The other night while watching ‘Pawn Stars’ re-runs, we were discussing how many of the items on the show really don’t require the experts that they bring in because you can often look up the value online, assuming there is otherwise no question on its authenticity.
That said, even with more common items you can look up, there may be wide variations that could greatly affect the value of an item, like a limited edition feature on a guitar, gun, etc. Which brings me to the question, how did pawn shops do this valuation in the days before the Internet existed? Presumably you have to know what the item is worth before you loan money against it.
If I brought in a random gun, musical instrument, tool, etc., while I would expect a pawn shop owner to have a vague idea what something is worth, and that certain brands sell better than others, how did they know what to do when something obviously valuable but outside their area of expertise came in the door? So much of what I see in pawn shops is jewelry, for example, which differs widely in purity, stone quality, etc. I doubt the average pawn shop guy is a master jeweler so how does even something like that get valued? Anyone have experience pawning oddball things, or work in a pawn shop to provide the straight dope on this?
From what I’ve gleaned, it was largely hit and miss experience on the part of the pawn shop owner. A lot of people lament the fact that you can’t find any great deals in pawn shops these days since anything can be easily looked up. Back in the day, you might find a classic guitar for a steal because the pawn shop didn’t realize what they had.
You also had various published sellers guides for common collectible items such as coins, firearms, baseball cards etc that you could reference to get an idea. I imagine your standard pawn shop doesn’t see many Lincoln manuscripts or 1641 French officer’s muskets.
But this works both ways. Because the Internet was not there to set standards for pricing or provide alternative sources, the value was based almost entirely on what the local market would bare. Knowledge of his own customers was more important than knowing what folks on the other side of the country were paying.
Pawn shops have been around long before the Internet and never missed it. The operators know the value of items brought in for pawn. They are loaning only a token amount of the wholesale value anyway. It’s hard to get hurt with their program. Either they get the item for nearly nothing and can sell it much higher or they gain a terrific rate of return on their loan. It’s win-win for the pawnshop owner. If something comes in that they are unfamiliar with, they guess low. After all, they should also know their potential customers. Guns and jewelry sell pretty well. Your grandpa’s ship-in-a-jar not so much.
I just want to elaborate on this, because so many people don’t realize it.
A pawn shop is really a method of providing a secured loan. The item you give to the pawn shop is your collateral. If you fail to pay back the loan on the terms offered, then the pawn shop keeps your item. Because they want a pile of money and not a pile of items, the pawn shop tries to sell anything they keep. Thus, the pawn shop’s biggest concern is really what the owner is willing to pay back. If the owner knows that Joe will pay back $1,000 for his old whatchamacallit, he doesn’t necessarily need a expert’s appraisal, but he doesn’t want to offer too much just in case Joe doesn’t pay and the pawn shop has to sell it to someone else.
Obviously, all of this puts pawn shops in the line of acquiring an selling used stuff, and they become a natural brokerage for those types of sales. But the origin of the business is really about lending money.