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Why Is Diamond Resale Value So Low?

Why Is Diamond Resale Value So Low?

Seldom do we consider the post-sale value of things we buy while we are still feeling exhilarated by a good deal we have just made. Yet, when this excitement wears down, reality kicks in, and we start questioning ourselves how much money we can get if we decide to resell the valuable item we just bought. 

Diamonds are luxury goods, and we really need to ask ourselves this question in advance: What can we get if we are obliged to sell them in the future? Unfortunately, the bad news is that diamond resale value is pretty low. 

For this reason, today, we will try to answer the following question: Why is diamond resale value so low? Is it justified to consider buying diamonds a valid investment, or are you bound to lose some money?

If you keep on scrolling down, you can find out just how much money you can get back if your bride-to-be does not like a gorgeous diamond engagement ring you have bought for her. In case you didn’t know, as soon as you cash in your purchase and close the store doors behind you, your diamond will be worth only half the price you just paid. 

Perhaps it is wiser to let your fiancee choose her diamond ring on her own and be sure you won’t have to resell it and start all over again. Why worry about your finances when you can assess the risks upfront? We know that all this might be a bit puzzling, so stay with us, and we will explain everything you need to know about the diamond resale value.

Learn everything about the resale value of your diamond with us so that you can make a successful sale at the right time.

First Things First: Why is Diamond Resale Value So Low?

As we have already warned you, a diamond is worth twice as much while being displayed at a jeweler’s store than after you buy it. The main reason for this rather shocking fact is that jewelers purchase their diamond pieces in bulk, and they thus pay the wholesale rate. 

When a jeweler buys a diamond from the manufacturer, it is finalized in terms of cut, clarity, carat weight, and color. All the needed assessments have been conducted and recorded, and the GIA (Gemological Institute of America) has issued all the necessary certificates as well.

The wholesalers include all the expenses brought up while creating and perfecting a diamond and then form their wholesale price. Retail jewelers, on the other hand, usually simply take the very same diamond and double its price. Sadly, that is the final value of the diamond that you need to pay at the store. Why is that so, and is it justified?

Such pricing policy has been widely accepted, and thus retail items are heavily marked-up in price. Diamonds seem to be most affected by this strategy. It is the main reason why the diamond resale value is so low.

Diamonds usually do not sell fast. In order to cover their business against a slow-moving item, a jeweler will buy a diamond for 1000 dollars from a wholesaler and then mark up its price up to 2000 dollars. This huge mark-up is well-justified since retail jewelers have to cover relatively large costs of running their business (paying the bills, rental expenses, etc.). In the end, they are left with only a tiny profit.

Related Read: Diamond Price List: How Much Is A 0.1 To 40 Carat Diamond Worth?

Do Diamonds Have A Resale Value?

Yes, but no jeweler will buy a used diamond ring from you at the same price you had to pay, not even the jeweler you purchased your ring from in the first place. Why? Well, it is simple, they can all get a brand new diamond directly from the manufacturer at a much cheaper rate.

Related Read: Do Raw Uncut Diamonds Have Resale Value?

Value of Appraisal vs. Value at Resale

Jewelers often provide buyers with details regarding the diamond ring’s appraisal value. Of course, it does not mean that you get the diamond at a better price, but you do have some kind of protection from excess charges if you decide to replace that diamond in the future. On the other hand, the higher the appraisal value is, the higher your diamond’s insurance premium will be as well.

The value at resale has to do with current market trends. It depends on your diamond’s mark-up and the recent drop in the value of diamonds. In general, you can expect that the resale value of your diamond will be somewhere between 25% to 50% of the original price. If your diamond is insured, a certain percentage will be deducted to cover that too. 

Stay tuned to find out more on determining the diamond resale value as we are about to discuss that in more detail. 

Related Read: Diamond Appraisal Vs. Diamond Certification: Which One To Get?

How Is The Resale Value Of A Diamond Determined?

If you want to avoid being deceived, you need to consider a few things before settling on selling your diamond. Frauds happen more often than most of us want to admit, and for this reason, both sellers and buyers have to adjust their expectations and understand all the diamonds’ selling points.

If you know all about your diamond’s characteristics and qualities, you can make a well-informed decision when settling on a buyer. You must always have a grading certificate issued by the GIA when selling or buying diamonds as well. This certificate contains all the essential details of your diamond crystal.

If you do not have the GIA certificate, you will need to pay extra money for your diamond to be certified by GIA or another grading lab once again. The certificate issued by a respectable grading lab is the most important document you need to have with you at the time of the resale. 

