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Cover Story

Pawning reality


Matt DePhillips is the man behind counter at The Pawn Store, 3005 Douglas Ave.

Working in a pawn shop isn’t like on TV. Right?

Let’s be honest. Most people don’t even think much about pawn shops. Even the show “Pawn Stars” — which has been running for four years on the History Channel and recently signed an extension for four more — has kind of crested the zeitgeist and is building a ramp in front of that shark. Sure people watch, but who really cares?                

When you press the average person for his or her thoughts on “what a pawn shop is like,” you’ll still get one of two answers. The first is something very similar to what “Pawn Stars” depicts: the strange and unusual items, the lowball prices, the seemingly endless array of “friends” who just happen to be experts in whatever rare treasure needs appraising that day and a bunch of yokels who’ve never heard of eBay. Or, people will conjure up the movie version: charnel houses of human despair or places where drug addicts, criminals and the eternally downtrodden go to traffic in stolen goods and the detritus of lives gone wrong.                

To find out if either description is based in truth, I called up my buddy Matt DePhillips, who’s an expert on pawn shops.

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The haggle

DePhillips is the man behind the counter of the incredibly appropriately named Pawn Store, on Douglas Avenue. He’s been working there, in some capacity or another, for 12 years. After appraising and researching thousands of items over the years, DePhillips has as good a handle on what the business is like as anybody in the city. So I spent a week pestering him to find out what it was actually like working in — and with — pawn shops.                

“I’ve always been a wealth of absolutely useless, trivial information,” DePhillips laughed. “This is the perfect job for me.”                

On a quiet day at The Pawn Store, DePhillips stood behind the counter along with one other employee. In the hour or so I had been standing around, two people came in looking to sell something. The process isn’t a complicated one.                

“Someone brings something in; we determine a value,” said DePhillips.                

Within that construct, the transaction takes place in a fashion remarkably similar to what you see on TV. DePhillips asks each person if they’re looking to pawn or sell. He asks background questions such as where the customer got the item, whether there’s any original packaging or paperwork that comes with it and why they’re looking to part with the piece. Then, the moment of truth:                

“So how much are you looking to get for it?” DePhillips asked a man who brought in a gold necklace.                

“Well, how much is it worth?” the customer resonded.                

DePhillips placed the necklace on a scale and told the man the weighted worth of the scrap gold. If jewelry sits for too long, it’s only value to a pawn shop is what it can be melted down and sold to recyclers for, he explained to me.                

“I’d like to get $200 for it,” the man said after a moment’s consideration.                

DePhillips shook his head.               

“The best I can do is $130,” he said.                

 “Aw, man. That seems low,” the customer groaned after a deliberate exhale and glance at the ceiling.               

“I’ve got no idea how long it’s going to sit here,” DePhillips shrugged. “I’ve got to make money on it.”                

“$175?” the customer urged.                

DePhillips shook his head.                

“Meet me half way, and go $150?” the man pleaded.                

DePhillips was resolute.                

“I’m already all-in at $130,” he said.               

After a few long minutes of consideration, the customer conceded.               

“OK, man. Let’s do it,” he resolved.                

Whether pawn or sale, once an amount has been agreed upon, the process is largely the same.                

“They need to give me ID,” DePhillips explained. “I log it into my system as well as into the City of Des Moines.”


The Pawn Oridance

In years gone by, a Des Moines detective would physically visit every pawn shop and manually look through the shop’s records, retrieving serial numbers to check against the PD’s database of merchandise reported as stolen.                

“But now the city has a server specifically for the pawn shop division, and we log directly into that and enter (the information),” DePhillips said.                

All pawn shops in Des Moines are governed by a thick law book, known as the pawn ordinance. This book details everything a pawn shop within the city limits must do to keep itself open and free from litigation and liability — from the fees to be paid for licensing, to the manner in which merchandise must be stored.                

“We used to buy and sell cars,” said DePhillips. “We rented a warehouse down the street and were keeping the bigger stuff there, but (DMPD) pointed out to us that everything we take in has to be physically kept in the licensed space. Until we got rid of all the bigger stuff, we actually had to purchase a second pawn license for the storage unit.”                

The pawn ordinance also dictates the procedure for taking merchandise in.                

“We have to hold (everything) for 15 days. This gives DMPD time to check everything against their stolen property logs,” DePhillips said.                

