How Do Pawn Shops Work?

A pawn shop is a store that allows consumers to sell goods for slightly less than their market value without going through the hassle of selling it themselves at an auction or through other means. Pawn shops also allow consumers to trade goods for other items that are worth the same value and even take out short-term loans using items as collateral. In some areas,  pawn shops are on nearly every corner, so many consumers wonder how the pawn shop process works.

How Does the Appraisal Process Work?

The first step in pawning an item is appraisal. The pawn shop appraises an item to estimate its value. The appraisal process includes weighing the item, researching details about the item, and asking the customer what he knows about the item. Normally, this only takes a few minutes and the customer leaves with information about the value of the item or money for the item. Usually, a ticket is given to the customer so he can reclaim the item if he later changes his mind. There are times when an item has greater value or is known as a specialty item, and the pawn shop will  contact a specialist for a proper appraisal of the object’s value. This can take a few days or weeks, so the customer will have to wait longer for his money.

How Does a Pawn Shop Buy the Item?

Once the pawn shop has appraised a new item, the customer has the option of selling the item to the pawn shop. Some appraisals include an assessment of the items “street” or resale value. This way a customer will know if selling the item to the pawn shop will cost him money in the long run or if he is getting a good deal. There are occasions when pawn shops are not completely honest about an item’s true value because they are trying to buy it for as little money as possible. Because of this, customers should always have an item appraised by a qualified appraiser before taking it to a pawn shop.  Customers might be able to haggle with the pawn shop if they know the item’s value is higher than they are being offered. Once the pawn shop and the customer have agreed to a price, the pawn shop has the customer fill out paperwork to legalize the transfer and protect themselves against stolen goods.

How Does a Pawn Shop Sell an Item?

After a pawn shop buys an item, it usually keeps the item in storage for at least six weeks  in case the item was stolen or the customer decides to buy it back. The pawn shop will tell the customer during the appraisal and buying process how long the item will be stored. The pawn shop then takes several high-value items at a time to an auction, in which the highest bidder walks away with the merchandise. Low-value items are usually re-sold in the same pawn shop for a higher price than which they were purchased.