers, and do a comparison on an item you are willing to sell in order to see if a local pawn shop can beat the online shops prices.

Happy pawning!

Outlet Roermond

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15 thoughts on “The Truth About Pawn Shops

  1. BE @ BusyExecutiveMoneyBlog

    I think the pawn business is a hugely profitable business. I do wonder about the overhead though. With lot’s of merchandise, there’s a need for loading and unloading staff, security, and survelliance, etc. The thing that keeps me away is the tendency for pawn shops to attract an element that can potentially be trouble if people don’t show each other respect.

  2. Modest Money

    Pawn shops are definitely interesting to at least browse around. Great point about the high sticker prices. It is a good way for them to still profit even after some haggling. Many people aren’t good at haggling though and they just leave when they see the high prices. I wonder how much effect online classified sites like craigslist has had on the whole pawn shop business.

  3. Economically Humble

    I have never shopped at a pawn shop, largely because I prefer to save and buy items with a warranty, or my research grants mean that I can but new items… but maybe I’ll take a peek at one sometime.

  4. Jeffrey

    Interesting, and it doesn’t sound too off from the reality TV versions. I feel like you have any experience with eBay or Craigslist, that may be a better way to go depending on the item. Obviously pawn shops serve those who are looking for money fast, so I guess you have to expect to take a hit in value if that’s the case.

  5. Thomas - Ways to Invest Money

    Never thought about shopping at a pawn online. I always felt more safer going and seeing the goods. Its amazing how many people state the lowest amount they are willing to get when they pawn something yet walk out with a lot less. haggling is the key in many cases they want to see if they are truly going to get you to pay up or let go of something cheap.

  6. John | Married (with Debt)

    The stuff they sell is way overpriced so I’m not sure who is actually buying from these places. Hardcore Pawn is an entertaining show.

    I tried to sell a nice watch at one of my local pawn shops recently but was told they aren’t buying watches at all because no customers are buying them. Rough business.

  7. shanendoah@The Dog Ate My Wallet

    I lived in Reno for 12 years. While I never shopped at a pawn shop on the strip, I did buy portable cd players and headphones from places off the beaten path. At the time, the prices were reasonable, and it meant I could be assured the electronics would work.

  8. MyMoneyDesign

    I know there are deals out there, but I can’t say I’ve ever had any luck at a Pawn Shop. When I was first starting out playing the guitar, I would go to some of the local pawn shops looking for a deal. As you said, they were basically asking retail price! What’s worse is when I’d try to talk them down, they wanted no part of it.

    I do agree they have quite the business model. Buy low, sell high. And there certainly never seems to be any shortage of people bringing their stuff in to get pawned.

  9. Daisy

    I’ve never really trusted stuff from pawn shops, and I don’t know why. I guess I haven’t really had any great experiences with pawn shops – they seem so sleezy! But I have considered pawning the jewellery I can’t get rid of, so maybe I’ll try it out.

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