License to Pawn: Deals, Steals, and My Life at the Gold & Silver

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License to Pawn: Deals, Steals, and My Life at the Gold & Silver Page 6

by Rick Harrison

Here’s another example of bureaucracy in action: If you watch the show, you’ve undoubtedly noticed the palm trees in the median of Las Vegas Boulevard in front of the shop. Those were part of a beautification project the city did a few years ago in an attempt to make downtown Vegas easier on the eyes.

  That’s all well and good, but there used to be street parking before the median and the palm trees. The businesses along Las Vegas Boulevard, including ours, depended on those parking spots because they provided easy access, especially for our older customers.

  When they came to me with the proposal, I said, “It’s going to look beautiful when there are trees on the road next to a bunch of boarded-up buildings. If people can’t park, they aren’t going to shop there.”

  No matter. They did it anyway. And several of the shops along the road did close. I ended up buying the parking lot next to the shop as well as the building next door. The government building across the street, built a few years ago for the then-bustling Building Department, is now empty, too.

  But you know what? Those palm trees sure do look nice on TV. I’ll give the city that much.

  Despite all the struggles we had to get the business moving, there’s no doubt we were extremely lucky to have gotten the pawn license when we did. Not only did we get in under 1955 laws, which call for us to pay only $200 every six months to retain our license, but we also benefited from the skyrocketing population of Las Vegas.

  The process of obtaining a pawn license is much different now. The city still issues one pawn license every time the population rises by fifty thousand, but the current state of affairs—a drastically shrinking population—has rendered that temporarily moot. However, there is a lottery system in place that takes first-come, first-served out of the equation. Tickets are $200 apiece, and they routinely sell between two thousand and four thousand tickets, which means the city earns $400,000 to $800,000 from the lottery tickets alone. The lottery winner must pay the city $60,000 for the license, but that’s still a bargain. The license is transferable, and people are willing to pay $1 million to get one. Our shop’s license is zoned for Las Vegas Boulevard, so I could probably sell it for $2 million.

  We got our license just as most family-run pawn shops were getting out. Like just about every business in America in the late eighties and early nineties, the pawn business was being overrun by corporate interests. Fewer and fewer companies were owning more and more shops.

  The two big pawn corporations—PawnAmerica and EZPAWN—started eating up as many pawn shops as they could. By the time we had a foothold in the Vegas market, Gold & Silver Pawn was just one of two family-owned shops left in town.

  This allowed us to be different. The corporate shops are limited in what they do. They cater to people who are pawning jewelry or other conventional, no-thought items. We wanted our shop to reflect our personalities: curious, knowledgeable, and eccentric. It would be boring if all we did was sell and pawn jewelry and lend out money. We wanted to focus on the rare and unusual. We were still going to do all the normal pawn-shop business, but we saw an opportunity to provide a service by inviting people to sell their rare and unusual items.

  As it turned out, our desire to attract the more eccentric stuff happened organically. The guys working for a low hourly wage at EZPAWN aren’t equipped to handle rare stuff, and their bosses don’t want them trying.

  If a guy has a $5,000 Gibson guitar and he knows he’s got a $5,000 Gibson guitar, he’s going to laugh at the guys at EZPAWN when they look at his guitar and offer him $400. He’s going to walk out of there thinking they’re fools. But if he comes to my place and deals with me, I’m going to do a couple of things: (1) appreciate the hell out of his $5,000 Gibson guitar, which is going to make him feel pretty good about himself and his decision to come to my shop; and (2) give him the respect he deserves for knowing he’s got a cool item—one he probably doesn’t want to give up—and deal with him as fairly as I can.

  I’m probably going to end up giving that guy three grand for his guitar. And if he needs the money that week, he’s probably going to take it and feel OK about it.

