Navigating The Used Gun Market
Image: N8 Tactical
Most customers walking into a gun store are searching for something shiny and new. But it doesn’t mean there’s not a lucrative opportunity for guns that have seen a little — or even a lot — of use.
When managed properly, the used gun market can expand your inventory (sometimes with no upfront investment cost) and provide customers access to unique collectibles — while also offering higher profit margins.
Consider display cases filled with new GLOCKs — each promising to return around 12% when they sell. Now, compare this with a used GLOCK, where you’ll clear 30 to 50%, depending on what you paid for it.
“It’s good money,” noted Jess Hancock, owner of The Wichita Gun Club in Wichita, Kan.
His shop takes an energetic approach to the market, pulling in used firearms from customers and estate sales. The key is making sure your outlay is low enough a profit is guaranteed.
“We start at the 50% mark and people sell their guns to us for it. Then you double your money,” Hancock said. “You feel a little bit bad. But you know, at the same time, we didn’t force them to sell it to us.”
Why are people selling their guns? Hancock sees a lot of activity from families of deceased gunowners wanting to rid themselves of collections.
“These men are passing away, and their families don’t want their guns,” Hancock explained. “I mean, they don’t want them at all. And they want [to get] them out of their houses as quickly as they can.”
In Oklahoma City, much of the used gun activity at H&H Shooting Sports is driven by the economy.
“I see a lot of people bringing stuff in because they need cash,” observed Mike Rust, H&H general manager. “It’s almost always the same story. They hate to sell it, but they need the money for bills.”
At Country Attic Treasures in South Lebanon, Ohio, the economy is also a major driver. Often it shows up when a customer wants a new gun, but doesn’t have enough disposable income, said owner Scott Ready.
“In a tough economy; folks looking to upgrade will sell to create some extra dollars because they have their eye on something else,” he stated. “Before pulling the trigger on a purchase, they’ll say, ‘I’ve got these other three guns. What can we do?’”
Purchase Or Consignment
Is there any other category of product that doesn’t really cost anything upfront? It’s one of the more interesting dynamics of the used gun market — depending on how you want to approach it.
You can buy guns outright from a customer. Or you can go the consignment route, where you essentially enter into a partnership with the customer.
The latter approach has worked well for Country Attic, where Ready prefers to emphasize new gun sales.
“Used guns offer us an opportunity to increase the breadth of our inventory without having to invest inventory dollars to do it.” he said. “So, everything we have in the used gun category is sold on a consignment agreement.”
With the store taking only 20% of the sales price, the approach has the added benefit of being better for the customer, Ready argues. When buying a gun from a customer, you have a strong motivation to pay as little as possible to offset the associated risks. This equation shifts with consignments, since both the store and customer share similar risks and rewards.
“We believe very strongly we want to build long-term relationships,” Ready emphasized. “So, we like to stay aligned with their needs.”
On the other hand, there’s certainly more profit potential if you simply buy the guns outright. It’s the preferred option for Rust and H&H Shooting in Oklahoma.
Where consigned guns net a 20% take, the store generally aims for a 30% return on store-owned used guns. It does require the initial outlay of cash to cover the purchases, but Rust sees it as a worthwhile tradeoff.
“I’m paying my guys a commission to sell it. I’m insuring it while it’s here. I’m safeguarding it. I have to check it in. I’ve spent the same amount on labor,” Rust shared. “If I can make 30% instead of 20%, I think it’s worth spending our money on.”
Evaluating Collectibles
When a customer shows up wanting to sell a GLOCK or any other firearm currently in production, it’s fairly easy to come up with an offer. Look at your store’s own sales history as well as completed auctions on sites like GunBroker.com to get a solid idea of what it can be expected to sell for after it hits your shelves.
But what about the oddities, like World War II handguns, old Colts and Smith & Wesson revolvers and higher-end custom rifles? These firearms are a golden opportunity to inject some uniqueness into the inventory. If you aren’t careful, though, you could end up paying more than you can hope to recoup.
“We love selling and buying old military guns,” said Rust, in Oklahoma City. “Pricing those can be a challenge.”
Take the case of early 1911s. You need to know if you are dealing with something all original, or something that was worked over several times by military armorers.
