For as long as human beings have valued certain items over others, there have been pawn shops and pawn brokers. And, for as long as there have been pawn shops, people have been making pawning mistakes.
When handled correctly, pawning can be a great way to get the cash you need and to transfer inconvenient assets into solvent currency. Most of us would probably admit that we have too much stuff lying around our homes. As the concept of what is valuable is relative to some extent – what might seem old and useless to you might be extremely sought after by someone else, for example – anything which gives us the opportunity to turn this ‘junk’ into ‘gold’ is always going to be a good thing. This means, with a shrewd eye and a tactical approach, pawning certain objects can result in a healthy cash injection.
The reality is, unless you have experience pawning your things, you may not get as much value as you potentially could for your items. Instead, it’s easy to make common pawning mistakes, resulting in disappointment or your expectations not being met.
Fortunately, our team is on hand to provide the advice and the guidance you need to achieve your pawning goals. We have spent many years in this business and understand the mistakes people can make and what customers can do to have a more fruitful experience. Here are our top five pawning mistakes, as well as five solutions which can help you to avoid these mistakes in the future. Don’t forget to get in touch with the team if you need any further advice or guidance.
Failing to Give the Item a Good Clean
Pawning, like any other transaction, is somewhat a matter of perception. If your pawnbroker thinks the item you provide looks great and is ready to resell, this will be reflected in the price they offer. While you don’t know the specific items people are looking for, you know quality and value matter when people make purchase decisions. When the item you bring in is in excellent condition, it’s likely to be worth more.
Of course, no one expects you to be an expert in repair and maintenance, and there are some jobs which will simply be too difficult to carry out on your own. In these cases, you may have no option but to hand the item over as is and pay for the repair out of the money you receive for the item. However, all of us can roll up our sleeves and give our items a good scrub before we take them to be pawned. This is likely to boost the price you receive.
Spend some time cleaning the item before you come into the store! Just like you would comb your hair and put on a tie or a nice blouse ahead of a job interview, you need to make sure your item is looking its best so that the pawnbroker and customers place the highest value upon it.
It is also a good idea to make sure the item is complete. Have a look around for instruction manuals, power cords, and any other appropriate accessories before you bring it in to be pawned.
Not Properly Understanding Market Demand
While a pawn transaction is a little different than a normal sale, it’s still governed by the same forces. This means the value is derived not so much from how ‘good’ or how ‘rare’ an item is, but rather by how much customers will be willing to pay for it once it is sold. How much these customers are willing to pay, coupled with how many of these customers exist in the local market, will dictate the value you receive.
Some music instruments or pieces of art are good examples of this principle in action. An antique violin, for example, is likely to be worth a lot of money, but if the pawn shop doesn’t have a history selling such valuable pieces of musical instrumentation, the market is not going to permit the value you expect. There is a similar case for pieces of art, which often fetch high prices at auction. It may simply be that the market for such pieces is not there locally, which means your item is not going to sell easily and will not attract a high price from the broker.
A bit of research goes a long way in cases like these. Consult with the pawn shop ahead of time as they will know all about the market forces relevant to their own business. They will be able to tell you which items are in demand and which items are gathering dust on the shelves. They may also be able to give you some insight into how much customers typically pay for the items you are offering.
This will also give you the opportunity to see the pawn shop’s inventory for yourself so you will have an idea of items they are interested in as well as items which are selling quickly or not selling at all. If there is little market for your particular item but you know it’s worth a lot, you may want to seek the advice of a specialist and put the item up for auction. It is better to be disappointed in the short term and eventually sell your precious item for the right price rather than to get a substandard sale at a pawn shop.
Not Understanding Market Fluctuation
The reason we talk about market forces rather than market force is that there are multiple factors which affect the prices items achieve when pawned or sold. In fact, the markets are in a constant state of fluctuation, which can have a marked effect on the value you achieve for your pawned item.