  The other place isn’t going to give him $3,000 even if they know a Gibson is worth $5,000. Remember, there are fake everything: fake Stratocaster guitars, and fake Gibsons, and there’s no way in the world a guy at EZPAWN is going to know the difference between that guy’s real one and a fake one. He’s not trained to know, or paid enough to know, so he’s going to pay the same $400 for a real or a fake. The risk of getting burned is just too great.

  Believe me, if word got out that EZPAWN paid someone $3,000 for a Gibson guitar—even if it was real—they would be flooded with fake Gibson guitars and they probably wouldn’t know the difference.

  Well, I know the difference. Old Man knows the difference. Corey knows the difference. And I have the clientele that would be willing to pay the $5,000 I would be asking. That’s the difference between me and the corporate shops.

  So here’s the way it shakes out: When one of the corporate shops is presented with something they don’t recognize, or something that doesn’t show up on their computer price sheet, they say, “I think you should take it to Gold & Silver Pawn.”

  Hey, that works for me.

  CHAPTER 4

  All Kinds—And Then Some

  Our shop is a poor person’s bank. This is probably the first fact you need to keep in mind when picturing the people who comprise our clientele. Sure, we specialize in rare and unusual items, and the television show highlights the cool stuff we have and the people who bring it in. That’s a part of our business, but it isn’t a completely accurate portrait of the everyday back-and-forth inside the shop.

  Who comes in the store? Just about everybody. There is the permanent degenerate class, which uses us to fund whatever sordid activities they’re planning at the moment. They’re generally harmless, eager to get whatever they can and get on with those sordid activities.

  There are the collectors who are drawn to the rare and unusual. There are skylarkers who line up outside to wait for their turn to walk around the shop, take pictures, and buy a T-shirt with Chumlee’s face on it.

  Most of our customers, though, are hardworking people who live just outside the lines of what you might consider conventional American society. They’re seasonal workers or itinerant construction workers or people who otherwise find themselves in Vegas in search of something they can’t find anywhere else. And most of them were hit hard by the collapse of the economy.

  Nevada was the state hardest hit by foreclosures, and Las Vegas was the worst place in Nevada. This is the absolute epicenter of The Great Recession. Unemployment went to almost 15 percent, the construction industry came to a halt, and tourism took a nosedive. This leaves a lot of people in trouble.

  Here’s an example of a ripple effect of the failing economy: I stopped buying tools or taking them on pawn. We were filling up the back room with expensive power tools, and nobody was buying them. And when I say nobody, I mean nobody. It got to the point where I couldn’t give away power tools. There was simply no market for them.

  When the economy was good, there was no stopping construction in Vegas. Guys were making good money in the building trades, and there was far more work than workers to do it. There was a joke that went along with it: The official bird of Las Vegas was the construction crane.

  When the economy took a dive, workers who had been laid off were coming into the shop by the dozen—they had nowhere else to go. These guys might not have been real sharp at managing their money. They never thought it would run out, and God knows our schools don’t do much when it comes to teaching financial responsibility. A lot of these guys were hoping to be able to get their tools back—the recovery was always just around the corner—but too often they never came back, and one day I looked around and we had about seventy-five saws in the back room. I would look at them and see more than lost tools; I would see broken dreams and a broken system. It’s enough to make you heartsick, but if I k
ept on taking saws from down-and-out construction workers, I was going to end up just like them. My back room was starting to look like Home Depot.

  One of the ways we can track the health of the economy is through the number of pawned items that remain in our back room for longer than 120 days without being picked up. The assumption is the people who pawned them couldn’t come up with the original loan money, plus interest, to get the items back. These items “come off pawn,” which means they are now the property of Gold & Silver Pawn, and ours to sell.

  The numbers aren’t definitive, but during a good economy—in this case, pre-2007—the recovery rate is roughly 90 percent. In the two or three years that followed the economic collapse, that rate dropped to roughly 80 percent. It’s a statistically significant difference, but it also surprises people to know that eight out of ten items, even in the worst economic times, get picked up.