While some of the individual pieces of the pawn ordinance can seem nit-picky or even trivial, pawn shop operators in Des Moines understand that the ordinance is as much for their protection as it is for regulation.                

“The pawn ordinance acts as an umbrella,” said DePhillips. “Because as long as I’ve followed the rules, I can’t be sued for receipt of stolen property.”


Traffic flux

Pawn traffic can fluctuate greatly. Gold and Silver Pawn Shop (of “Pawn Stars” fame) reportedly averaged 100 customers a day before the show and more than 1,000 a day since. For most pawn shops, however, traffic fluctuates depending on the economy and the time of year. The season also affects the type of traffic a pawn shop will usually see.               

“In the winter, a lot more stuff gets pawned,” DePhillips said. “Most of that are tools and construction stuff because people aren’t working in the winter. About the time that unemployment runs out in February, that’s when the tools start coming in.”


Cost vs. benefit

With each potential customer through the door, shop employees have to do a cost/benefit analysis in their heads. What is the customer selling? What kind of condition is it in? How much has the shop sold similar items for in the past? If the customer is looking to pawn an item, how much does the employee think the customer will be able to afford to repay in 30 days? How much can they loan out and still make a profit if the customer defaults at the end of the loan date?                

Naturally, pawn shop employees don’t rely exclusively on experience and intuition when it comes to determining value.                

“We used to get the ‘Ryan Blue Book’ every year,” DePhillips recalled. “There’s a book for televisions, one for car stereos and so on. But now it’s all eBay. I check a lot of stuff on the Internet.”                

The Internet is also proving to be an invaluable resource for pawn shop employees when trying to determine an item’s authenticity. Forgery is the most consistent issue pawn shop employees need to be vigilant against, because the problem isn’t limited to just collectables or rare items.


The sniff test

“Anything you can imagine is faked,” DePhillips warned. “Not just Louis Vuitton bags and Rolex watches. I had a guy sell me a Bosch drill once. I sent it in to Bosch to get a part replaced, and they called me saying, ‘We’ve never made a model like this. It’s not ours.’ I’ve seen a fake version of just about everything.”                

It’s for that reason that shop employees are always willing to step away from a purchase that doesn’t pass the sniff test.                

“Gut feeling has a lot to do with this business. There have been times where I’ve decided not to buy something just because I didn’t feel right about it,” DePhillips said.               

To combat this issue, a lot of the questions DePhillips asks prospective customers are about establishing providence — asking for things like receipts, original packaging and certificates of authenticity.                

“A certificate of authenticity is gold,” DePhillips said. “That means that something has been closely examined by top professionals and certified real. It means a lot,” assuming, of course, the certificate of authenticity isn’t faked as well.                

“Yeah,” he laughed. “That happens, too.”                

Deceptive practices aren’t limited to sellers, however.                

“Everyone wants to get one over on the pawn guy,” DePhillips said.                

Buyers, long seeing pawn shops as places to get great deals on used merchandise, will use any number of tactics to try and get a lower price on an item they want.                

“Buying, selling — it’s all the same,” DePhillips said. “You hear stories from every person who comes in. It kind of changes you for the worse, over time, because you start to just assume that it’s all bull until you’re proven otherwise.”


The crafty customer

Just as with sellers, someone looking to buy a rare or one-of-a-kind item from a pawn shop will often exploit an employee’s potential inexperience with an item to their benefit.                

“I once had a whole collection of Indian axe heads,” DePhillips recalled. “This guy came in here and asked what we wanted for it. It’s hard to establish a value on those things, so I said, ‘Make me an offer, and we’ll figure something out.’ Well, he said, ‘I don’t really know much about them; I don’t know…’                

“Much like on ‘Pawn Stars,’ we really do have a lot of ‘friends’ in the business that we can call for help on valuation,” DePhillips said. “We have one guy we talk to that collects Native American stuff, so we called him up and ask if he knows of any experts to help price these axe heads. He gives me the name of this guy in town who’s written books on Native American tools. So I go to call this guy, and it turns out, it’s the same guy who’s standing in front of me trying to buy them off me for cheap.”


To sell or to pawn

Let’s say you’ve got something that you’re interested in bringing in to a pawn shop. The first thing you need to determine is whether you want to sell it or pawn it. The determining factor is, do you want the item back?               

