Determining Diamond Resale Value

Diamond resale value isn’t always a given. It fluctuates with the market, the buyer—and many other factors.

That’s what makes selling a previously worn diamond so frustrating. Before you entertain the thought of selling an old diamond, whether it be an inheritance or a stone from an ex, it pays to do your homework.

Here are some diamond re-selling tips from expert jewelry buyers that can help you best determine the resale value of your diamond.

Diamond Resale Value

How Experts Grade and Price Diamonds

The best way to start determining your diamond’s resale value is to begin where the pros do—with the four key characteristics that determine the quality and size of the diamond—the “four C’s”: carat, clarity, color, and cut.

  • Carat weight: Diamond experts express the weight of diamonds and other stones in carats. One carat equals 0.2 grams. If, for example, your diamond weighs 0.1 gram, it’s a half-carat diamond. Larger diamonds are rarer, so they are more valuable. Note—a carat differs from “karat,” A karat is a unit that indicates the purity of gold. Know which term a buyer is referring to if you have a diamond set in a gold setting. Because the terms are pronounced the same, it can be confusing. If you’re selling a diamond without a setting, you only need to concern yourself with its carat weight.
  • Clarity: A diamond’s clarity indicates how many flaws, also called inclusions by diamond buyers, are visible in the stone. Diamonds with fewer flaws, too, are rarer—and more beautiful, so naturally, they bring a higher price. The Gemological Institute of America (GIA) has created a scale that most U.S. diamond experts use to grade each stone.
  • Color: Though most diamonds may look white or silverfish to the untrained eye, there are slight variations of color in diamonds. In general, the fewer yellow hues in the diamond, the higher a buyer will grade it. In diamonds, a lack of color will usually bring a higher price. However, some rare-colored diamonds, such as those with pink, blue, and several other hard-to-find tones, will command a higher price. Research is essential when it comes to diamond color versus value.
  • Cut: Look at your diamond closely. On it, you’ll see several flat faces, called facets. The more facets a diamond has, the more brilliance it usually will have. Therefore, jewelers use the number of facets to determine its worth. The shape of the diamond, too, whether round, oval, marquise (an oval with pointed ends), rectangular, or square, also enters into the equation. Brilliance and light return are the two most important factors when determining cut. The more sparkle a diamond has, the more likely it is to have a higher value than a similar one whose cut appears dull. Round-cut diamonds are easier to grade since the guidelines buyers use to grade round stones are better developed than those with other cuts.

Once you know the carat weight, clarity, color, and cut of your diamond, you can begin to compare prices. If you’re not sure about these four characteristics, take your diamond to several potential buyers to see if their opinions align.

Diamond Certificates and Appraisals

For a fee, you can send your diamond to the GIA or a similar grading lab to obtain a certificate that will describe its clarity, cut, color, and carat weight. If your diamond already has a grading certificate, keep the certificate in a safe place and make a copy of it so you can refer to it when you compare your diamond to others in its class.

For larger or more valuable diamonds, you may want to invest in a formal appraisal to get a more accurate idea of their worth. Be sure that anyone you consult is a member of the GIA to avoid dealing with amateurs—or worse, charlatans.

If your diamond is set into a piece of jewelry, it’s best to get a formal appraisal, since the setting itself may contribute to its value.

Compare Your Diamond with Similar Stones

After you know the “four C’s” for your diamond, look for stones with a similar carat weight whose clarity, color, and cut are similar to yours. Retail prices, however, are not what you will receive when you sell your diamond to most knowledgeable buyers, though. Jewelers and pawn shops will need to factor in their expenses, time, and labor to make the transaction profitable for them.

To calculate the probable resale value of a diamond to a typical buyer, you’ll need to multiply an average of the retail prices for similar stones by 20 to 40 percent. That’s the wholesale price a jeweler or pawn shop will need to pay to avoid losing money on the transaction. Remember, the jewelry store or pawn shop from which you purchased it had to pay high overhead expenses, such as salaries, rent, heat, electricity, advertising, labor to reset and polish the stone, and other expenses.

The sellers you are competing against are the wholesalers. Once you realize that, you can adjust your expectations. A pawn shop owner or jeweler won’t pay more for your diamond than she or he can get it from a diamond dealer for.


Prices Depend on How and Where You Sell Your Diamond

What you can expect to receive for your diamond will also depend on where you sell it and on which platform you sell it.

  • Retail jewelers: If you sell it for cash at a jewelry store, the value will usually be lower than if you exchange it for another piece of jewelry at the same store. Some jewelry stores will exchange your diamond for store credit. That can be your best bet if you ultimately want to replace your diamond with another piece. Some jewelers will not pay cash for diamonds or will give you well under what they would give you in store credit. If you’re short on cash, store credit won’t get you out of a financial pinch.
  • Wholesale diamond sellers: Wholesalers usually will pay even less for a diamond, since they can buy them for a relatively low cost from their suppliers.
  • Online diamond and jewelry brokers: Certain jewelry houses will buy your piece online, particularly if it is antique, from a well-known brand, or is of especially high quality. These houses usually have an online form for you to fill out to get an estimate on the price they will pay for your piece.

