The other day I caught a marathon of the show Pawnstars. On the surface, it's kind of a blue collar version of Antiques Roadshow and at first I thought it was a pale rip-off of the original. But after watching a dozen or so episodes and a couple Antiques Roadshows, I'm convinced I like this Pawnstars show more, mostly due to the more modern items being discussed that I can recognize versus the Roadshow saying an ugly broken victorian chair is worth $250k which makes no sense to me.
Anyway, the big part of the show is that this is a pawn shop in Las Vegas of all places, so people are often desperate for money when they bring items in, and there are rounds of negotiation on price featured for every item following an appraisal. The appraisal stage varies among these three situations with the main pawn shop employee/owner Rick:
- Rick doesn't know how much something is worth, and brings in a local expert to give a real world auction appraisal price in front of both him and the owner of the item.
- Rick knows a lot about the item and gives an estimate for how much he might be able to sell it for.
- Rick has no idea how much it is worth, neither does the seller, so they guess.
Now, if you were really trying to get top dollar, it would help to do some research at the very least on Google before you ever try to sell anything. It being Las Vegas and people often being desperate for money, it's clear most sellers arrive not knowing anything about their item or what its worth may be.
The best part is the negotiation stage. I'm a terrible negotiator and in the past I've only done bargaining for new cars over email, since I completely fail trying to persuade lower prices from someone standing in front of me. I'm fascinated at how consistently Rick pulls a fairly low price for items and there is a general pattern to the procedure worth knowing.
Rick always asks people "So what do you want for it?" and the negotiations start from there. In the first situation, they have a third-party price and sellers will often say they want that full price but eventually cave. The second situation is the owner coming up with a price, and sellers tend to not cave so often (probably due to trust issues). The third situation is my favorite, since it's pure speculative negotiation with both parties in the dark about any true worth.
There is a general pattern almost every transaction follows and it goes like this:
"What are you looking to get for this?"
"Hmm, I can't go anywhere near that, I was thinking more like $400 or so"
(usually there is a joke or some light laughter thrown in to defuse the tense situation of offending a seller with a low-ball bid)
"$400?! I'd really like to see $700"
"Hmm, about $450 is as high as I could go"
"I really needed to get at least $600 today"
"Ok, my absolute final offer, and only because I like it (inserts flattery for the seller) is $500"
"Ok, sold" (handshake)
No matter what the appraisal is at the start, almost every transaction involves the pawn shop not wanting to pay more than half of what something is worth. A lot of sellers balk and leave, but most give in because they had no idea what is was worth so anything more than zero is a deal.
My favorite deals are in the third category, where by just asking what someone wants for it, and talking them down to about 50-60% of that price, you later find out with a real appraisal an item was worth thousands of dollars and picked up for just a couple hundred through successful negotiation.
I highly recommend Herb Cohen’s How to negotiate anything.
It’s a well written book that takes you through the art of negotiation.
I will be seeking out stuff. When Leah and I sold basically everything, we were mostly happy to see it go.
But in general, the first person to name a price in a negotiation has given away the upper hand. This is especially true in salary negotiations.
the first person to mention a number in a negotiation loses.
Not true, the first person offering a price has the ability to “anchor” the negotiation and negotiate up or down from his price.
The only time offering a number first is a losing proposition is when you haven’t done your research and don’t know your value.
Yes, if you’ve done research and know how much something is worth then you have nothing to lose by naming a price first. Just name a larger number than you know it’s worth.
This is true for salary negotiations as well.
Of course if you are lazy you can always sell something on an auction (like eBay). As long as the market is liquid enough you will get close to fair value.
You do realize Pawn Stars is pretty much a complete fraud? Every pinball they’ve had is completely out of line with the going prices.
typical manufactured ‘reality’ crap
Everything you need to know about negotiating, you can learn from the Laura Ingalls Wilder book called “Farmer Boy”.
If the guy is going to lowball you by 50%, then start 100% higher than your target price. It’s really a no brainer.
Of course, another no brainer is to not get yourself in a situation where you’re desperate to get rid of something…
A third no brainer is to be very VERY suspicious of any “expert” brought in by the buyer. For all you know, they may have an agreement to split any profits made on a low appraisal.
No- the one who is least willing to walk away from the deal loses. If you are willing to walk away from the deal because the other party isn’t offering what you want, you lose nothing. But if you are committed to the deal so much that you can’t walk away when things aren’t going your way, you will end up either giving away more or receiving less than you wanted- which is to say, losing.
I had the same blog about this topic a few months ago:
Ditto on the Herb Cohen recommendation above!
My father sold cars for forty years, and he said, “I’d tell the customer what I’d sell the car for. Then I sat back and shut up. The first person who talks, loses.” Meaning, the first person who responds to the deal will have to give on the price. He made a very good living on that principle and a few others.
You should check out American Pickers – it feels far less ‘set up’ than Pawn Stars, and there’s cases where the conversation goes, “What do you want for this doorknob?” “Oh, I’d let it go for $5.” “No, man, it’s easily worth $20, I’ll give you that.” They also deliberately overpay for items to get a guy to open up, before going for the thing they really want a good deal on. They discuss their negotiation style in a lot of detail in the ‘talking head’ segments; there’s ‘talking head’ segments on Pawn Stars that I’m certain are re-run from previous episodes.
Antiques trade is exactly like this. You typically know a lot about some material, a little about some broader catagories, and then stuff comes along you have no idea. I did well going on what we called “the look” – you have no idea what it is, but it looks cool/old/authentic, and guessed a reasonable lowball price.
The worst part was people selling “collectables”. They knew what they paid, and wanted that money back, which they would never get. Old guys with Franklin mint coins were the saddest.
Never ever ever ever tell Rick what you paid for something. That puts him in a position of offering what might seem like a reasonable profit to you.
Most people seem to take it since they are getting more than what they paid for something but not necessarily a good deal.
Rule of thumb with pawn shops is that they will pay only up to one-third the price at which they can sell an item. So if you see an item identical to yours on Craigslist for $100, you can only reasonably expect to get about $30-35 for it from a pawn shop.
If it’s a specialized item that they are unlikely to sell to people who come into their shop, you’ll get less. But the one-third rule is a good benchmark to remember when you’re trying to pawn something.
The last time I had to negotiate to buy a car, I did my homework on what an acceptable offer by me was. I knew the dealer had just bought the entire inventory of another dealer who had gone out of business, so they had to move some inventory. I made my offer, told the salesman I knew it was an acceptable offer and not to insult me with a counteroffer. He did. I pulled out my calculator, fumbled with it for a minute or so, and made my counteroffer to his counteroffer, which was a couple of hundred dollars less than my original offer. The salesman sputtered that there must be some mistake, that my second offer was lower than my first. I said that when I was recalculating, I realized that I had offered too much the first time. He accepted my second offer VERY quickly and got me out of the dealership as fast as he could.
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