With most purchases we make, we barely consider their value post-sale. Diamonds, however, though a retail product, are not one of these common items. Most of us care about how much we may be able to get in exchange for the diamond if we needed to sell it in the future. Unfortunately, our desires may be watered down because the diamond resale value is low.
So, you just bought that beautiful diamond engagement ring that your bride-to-be had gushed about in one of the fashion magazines. It was a hefty price to pay for tiny jewellery, but it was worth it, and you are not worried about your finances. Besides, isn’t buying a diamond considered an investment?
Sadly, immediately you cash in your purchase and leave the store, the ring is now worth 50% less what you paid for barely five minutes ago. Puzzling. There are a few things that may help explain this shocking fact.
How Much is a Diamond Worth?
For people in the trade, we have access to cutting houses and contacts of wholesalers to get an idea of current diamond prices. Even so, getting diamond pricing correct is more of an art rather than a science.
But what if you are just a regular guy on the street who’s trying to sell a diamond ring? How do you determine a fair resale value for your diamond ring? The 4Cs largely determine diamond prices: cut, colour, clarity and carat weight.
In order to estimate the diamond resale value, you can make price comparisons of your current diamond ring against those that are being sold in the market. Bear in mind that details matter when you are making a comparison.
For example, you need to compare a GIA certified diamond against a GIA certified diamond of similar properties. Likewise, subtle details like fluorescence, type of inclusions present and cut precision can also affect a diamond’s value. You may want to refer to this article on diamond prices for a comprehensive read.
To get a rough idea about the resale value of your diamond, you can multiply the average retail price of a similar stone by 30%-75% to get a rough estimate. Suppose you bought your ring from a high-end store like Cartier or Harry Winston. In that case, you could generally expect to take a bigger loss on the secondary market compared to a ring that was purchased from an online retailer with a significantly lower markup.
That’s because the retail price would include brand premiums and business overheads. And when you sell a diamond ring, most buyers don’t care about the cost of manufacturing, air-conditioning, salary, insurance or shipping expenses that go into operating a business.
What buyers care about is the intrinsic value of the ring they are getting, and if you are dealing with a professional, you can bet that they know what they are doing when they offer a price.
Can I Make Money Buying and Reselling a Diamond?
I’ve heard this from a number of people who actively prowl auction sites like eBay or Craigslist to look for deals in the hopes of making a fast buck. The mantra of “buying low, selling high” can get you into trouble unless you know exactly how the industry works and what you are doing.
It’s easy to get suckered into a seemingly great deal on a diamond ring at places like eBay because prices look cheap on the surface. However, the diamond’s intrinsic value is largely determined by the 4Cs and subtle details that a layperson may overlook.
To make a profit, you are operating on the basis that the seller is a sucker who doesn’t know what they are selling to you to “buy low”. On top of that, you need to find a buyer who’s willing to buy it from you at a higher price, and each step of this process entails risks that you need to account for in order to turn a profit.
Do diamonds have a resale value?
Resale Value: The resale value is how much you will get paid if you decide to sell the diamond. As a result of the retail markup and the decline in diamond prices, the resale value is typically well below what you paid. Indeed, diamond jewellery will typically resell for 25% to 50% of the purchase price.
Do diamonds increase in value over time?
The long and short of investment diamonds is that diamonds are subject to the fluctuations of supply and demand, so the more rare a diamond is, the more likely it will appreciate over time. Preserving and protecting a diamond ensures it retains and gains value.
How can I sell my diamond?
- Know Your Diamond Before You Sell.
- Set Realistic Price Goals For Your DIamond.
- Consider How fast You Want the Cash For Your Diamond.
- Choose a Trustworthy Diamond Buyer.
- Make Sure You Are Emotionally Ready to Sell Your Diamonds.
- Factors That Determine Value When You Sell Diamonds.
Do Diamonds Have Resale Value?
A short answer to this question is a straight yes.
A long answer to this question will take you through the basics of trading in (buying and selling) diamonds, but the answer will remain yes. However, the resale value of diamond jewellery or loose diamonds does not fluctuate like gold price. Instead, it depends on the demand and supply of these precious stones.