  If there’s one thing I’ve learned, it’s that people will do what they have to do to make it work. It’s amazing to me how resourceful people are when it comes to making a living and taking care of their families. There are hustlers out there who will simply find a way, regardless of the obstacles. There’s a Hispanic guy I know who has raised six kids by going from pawn shop to garage sale to pawn shop, selling and pawning and working his way to a profit.

  He has a system, and he has it down. He’ll shop prices and ask me what I’d pay for something that he’s seen in another store. Then he might pawn something with me and use the money to go make the purchase in the other store. Then he’ll sell the item to me and use part of the profit to take his stuff off pawn.

  Watching this guy work is enough to make anybody nervous. He’s talking fast, asking questions, running the numbers through his head while he figures out his next move.

  He’s made his living this way for years. He’s raised six kids doing it. It’s not a hobby; it’s a profession. There’s not a big spread there, so he needs to be hustling full-time to make it. He’s just one of the people I deal with who lives a little bit outside the typical American nine-to-five structure.

  Here’s a fact I’ll bet most people don’t realize: Roughly 25 percent of the adult population can’t get a bank account. If you have bad credit, you can’t get a bank account or a credit card. So what choices do those people have? They have me, and that’s about it.

  If you come to me with your big-screen television and pawn it for two hundred bucks, I’ll charge you 10 percent a month—120 percent a year. I’ll charge you a $50 storage fee and five bucks a month additional for storage. After 120 days, if you haven’t picked it up, it comes off pawn and becomes mine.

  People look at a 10 percent monthly interest rate and say, “You’re gouging people.” That would be true if this was a simple electronic transaction, but it’s anything but that. I’ve got to store your television—or painting or rare book or motorcycle—and five bucks a month isn’t very much to pay for storage. Besides, this is the only place you can walk into and get a loan in exchange for your stuff with no questions asked.

  Here’s a scenario: A guy walks through my door with a new Rolex and wants to borrow five grand against it to go over to the Mandalay Bay and gamble. Clearly, he doesn’t have five grand in his pocket or his bank account—or he doesn’t have access to it at the moment. Providing I’m confident the Rolex isn’t stolen, I’m going to take the watch, write him up a pawn slip, count out one-hundred-dollar bills until I get to five thousand, shake his hand, and send him on his way. I’m not going to ask him what he’s going to do with the money, because frankly I don’t care. He got something, I got something, and we’re both clear on the terms of the transaction.

  Now, change the location of the transaction from the pawn shop to a bank. The same guy walks through the door and says he wants to borrow five grand.

  “And, sir, what do you plan on doing with the money?” the banker asks.

  “Dude, I’m going gambling. Throwing bones.”

  So tell me, how fast is that guy going to get kicked out of the bank?

  You also can’t walk into a bank and say, “I need to borrow fifteen hundred bucks because I’ve got to get a new apartment because my old lady caught me fooling around and kicked me out on the street.”

  Me? I don’t care. If you’ve got something worth more than fifteen hundred bucks, I’ll be glad to take it and give you the money. And if I’m lucky, you’ll tell me the story of what happened between you and your old lady while I’m counting out the bills. Don’t be surprised if I go ahead and ask.

  If you walked into our back room, you’d be amazed that we can keep any of it straight. For one thing, the back of the shop is about four times bigger than the showroom. We’re buying so much stuff and putting so much on pawn that it’s hard to keep track. It’s not air-conditioned, and on a 110-degree Vegas summer day, you could very easily mistake that back room for hell. That’s why cleaning it has become such a joke on the show. If Old Man is mad at Chum, he’ll tell him to go and clean the back room.

  I don’t think he’s ever done it, but the threat works. As a joke, anyway.

  People who come into the pawn shop use their material possessions the way people in the conventional world of finance and commerce use credit cards. And like someone using a credit card, they aren’t usually looking to max out. They just want enough cash to get by. That piece of jewelry or table saw is their collateral to make it through a tough time.

