Why is Diamond Resale Value So Low?(2021 Detailed Reasons)

Hey! I finally find the Answer!

With most purchases we make, we barely very 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 jewelry 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, isn’t it? There are a few things that may help explain this shocking fact.

Why is Diamond Resale Value So Low?

At a jeweler’s store, a diamond ring is worth twice what it’s worth after it has been purchased. 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 an issue in mark-ups.

By the time the jeweler buys the diamond from the manufacturer, the product is finished in terms of cut, clarity, color, 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 jeweler will then take the same diamond and double the cost to come up with the final value of the diamond.

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 jeweler 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 mark-up helps them maintain their bills and secures them a small profit.

This same jeweler 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 jeweler 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 cheaper 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 mark-up, and the drop in the value of diamonds, the resale value of diamonds 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 by 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 color of a diamond crystal is crucial. Possibly the most important factor. If your crystal is showing tints of other colors such as yellow and brown, it is considered tainted and it drops in classification and price. Also graded on a scale, the less color fund on a crystal, the more valuable it becomes.
  • The cut of a diamond is evident in its shape in terms of facets, their number, and their 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 and 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, color taints, and unpopular cuts you are not likely to make a successful sale with any potential buyer.

 

Alternative Options

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 jewelers 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 jewelers 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, pawnshops will give you nothing but despair. Their quotes are designed to match their low prices.
  • Local jewelers are also a bad bet for diamond reselling. Although their quote will beat that of the pawnshops, jewelers do not need buying an old diamond from you while they can get new ones at wholesale prices.
  • Choose to sell online through jewelry 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. Hold on to it and if possible, pass it on to the next generation and have them try their luck.

Maybe then, the diamond resale value will have improved.

Guys, do not forget to check more posts here and here. you will learn a lot of diamond rings information.

Leave a Comment