Here are all the factors that impact the resale value of diamonds:
Diamond Grading Certificates
Trustworthy diamond jewellery is always the first choice for every buyer. While buying a diamond (loose or in the jewellery) always ask for grading certificates (GIA, SGL, DGLA, or IGI) that states that the diamond is real. These certificates prove the authenticity of diamond stones, their carat weight, their cut, clarity, colour, and shape. The resale value of any diamond rock highly depends on these certificates.
4Cs of Diamond
If you own even one diamond ring or jewellery item, you would know about the 4Cs of diamonds: cut, clarity, colour, and carat. Melorra has a dedicated guide to the diamond’s 4Cs, which you can read to understand the concept. The higher the clarity/carat of the diamond, the higher the chances of reselling it. All these aspects are mentioned in the diamond grading certificates mentioned above.
Just like choosing the right diamond is imperative to gaining a resale value, picking out the right market and time to sell your diamond is equally essential. From auctions, retailers, and pawnshops to jewellers, reselling a diamond depends upon a variety of factors.
Most importantly, the right time and market demand determine the value you would receive by reselling your diamond jewellery in any places mentioned above. We suggest that you do thorough internet research and check out the minimum-maximum price range of reselling your diamond at different places before finalizing on one.
Where you decide to buy the diamond is equally important to where you sell it. A branded diamond necklace will always sell for a lower price compared to its cost price as big brands add their reputation and marketing money into the diamond’s value. You’re expected to lose around 25% to 50% of the diamond’s cost value if you try to sell it in the market.
The resale value of diamond indeed depends on several factors and does not simply fluctuate like gold rate. Typically, you should expect to resell your diamond at 25% to 50% lower than the price you bought it. However, exceptions do occur; if the diamond shape is highly unique or the diamond colour is very rare, you need not drop the price to a significant low. But negotiating the deal requires people’s skill, of course. You can also explore the range of gold coins on our website.
Why is Diamond Resale Value So Low?
A diamond ring is worth twice what it’s worth after it has been purchased at a jeweller’s store. This is because they buy their diamond pieces in bulk, and this secures them the wholesale rate. This does get them more products at a lower cost, but it also introduces markups.
By the time the jeweller buys the diamond from the manufacturer, It is finished in terms of cut, clarity, colour, and carat. All these assessments have been done, completed, recorded, and certified by the GIA.
The wholesaler will sell the diamonds with consideration of all the processes and expenses incurred in creating and perfecting that one diamond. The retail jeweller will then take the same diamond and double the cost to come up with the diamond’s final value.
So, once the diamond has been paid in full, the costs and expenses are all settled, and the only things left worth measuring value are the diamond crystal and the ring’s setting.
In a nutshell, these are the main reasons why the diamond resale value is so low:
1. Value of purchase
It’s a known fact that retail items are heavily marked-up in price. Diamonds are even more so affected because their value is high.
If a jeweller buys a diamond at 1000 dollars from a wholesaler, he marks the price up to 2000 dollars to cover himself against the slow-moving item.
This huge markup helps them maintain their bills and secures them a small profit.
This same jeweller will not want to buy your wedding ring because it is not going fast and he can always get a new one from a manufacturer at a cheaper rate.
2. Value of Appraisal
Your jeweller might have handed you details of the diamond ring’s appraisal value to shield you from excess charges if a replacement is needed.
Don’t let this fool you into thinking you got the ring at a lower price than you would have.
This appraisal value only raises your diamond’s insurance premium.
3. Value at Resale
Based on the current market trends, your ring’s markup, and the drop in diamonds’ value, diamonds’ resale value commonly falls somewhere between 25% to 50% of the original price.
In the case of insurance, a percentage is also deducted.
How to Determine the Resale Value of a Diamond?
Once you are settled on selling your diamond, a few things must be considered by the buyer and the seller alike for both of you to manage your expectations and to avoid getting duped.
Unfortunately, this happens more than people may care to admit, but that is why you need to learn and understand your diamond’s unique selling points.
Understanding your diamond’s characteristics and qualities will help you make a wise decision when settling on a buyer. A grading certificate provided by the GIA should be part of your purchase detailing all aspects of your diamond crystal.
