Sunday, November 14, 2010

PawnStars and Pawnshops

OK, I admit it, I am addicted to PawnStars.  In case people don't know, PawnStars on the History Channel is a reality show that follows the owners of an upscale pawnshop.  People bring very diverse merchandise to the shop - including fine art paintings and museum-quality civil war relics - and the owners price it and negotiate with the sellers.  The negotiations are fascinating - as are the refurbishment the owners do on many of the purchases. PawnStars got me interested in pawnshops and there are a couple things that I learned that I will discuss below.

First, I was a little surprised by the owner's negotiating style.  For example, for an arcane object like an 1800s firearm they have an expert come in and evaluate and appraise/price the piece - but the expert tells the owner the price right in front of the seller!  My first reaction was amazement that the owner would let the seller know that information - in some cases the seller wanted to sell the piece for $500, but the appraisal comes back for $3,000, so now the seller wants $3,000 whereas the owner could have bought it for $500.  I would have assumed that the expert would have told only the owner initially - and then the owner could have instructed them to inform the seller if the appraised price was less than the price the seller wanted.

However, the next surprise was when the seller turns around and wants the $3,000, the owner just calmly informs them that they "have to make a margin" and the seller buys into it.  For a $3,000 appraised piece, the owner might offer $2200-$2400 - and usually the seller takes it.  Of course, there may be some selection bias here because they just may not be showing us the times when a seller walks out.

In general, however, you can tell that the items that they feature on the show are the more notable items - you somewhat get the feel that you are not really seeing the bread-and-butter transactions that keep the pawnshop afloat.  That got me interested about what the real bread-and-butter of pawnshops are, so I did a little research.  First, there is a lot of variations between pawnshops - they can serve very different clientele.  Clientele here is not only the people bringing objects into the shop - it's also people buying the objects.  Remember that just about everything that goes into a pawnshop must come out (get bought) or the shop could not operate.  In other words, for everyone selling to a pawn shop, there must be someone buying.

I actually went to several pawnshops and each one had a very distinct and very different personality - a personality primarily based on its location.  One located downtown near "jeweler's row" specialized in things like jewelry and coins.  One out in a ritzy suburb (and there certainly ARE pawnshops in ritzy suburbs) had watches, but had a lot of household items like antique silver.  One in a primarily rural area had a lot of farming stuff, etc.  I'll summarize below some thoughts that I had after visiting these shops.
  1. I am never buying a nice watch new.  Holy cow can you get a bargain.  The last nice watch I got was a gift, but for what they paid, they could have gotten 10 of the same watch at a pawn shop - and it's not like you could tell where you got it when it is on your arm.  The same goes for just about any other similar item - jewelry, rings, silver, place settings, just about anything high-end designer, etc. - think 80%-90% off.  For the ladies, one shop even had expensive purses - I didn't think that $100 was a good deal until I looked it up on Amazon and found that Gucci and Prada purses are selling for $1200.  Also, it's not romantic, but if you are looking for a wedding ring, you could save yourself huge money.  Alternatively, get the stone from the shop and a place setting from a jewelry store - the place settings are much cheaper and the jewelry store has a much greater variety and will typically put whatever stone you want in their setting (make sure the setting is sized to accept your stone). 
  2. If you are interested, go to several of them to find one or two that deal in the type of merchandise that you are looking for.  You get the feel that there are some items that every store will buy, but that stores develop a specialty or local market that allows them to take in certain items that would appeal to the local market.  Don't look downtown for designer home furnishings.  There are also some price differentials between the stores, but on commonly stocked items the prices seem to be pretty uniform.
  3. The merchandise changes pretty often.  These stores really do seem to have a bunch of turnover.  I went back to one a month or so after I visited it the first time and there were a lot of differences.  Consequently, if you don't see what you like the first day, come back in a few weeks - or talk with the manager and have them call you if something you want comes in.
  4. Compare with e-bay and Craiglist - I noticed that at least some of the shops were selling items on e-bay and/or Craigslist.  It's kind of strange to me that a bunch of people turn up their noses when a "pawnshop" is mentioned to them, but if they bought the item from the pawnshop over e-bay or Craigslist
  5. Most things are "as-is".  Consequently, I would limit myself to stuff that pretty much can't break.  I'm not sure I would be comfortable buying a high-end digital camera, for instance.
  6. Don't expect a PawnStars experience.  My feel is that the typical shop will not provide you with information like they do in PawnStars - or it will be unreliable.  Know your price before you come into the store - or else when you see something you like, go and research it first to find out your price before you start to bargain.
  7. And don't be afraid to bargain.  Some shops seemed more set on their prices than others - and it may vary depending on the merchandise.  For example, they know if something has been sitting a while or if they can turn you away because the shelf-life of the item will be small.  However, in general it seemed like most shops were open to a little haggling.
In summary, if you want to buy an engagement ring, jewelry, a watch, etc., you may want to consider adding a pawnshop to your list of potential providers - especially if you are already looking on e-bay and Craigslist.

UPDATE - Looks like one of the pawn shops that I visited is getting its own tv show - "Pawn Queens" on TLC  (the head characters are both women.).

4 comments:

  1. If you get a chance, hang out in the parking lot for a while. See something you like, tell them you will beat the price offered if they come back out. A good idea to be browsing nearby when the offer is made, and then go back to the lot to deal. The seller makes a little more money. You miss the markup. The pawn shop gets upset though...so be discrete.

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  2. The one thing you have to watch out for is knock-offs on things like watches and purses. The PawnStars guys seem fully legit, but I wouldn't trust that every pawnbroker has scruples (there's an incentive to buy counterfeits for dirt cheap and try to pass them as originals - if you get caught, you can plead ignorance and most people would believe you).

    For the right item, though, pawn shops are an outstanding deal, especially if you are into antiques where the owner ma not know a lot about the items and you may be able to score a bargain, although that's become harder with the internet.

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  3. 12:48 - Interesting way to get the best deal, but I don't like the visual of the shop owner chasing me off with a stick!

    1:37 - I also would not trust the scruples of most pawn borokers. Be sure you know how to identify the counterfeits.

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  4. Talk about Serendipity.

    I walked by a Pawnshop today on Long Island, and because of watchng the TV shows, I walked in out of curiosity.

    First time I'd ever been in a Pawn shop.

    A lot of security. Had to be buzzed in. A big thick partition between me and the counter and the salesperson.

    The guy behind the counter was nice enough. I asked about the few guitars that I saw through the window.

    But it seemed like they were mostly into jewelry and gold etc.

    There were a few Ipods and things like that.

    I wish I had something of value to sell.

    He said they sell a lot of stuf on craigslist.

    I have also seen pawnbrokers on e-bay selling things.

    An age-old profession I guess.

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