Need cash? Try a pawn shop
"One man's junk is another man's treasure."
It's an adage which can be attached to the practice of pawning, which is widely considered the oldest form of the financial institution system.
Dating back some 3,000 years, pawn broking has been recorded in ancient China and in written histories of Greek and Roman civilizations.
It's endured that long because it's a system which is simple and effective for both parties involved.
For area pawn stores, it's a way of living and it provides people who are in a financial pinch to gain money quickly by providing collateral in the form of their physical possessions.
Especially now in some tough economic times, pawnshops have been a source of short-term relief for individuals who need help financially.
And the items people bring into the shops to either pawn or sell range across the spectrum, from DVD's to tools to jewelry to cars.
Anything can be found in a pawnshop for the right price.
"You can come in and see what's in a pawn shop and anything can be in there," said Frazee Pawn owner Terry L. Harrison. "Our motto is, 'More than just a pawn shop, it's a shop."
"It's all in the eye of the beholder and eventually every piece we have in our shop will be sold, because someone at one time or another bought it before."
But the path those items travel to the pawn store shelves involve more than several steps -- it's a process.
The client or customer has the choice of either pawning their items or selling them outright.
It's not unusual for an individual to ask full value price for the item, but pawn broking is a business and the owner has to consider his profit margin before buying or lending out their money.
"First thing I look for is to determine the value of the item," said 59 Trade Route owner Dave Vareberg of Detroit Lakes, who has been in the pawn business since 1992. "Second, you have to judge the condition of the item and determine how much you can get back off it."
The pawnbroker will charge around 25 percent to hold the item for 30 days after lending the money.
For example, if the amount borrowed is $100, the person who pawned their possession has 30 days to return and pay $125 to get it back.
There are risks every time a pawnbroker lends a person money against their possession. If they lend more than what the item is worth, the person has no motivation to come back and repay, plus the interest.
"The client has to weigh their decision to pawn or sell, they need to decide whether it's an item they are really going to use or need against paying the interest to get it back," Harrison said.
But the staple of both Harrison and Vareberg's businesses are repeat customers.
Dealing fairly with each client will pay dividends in the future with repeat business.
The pawnbrokers also realize when a person comes in to pawn or sell an item, they are in a tough spot, so they want to treat each one fairly.
Both Vareberg and Harrison stated they are always willing to work with clients to help them buy back their pawned items.
"Their possessions are going down in value sitting back on our shelves and if they don't have the funds to buy back their possessions, I'll work with them," Harrison said. "I don't want to take their merchandise."
Proof is in the pudding, as well, for Harrison. Five years ago when he opened Frazee Pawn, the buy-back percentage on his pawned items was about at 70 percent.
This year, that mark is up to 80 or 85 percent.
Vareberg's clientele is also solid in buying back pawned items and his policy is directed towards having them being able to buy them back.
"As long as they show the interest in retrieving their stuff, we will work with them," Vareberg said.
But both are in pawn broking as a business, with both estimating about 90 percent of their business comes from pawning, not direct buying.
Storing pawned merchandise is money. The 59 Trade Route shop is expanding for more space to store more items, which of course, costs money.
If Vareberg and Harrison need to turn around and sell it for the 30-35 percent profit, it needs to be in working condition -- which again, takes money to fix up.
A good example of how a pawn deal goes down, happened between Harrison and a client who pawned a very expensive gold coin.
The coin was a 1901 $10 gold piece, with a high rating and valued around $6,000. Harrison lent his client $2,000 on the coin Dec. 5, and stored it safely for the contracted 30 days.
But the client, who would have owed $2,500 at the end of the 30 days, instead was able to return and buy the coin back Nov. 18. That was almost half the time of the 30 days, so the client only owed Harrison $2,250.
Frazee Pawn's most commonly-seen merchandise are DVDs and CDs, with jewelry being second.
Vareberg's top items are guns and tools, which include some heavy-duty ones, as well as DVDs and CDs.
Both also guard against buying stolen property. They cooperate with law enforcement and make the sellers accountable, by recording names, licenses and in Harrison's case, taking their picture.
"I don't want stolen property, keep it out of my shop," Harrison said. "You can get a good feeling if it's not their items and then you tell them to take a walk. If I know it's stolen property and I have it in my possession, I will give them two options -- either walk out the door or I'm calling the cops."
Frazee Pawn has returned cameras to Perham High School on two different occasions, as well.
"The best thing someone can do is record their serial numbers on their possessions or make a unique mark on it," Vareberg said. "But (the seller) is held accountable for what they are selling is not stolen. I know about every item and where it's coming from."
But it's not just the usual DVD collection or television set or computer that comes through Harrison and Vareberg's doors.
There are plenty of other things that are -- well -- unique.
Harrison bought an ancient Byzantine gold ducat, which was authenticated as being struck in 502 A.D.
The coin came from the Virgin Islands and made its way to Frazee, eventually into Harrison's hands.
The ancient coin has a 14K chain attached, as well. It's an item Harrison stills has after buying it over three years ago.
"That's one of the most unique things I have seen," said Harrison, who also owns the Morningside Hotel outside of Frazee and is also opening the new PawN-Shop in Pelican Rapids .
Vareberg also has seen some old relics on his counter.
About 10-12 years ago, a Civil War musket was purchased by Vareberg, who ended up doing about two months of research on it after buying it for a good price.
Vareberg also struck gold with a WWII 1941 Johnson rifle.
"The value at the time I bought it was virtually nothing, but I thought it was a unique purchase. Then, overnight, the interest in those types of guns took off. But for every homerun, there is also a big pile of (crap)."
Big-ticket items are also brought in -- or left out in the parking lot, that is.
Cars, boats and four-wheelers are some pawned merchandise, as well, at both locations.
Having good negotiation skills also helps in the pawn business. People are always trying to get the best deal, but so are the pawnbrokers.
"It's like dealing with politicians," Vareberg laughed.
"There's a lot of B.S. which goes into it. I've gotten burned plenty of times and it comes with experience. I've learned every day."
The internet is also an important tool, since everything can now be looked up to see the value of it with the touch of a couple of buttons, which helps both the buyer and seller.
"Now with the internet, you can afford the opportunity to see what things are going for," Harrison said. "You can also show customers what things are going for and they can feel comfortable with it."
Jewelry for both is also common business, which usually comes from disgruntled ex-wives and ex-husbands. But jewelry is usually always worth something.
"The big thing about jewelry is it always has value," Harrison added.
In fact, legend has it that Queen Isabella of Spain "pawned" the family jewels in 1482 to finance Christopher Columbus' voyage to the Americas.
In essence, pawnshops are no longer the seedy, back-alley business that some considered them to be a decade or more ago.
With the tough economic times, all walks of life enter Vareberg and Harrison's shops for a little bit of financial relief.
"I do get a lot of people thanking me after deals," Vareberg said.
It's also a place treasures can be found, despite them being relegated as trash by another.
"We get many highly collectible items which appeal to certain people," Harrison said. "I get people coming in, say 'Oh my God! You have one of those!'"
Treasure or trash, it all comes down to the eye of the beholder, with a price tag attached.