  I know popular culture has made it difficult for you to believe this, but I’ll say it anyway: It’s a good deal for them. Before you call me crazy, think about it.

  You can come into my shop and get a loan. You can renege on the payment. You can get your stuff repossessed. But guess what? I’m still not going to turn you in to a credit agency. And I’m not going to sue you. Where else can you get that deal?

  And the best part is, if you walk in the door a week later, I’ll do business with you all over again. How’s that for service?

  It’s nice to envision an ideal world, but we don’t live in one. These are the facts of life, and I deal in the facts of life. Stuff happens and people need to be able to turn to someone. If we weren’t there, most of these people would have to turn to friends or family—if they have one or the other or both—and how often does that turn out well? I’m not saying we’re a house of philanthropy, but a pawn shop does serve a purpose to a certain segment of society that a lot of people would rather ignore.

  Back before our industry became vilified, a slang term for pawnbroker used to be “Uncle.” You’d think people who come in looking to pawn something would be ashamed or embarrassed, but the opposite is true. All of a sudden, their pawnbroker becomes their therapist. They’ll tell me things they wouldn’t tell their spouses or parents or siblings.

  I’m the closest thing these people will ever have to a financial advisor. They ask my opinion on what they should do with their money, where they should look for work, whether their latest get-rich-quick scheme is as foolproof as they believe it is.

  The interaction I have with our longtime customers is probably the best part of the job. There are people who have been doing business with us since my dad opened the buy-and-sell store on Fremont Street, almost thirty years ago. They are as much a part of the fabric of the store as my dad or Corey or Chumlee.

  I have to be careful not to identify people here too precisely, or by name, because by law a pawn is a private transaction. I’m legally obligated not to reveal our customers’ identities. In a strange consequence of the television show, that privacy law has kept my dad, Corey, Chumlee, and me from working the counter in the store any longer. With the crowds of people roaming the showroom, snapping photos and taking video of us, we can no longer feel comfortable with the confidentiality of the pawn transactions. When we’re shooting the show, we close the shop temporarily and allow a handful of customers to stay in the showroom.

  But there are certain people I tell the employees that I want to see whenever they come into the s
hop. Janie is an older Asian lady who started coming into the store when she was in her fifties, right after we opened. She’s in her seventies now, and she still can’t play enough slot machines. She’s the sweetest lady, and if you saw her walking down the street you’d never imagine she’s one of our most loyal customers. Or that she gambles the way the rest of us breathe.

  Janie (not her real name, of course) comes into the store once a week, the same way she’s been doing for more than twenty years. Literally once a week. She’s either pawning something or picking something up. It runs in cycles; three or four weeks in a row she’ll come in and pawn stuff so she can gamble, then she’ll show up one day with an even bigger smile on her face, pay off her loans, and pick everything up at once.

  Every time, without fail, she walks into the store and says, “Hey, Rick. How are the kids? How are you? How’s everyone?”

  People will be standing around the counter and she’ll engage all of them.

  “Oh, this Rick—he’s the greatest person there is.”

  Everybody laughs, including me. (I might appreciate the sentiment, but even I think she’s laying it on thick.) I don’t know how Janie does it, but she’s figured out a way to make this whole thing work for her. Pawning and picking up, pawning and picking up. She keeps all of it straight, and she always has a smile on her face.

  This is a crazy business. I can’t say that often enough. I’ve met politicians, celebrities, athletes—every walk of life has walked through that door. The people-watching in the Gold & Silver Pawn Shop over the years has been top-notch. I’ll put it up against any other place of business in the country.

  For instance: The finance minister of a major Southeast Asian country was a semiregular customer. He came into the store six or seven times over the course of a few years. I can’t name him or his country, but this guy was a major player—diplomatic passport and everything—who would show up in front of the store and climb out of the back of one of the casino limousines.

 

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