“You almost have to disassemble one to prove it’s 100% authentic,” Rust informed. “It could be the difference between a $1,200 shooter and a $3,000 collectible.”
One of the keys to evaluating these firearms is taking a more deliberate approach. A GLOCK seller may get to walk out the door with a pocketful of cash, but the fellow who brings in a handful of German Lugers will need to be patient.
When this happened at H&H (it was a collection of more than 15 Lugers), they took photos of each gun along with detailed notes. Then, after a few days, they were able to send an educated offer for the collection.
“I had a chance to research each and every one and do my due diligence to figure out exactly what I was looking at,” Rust recalled.
Where to do this due diligence can vary, based on the gun in question. Completed auctions (rather than active listings) on sites like GunBroker.com and Rock Island Auctions can be particularly helpful. Also, consider enlisting the help of employees and customers who have expertise with certain types of guns.
It’s been extremely effective for Jess Hancock, in Wichita.
“I have an AK guy. I’ll send him a couple of pictures and a text and he’s spot on,” Hancock shared. “He just lives and breathes AKs and knows everything about them and gets me right in the ballpark of what I should pay and what it’ll sell for.”
He has other guys he can turn to for 1911s and Smith & Wesson wheelguns, where an extra screw in the cover plate can mean a significant difference in value.
“One of the things I learned being a cop for 30 years: If you don’t know it, don’t wing it. It’ll get you in trouble every time,” Hancock advised.
Estate Sales
The easiest way to bring used guns into the shop is by letting customers know you buy them. These guns will trickle into the store, usually one or two at a time. It may be all you can handle — depending on how much space can be allocated to a used gun display.
But to turbocharge your used gun inventory, consider dipping a toe into the estate market. Those families who suddenly find themselves with collections of guns and related accessories want nothing more than for someone to take them off their hands.
With the consignment-only approach used by Country Attic Treasures, there will likely be some limits to how many guns you can absorb at any one time. When dealing with large collections, Ready’s strategy is to divide everything into three categories — guns that will sell easily, guns that might take a while and guns the store has no interest in.
“We’ll carve it into chunks like that, and we’ll take one chunk at a time and kind of work through it, based on the client’s goals,” he explained. “Some folks just want to get it turned as quickly as possible. With others, there’s no rush. They want to get every dollar out of it that they can.”
For a competitive edge (if you are bidding against others), consider the aggressively friendly approach used by both H&H Shooting Sports and Wichita Gun Club.
When an estate opportunity arises, they’ll visit the collection in person to get a better assessment. And when the offer is made, it covers every firearm. Often, they’ll also buy safes, reloading equipment and other accessories in the collection.
“We really feel like we’re helping people out who don’t have any other option on how to get rid of it,” informed Rust in Oklahoma City. “We want to be fair and make them a good offer, and if they accept, we’ll show up with a company check and three or four people and get stuff packed up and out the door.”
Wichita’s Hancock has been active in the estate market for many years, even traveling to other states to evaluate and make offers on larger collections. The “buy everything but the kitchen sink” approach has served him well, even with guns that have no hope of reaching the used gun display at his shop, which specializes in higher-end handguns.
Many of the guns go straight to penny auctions on GunBroker, where his company is currently among the site’s top 100 sellers.
“We keep 60 or 70 guns all the time on our GunBroker listings,” he said. “We’re just taking the risk and throwing them up at a penny and letting the market drive it.”
They’ve even figured out a way to deal with all the extras — guitars, pellet guns, cleaning equipment, holsters, safes, etc. — they’ve pulled in with larger collections. When they get enough stuff, they have a garage sale in the parking lot. He remembers one event had 300 or so people lined up in the morning, waiting for the sale to start.
“I put one guy on a table with this load of crap and told him to sell it for whatever they offer. Just get it gone,” Hancock shared. “We sold every single thing in 90 minutes.”
There’s also a lesson to be learned from one of his earlier estate encounters. After being sent a list of guns offered for sale, Hancock responded with a detailed account of how much he could offer for each item.
He got crickets in response.
“Then I realized I did all their work, and they took it and shopped me around,” he said. “So now I don’t release that information to anybody. I give them one price when I’m buying an estate.”