Related Read:

What Will The GIA Certificate Tell You About Your Diamond?

1. Clarity

The GIA utilizes a specially designed grading system to assess your diamond clarity. The term clarity refers to the degree of noticeable inclusions and imperfections in a diamond crystal. 

2. Color

Color is yet another highly important factor that needs to be considered when determining the value and quality of a diamond crystal. Tainted crystals that have a hint of brown or yellow color are considered lower quality and are classified and priced in accordance with that. So, in essence, the less color there can be noticed on your crystal, the greater its value will be.

3. Cut Of A Diamond

The cut of a diamond will significantly influence its brilliance and reflectivity. Therefore, the better the cut, the higher the value of your diamond will be as well. A good cut is determined by its shape and the number and arrangement of its facets. Round-cut diamonds have the strictest guidelines.

4. Carat Weight

Carat weight refers to the actual weight of the diamond crystal. One carat corresponds to 0.2 grams. Therefore, the bigger your diamond is, the higher its carat value will be too. Likewise, the more carats your diamond has, the more money it will cost.

Can You Get More if You Resell Your Diamond to a Pawnshop?

You can expect to get somewhere between 30 to 60% of the diamond’s worth if you decide to take your business to a pawnshop. However, the truth is that most of the time, pawnshops will quote the lowest value since their selling costs are low too, and they need to make some profit to stay in business. 

For this reason, a pawnshop should be the last place you should go to sell your diamond. You are bound to receive only a fraction of the money you have initially spent.

Read More:

Where Can You Get The Most Money For Your Diamond?

Your best option is to turn to online brokers. They are highly convenient, solicitous, and efficient. Most of all, online brokers are willing to engage in your diamond resale process and help you find the best buyer.

Once again, the GIA certificate (or its equivalent) is a must! You will need to present your brokers with the grading certificate so that they can know what kind of diamond they are dealing with. They will also need the pictures of the diamond if you wish to do the business entirely online. Alternatively, you can organize a meeting or two and agree on all the resale details in person. 

Online brokers have their connections and access to a diamond market network that can help you get up to 39% less of the original value of your diamond. Even though this is quite impressive, a lot depends on the quality and characteristics of your diamond too. You can not expect a successful sale if your diamond is tainted or of unpopular cut. As long as you are realistic, all parties involved can be satisfied.

What Are Your Other Options?

There are a couple of alternative options for selling your diamond.  Besides online diamond brokers and jewelers, you can find the ones with actual offices you can visit and get a quote. Our advice is to find as many potential buyers as possible in order to get the most quotes. It is an excellent tactic in terms of getting a good resale value. 

Some jewelers might refuse to give you a quote because diamonds are slow-moving liabilities to them, or they simply have enough of them in stock already. Do not be discouraged by that. They are simply better off passing on your diamond than giving you a quote that could hurt their reputation.

You can try selling your diamond through online platforms like eBay, too. Yet, it is rather hard to come across a serious buyer to pay you a reasonable rate for your diamond. Moreover, searching for a potential buyer makes you more vulnerable to all kinds of cons.

Related Read: Which Brand Is The Best For A Diamond Ring?

Final Tips

Now that you are armed with all the correct information selling your diamond to the best buyer should be a piece of cake. As long as you have realistic expectations, you are bound to be satisfied with the final payout you are going to receive.

Of course, in order for you to avoid disappointment, you must first accept the inevitable truth that you will sell your precious diamond for less money than you have originally paid for it. However, as long as you can be satisfied with such an outcome, you can be content too. 

Remember what we have advised you:

Avoid pawn shops at all costs since their low prices dictate low quotes. Only desperate people who need cash as soon as possible can consider selling something as valuable as a diamond to a pawn shop.

Local jewelers are not a good option either, even though their quotes will likely beat that of pawnshops. They can get a new diamond at a wholesale price and will thus almost never give you a reasonable quote.

The best option is to sell your beloved diamond online through jewelry brokers’ companies. Make sure you choose a trustworthy company, and you can expect a fair offer. In any case, you will certainly get more money than you would from any other diamond resale option.

Finally, make sure that the timing is right. When the prices of diamonds drop, the demand for them drops as well. A decline in demand shows that people are not currently interested in buying diamonds, and that can make the prices drop even lower. It would not be an ideal time to sell your time in these circumstances.

If you can, hold on to your precious diamond until the conditions improve, even if that means you have to pass it on to the next generation. Then, your heirs can try their luck and potentially earn much more than you could. If not, at least they’ll have you in good memory.

Read Also: Are Old Diamonds More Valuable?