People who sell things to pawn shops are most often just cleaning out their closets, DePhillips said. People who don’t have the time for garage sales, lack the patience or computer knowledge for an online auction or just want to free up space in a hurry. For sellers, a pawn shop employee will determine a fair market value for the merchandise, then make an offer to the customer that attempts to be fair to both parties. Some places will negotiate a little; others are firm.                

People looking to pawn merchandise are usually just in need of a quick loan, such as contractors who have been out of work for a while, people who are between jobs and students. For pawned merchandise, valuation is less precise.                

“It’s not as necessary to determine an actual hard value if someone is pawning,” DePhillips said. “Basically they are giving me collateral, and I’m giving them what I feel is an amount that I’m comfortable (knowing) they’ll come and pay back, with interest.”                

Pawn contracts run for 30 days. At any point after the 15-day holding period, a customer can return and pay it back the loaned amount, plus interest, and get the item back.                

How much interest?                

“Interest depends on the amount loaned. At higher dollar amounts, we do a lower percentage, but most shops do right around 30 percent,” DePhillips said.


The unique or unusual

While most people pawn things like jewelry and electronics, unique or unusual items do turn up.                

“The shop had this guy who was a regular customer,” DePhillips recalled. “He was an old carnie, and he would bring in some really weird stuff. Once he brought in a shrunken human head. The City of Des Moines took it from us.”                

Unlike what viewers see on “Pawn Stars,” many pawn shops are more likely to offer to pawn rare, unusual or one-of-a-kind items, rather than buy them outright.   

Pawn shops will sometimes buy strange or unusual things like stuffed animal heads with no intention of re-selling. They buy signs and mounted heads and things like that just to decorate the shop.


“I’m banking on the idea that they’ll want to come get it back.” DePhillips said. “Something that’s really bizarre: A lot of shops won’t (buy) it or will only take it if they think they already have a home for it.”                

Where once pawn shop operators had to limit their purchases to merchandise that fit their foot traffic, the Internet has changed the way pawn shops operate. Not only does it make it faster and easier for pawn shops to share their transactions with local authorities, thereby making crime-fighting more efficient, but the Internet has also changed how shops move the merchandise once they have it, DePhillips said.               

“We have an eBay store that we run,” he said. “I do a lot of selling on Craigslist as well. Higher-end stuff doesn’t tend to sell here in the store — bigger-ticket jewelry or large equipment, that sort of thing.”                

Since people are always looking to sell or pawn new things, shelf space is at a premium. This is why pawn shop operators are always looking for new ways to get their product seen by as many people as possible and keep the inventory turning over. And if something lies around too long, employees become more willing to eat some cost in the name of dumping an item.                

“If I have to dust it too many times, usually the price will drop,” DePhillips admitted.


Pawn shops to the rescue

So of the two pre-conceived notions we started with, which is closer to the truth of the modern pawn shop? Anticlimactic though it may be, the actual pawn experience lies somewhere close to the middle. Pawn shop operators haggle and (occasionally) low-ball in an attempt for a deal, just like on TV. They occasionally traffic in high-end, one-of-a-kind and unusual items, but they also deal with a lot of people who have little money and fewer places to turn for help getting over the hump. And that is where DePhillips sees his true place in life.                

“Yeah, we’re a business like any other,” he said. “But I also feel like I’m here to help people.” CV



Pawn shops 101

Thinking of selling, pawning or just hunting for deals? Here are five things you should know, courtesy of The Pawn Store’s Matt DePhillips.

1) Pawn shops are the smartest way to buy jewelry. “Don’t get hung up on it being used,” said DePhillips. “It took millions of years for that diamond to form. What’s a few more?”

2) If you’re pawning an item, remember that the amount you get needs to be paid back with interest. “Borrow as little as you need to get over your hump,” DePhillips cautioned.

3) Remember that pawn shops are businesses, not collectors. “We don’t buy and sell for the same price. We wouldn’t be in business for very long if we did that.”

4) No matter how quickly you can pay back the pawn loan, don’t forget about the holding period. “We have to hold things for 15 days so the Des Moines Police Department can run serial numbers and make sure it’s not stolen.”

5) Almost everything in the shop will be well below retail and similar to eBay or Amazon prices, minus the shipping. “Pawn shops are an excellent way to buy quality, used merchandise,” DePhillips said.

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