Get Plenty of Quotes

Because markets and buyers vary, get a lot of quotes before you decide on a buyer. If you’re not in a rush to sell your diamond, it makes sense to wait until you get what you believe to be a fair price, based on 20 to 40 percent of the retail price.

Decide What Your Goals Are

Determining your diamond’s resale value on the buyer’s end may require a bit of research, but deciding what it’s worth to you may be a bit more difficult. Barbara Diggs, writing in Forbes,

looks at the complicated tangle of emotions that can go into the personal side of diamond valuation.

  • Do you need more cash flow? One situation Diggs looked at was that of a divorcee who needed to sell her diamond jewelry to keep up the payments on an expensive home. Although it was a tough decision, the woman concluded it was the best one for her. Though she loved her jewelry, she loved the peace of mind of paid bills more.  The decision paid off. The woman managed to pay off her home and start a new business as a CEO of a consulting firm that helps women through the divorce process.
  • Do you really want to let it go? Others, however, may feel torn about letting favorite pieces go, particularly if they have emotional value. Great-Grandma’s engagement ring, for instance, may help Junior get a little help on his tuition at State this year, but Mom and Dad may want to pursue other avenues for raising funds first before accepting an offer from a diamond buyer or pawn shop for this heirloom piece. For example, one of the people Diggs looked at allowed a treasured heirloom to slip from her fingers during the recession when money was tight. Later, she regretted that decision, wishing that she had saved it to will to her own heirs.
  • Do you want to wait for the perfect time to sell? Timing is all-important when it comes to getting the best price for your precious stones. You may want to time your sale during the months prior to holiday sales, such as the early fall, so that the retailer or pawn shop can have your piece polished and ready for gifting during the shopping season. Prices and demand fluctuate by the year, too. Keep an eye on the demand for the precious stones and sell when demand is high, if you can afford to wait. For example, although prices soared in 2011, according to Diggs, they hit a low spot in 2015.

Diamond Resale

Do Your Homework

Diamonds make a tricky investment. While investors clamor to invest in gold, diamonds are a bit more iffy. The reason? Gold has two objective measures—its purity and its weight. While gold melts easily into its pure form, diamonds do not. As the hardest natural substances on earth, they are more difficult to value. While weight is a consideration, the other factors make diamond investing, and hence selling diamonds, a riskier proposition.

That’s why you need to do plenty of research before you sell—if you have the luxury of time. Read all you can on diamonds. The more you learn, the less chance that someone will take advantage of you—or that you will set an unreasonably high price for your stone and end up not selling it at all.

Look carefully at the stone you have. Set your emotions aside and allow reason to rule the day. Evaluate it by its own characteristics and allow potential buyers to rate its worth.

Compare those estimates with what individual sellers are getting on third-party sites like eBay. Since eBay sellers often sell to end users, they can often get a decent price out of their stone, provided it’s set into an attractive piece of jewelry. That’s not always the case, though. Items on bidding sites often linger way longer than they would if the owner had sold the piece to a local pawnbroker or jeweler. Furthermore, they may have to reduce their price to get even a nibble.

Create a Sales Strategy

Once you have a realistic price, tweak it for various scenarios. Calculate the cost of keeping it versus the benefits of letting it go for less. For example, if you refuse one offer, but must spend time, effort, and money running from one dealer to the next or creating tantalizing ads on eBay or a similar site, you may lose more money in the long run, even though you may get a higher price for your effort. That’s not guaranteed, though. You may put in all that effort and still end up with a low offer.

Always Check References

  • Industry references: When you consider selling your gem to a diamond dealer, pawnbroker, or jeweler, make sure to check their references. The Better Business Bureau, American Gem Society, and the GIA all are good places to check. If the reviews are bad or if they’re not a member of one of these industry associations, beware.
  • Online reviews: These days, you can look at a seller’s online reputation to determine their business practices. Aside from the occasional crank, most people will give an honest evaluation of the way a person does business. Look for words like “honesty,” “trustworthy,” and “knowledgeable” in customer reviews.
  • Word-of-mouth-references: Still the number one way people find businesses they want to deal with, word-of-mouth references from friends, colleagues, and relatives can help you track down an honest buyer. Ask around. Your neighbor may know just the jeweler or pawnbroker that will be a perfect fit for your needs.

If a diamond seller, jeweler, or pawnbroker passes muster in all areas, it’s a good bet that he or she is someone who will fairly determine your diamond’s resale value. To learn more about diamond valuation, contact the knowledgeable team at Monte de Piedad today.