This is particularly important to bear in mind when it comes to precious metals. Gold and other precious metals are popular items at pawn shops because of their high value and their generally stable pricing. However, just because the price of precious metals is relatively stable when compared with that of other commodities, it does not mean that it is static.
Let’s imagine that you have a gold watch that you have been meaning to pawn for quite some time. You had it appraised a while back, maybe a year or two ago, and were satisfied with the price you were quoted. Then, your financial situation changed and you decided against pawning it, only to find yourself tempted by the idea once again a year or so later. You already know the value you should receive based on your earlier appraisal, and have started spending the money in your head. However, when it comes to actually pawning the item, the price ends up being significantly lower.
This is because the price of precious metals is determined by the karat – or purity – of the metal and its weight in DWT or pennyweight. Current market values are then applied to these figures, and the cash value of the item is determined. As these market values can fluctuate, the price you receive for your item may not be the same if you wait a long time between appraisal and pawning.
There are several, reasonably simple, solutions you can apply to this problem so that you do not make a mistake. Firstly, engage in some research regarding the current market value for the precious metal. If you find that the precious metal is currently experiencing a dip in its value at market, this might not be a good time to sell.
Secondly, if you are happy with the appraised value of your item, act quickly. As we have seen, values can change, and the cash amount you receive can change too. The quicker you act following the appraisal, the more likely you are to achieve the price you expect.
Thirdly, and finally, work with a pawnbroker who has experience with selling gold or other precious metal items. As well as wider market fluctuations, there may also be local market forces which affect the price. By working with the right pawn shop, you can be assured that you are pitching your item to the right buyer and giving yourself the best chance of getting the most advantageous price in return.
Missing Out on an Appraisal
You will have noticed that we have mentioned appraisals several times in this article. This is because seeking expert advice regarding the pure value and expected sale price of an item is an important part of the pawning process. However, many item owners still neglect to get their item appraised ahead of time – which is a mistake.
There are several reasons behind this. One reason is that getting an appraisal might result in additional expenses during the process. As sellers are aiming to maximize their returns when they pawn an item, they may balk at the idea of eroding their profits in this way. What these sellers fail to understand is that this sort of appraisal helps to secure the right selling value.
Another reason is that many sellers believe they simply don’t need an appraisal and are instead happy to enter into the transaction with no prior knowledge or understanding. This is fine if you are an expert on the item you are planning to pawn. If you’re not an expert, you can certainly benefit from learning more, especially if your item could be worth a lot of money.
Probably the simplest solution to any of the problems on this list – get an appraisal. Shop around and do your research, finding out who is best positioned to give you their expert opinion on the item in question. Then, get at least one appraisal and preferably more than one. This will give you a better understanding of how much you can expect when it actually comes to pawning the item.
Needless to say, it pays to work with a specialist in your field. An expert in precious metals is probably not going to be able to give you a good estimate on your sporting memorabilia, while a leading figure in the field of fine wines is going to be somewhat clueless when it comes to white goods and electricals. Don’t be afraid to part with a bit of cash to get the right opinion.
Human beings are emotional creatures, and, as such, we tend to attach sentimental value to things other people might not be interested in. This is why a cheap picture frame which was gifted to you by your grandmother is going to be very important to you and your family, while its importance will be lost on others.
Humans are also practical creatures but our practicality is centered on ourselves. For example, if you have an interest in caring for exotic plants, specialized tools to help you enjoy this hobby are going to be a lifesaver for you personally, but will certainly not have a broad appeal outside of this niche.
Don’t fall into this trap. Understand that the amount of the pawn loan you receive depends on how many people are going to want to buy it, and how much they are going to want to pay for it.
Do your best to step outside of yourself and your own situation when you are deciding which items to pawn. Think about the wider value of the item and how many people are going to get any use out of it, or how many people are going to be genuinely interested in it. Put all sentimentality to one side and think about the public’s wants and needs.
To learn more about pawning items, and how this can be a great way for you to get the cash you need, get in touch today.