If it is lacking, you will need to pay a fee to have the diamond certified by GIA or another grading lab that issues certificates. This is an important document to have at the point of resale.
- Clarity refers to the degree to which inclusions or imperfections are noticeable in a diamond crystal. The GIA has employed a special grading system to record different stone clarities.
- The colour of a diamond crystal is crucial—possibly the most important factor. If your crystal is showing tints of other colours such as yellow and brown, it is considered tainted, and it drops in classification and price. Also graded on a scale, the less colour fund on a crystal, the more valuable it becomes.
- The cut of a diamond is evident in its shape in terms of facets, number, and arrangement. All cuts have their specific guidelines but not as strict as those observed for the round cut diamonds. Cut of a diamond determines its reflectivity and brilliance so the better the cut, the better the bling and the more expensive it is.
- Carat is the weight of the diamond crystal. One carat equals 0.2 grams. The bigger the diamond, the higher the carat value, and the more money you need to part with to acquire it.
How Much Do Pawn Shops Pay for Diamond Rings?
Pawnshops will offer you anywhere between 30 to 60% of the diamond’s worth. They are the last place you want to take your diamond to get a quote as you will only get a fraction of your initial costs. They are renowned for quoting the lowest values because their selling costs are low as well, and this is the only way they can make a profit.
Where Can I Sell My Diamond Ring for the Most Money?
Online brokers are currently the best option when it comes to the diamond resale process.
Not only are they convenient, effective, and very considerate, but they are also very engaging and can help you find the best buyer for your diamond ring.
This is where the grading certificate comes in handy because it will help them understand the kind of diamond they are dealing with. With a few pictures and maybe one physical meeting or two, you may be able to fetch up to 39% less the value of the diamond originally. That’s impressive.
Even with all their connections and available diamond market network, the quality and characteristics of your diamond are what will make it get more bang for the buck.
If your crystal is spotting inclusions, colour taints, and unpopular cuts, you are not likely to make a successful sale with any potential buyer.
A few options are available for you to sell your diamond through.
Though the rates you are likely to get will vary from one potential buyer to the next, the most important thing is to gather as many quotes as possible.
There are diamond brokers and jewellers online and in physical offices, and these are a good bet in terms of getting a good resale value. However, this does not necessarily mean that they will quote the highest price.
Most jewellers may refuse to give you a quote because, for one, they are slow-moving liabilities to them that they already have tons in stock.
Secondly, giving you a terrible quote could compromise their integrity, and they would rather pass on your diamond than risk their reputation.
Of course, there is the online buy and sell shops available on platforms like eBay. Here you may be lucky to find a serious individual buyer who may be able to pay a good rate for your old diamond. Getting a buyer through this platform is rare, and more often than not, cases lead to vulnerable sellers being conned.
Tips on Selling Your Diamond
Selling your diamond is not a complicated or challenging process at all. If you arm yourself with the right information and manage your expectations, you should be content with the final payout.
- By now, we have made it obvious that you will be selling your beloved diamond at a loss from what you bought it. Once you have accepted this fact, it should be easier to find a satisfactory value.
- Avoid pawn shops at all costs. Unless you are desperate for some loose change and you couldn’t care less about your diamond, pawn shops will give you nothing but despair. Their quotes are designed to match their low prices.
- Local jewellers are also a bad bet for diamond reselling. Although their quote will beat that of the pawnshops, jewellers do not need to buy an old diamond from you while getting new ones at wholesale prices.
- Choose to sell online through jewellery brokers’ companies who are trustworthy, transparent, and will give you much more money than all other forms of diamond resale options.
- Selling privately online through stores like eBay is viable, but you may need to wait a long time to get a buyer. This is because old diamonds are not a heavily sought-after commodity.
To wrap it up
As the prices of diamonds drop, so will their demand. If there is a decline in demand, it will mean that people are not interested, which will further cause the prices to drop.
In these circumstances, selling your diamond is not the best thing to do. If possible, hold on to it on to the next generation and have them try their luck.
Maybe then, the diamond resale value will have improved.