A consumer’s guide to reselling diamonds.
Start at the beginning.
Get it graded and appraised by an independent appraiser who is NOT going to be a bidder in the process and who is working for you, not the seller where you bought it. This is not the same set of questions as for an insurance replacement appraisal so make sure they know what you’re asking. The correct answer to the wrong question is doing you no good at all. For diamonds, the best grading info is a relatively recent GIA or AGS grading report but even if you already have one a big remaining question is about condition. If you don’t have a GIA, start with your appraiser anyway, because there may be repair concerns that need to be addressed before it goes to the lab and there are certain buyers where you won’t be able to recover the cost of the lab fees with the price. Without this basic information you really are flying blind.
There’s a list of independent appraisers here.
After you know what you have, the next step is to choose a marketing strategy. Most individuals selling diamonds have access to 4 primary markets, sales to dealers & professional buyers, direct sales to friends, ebay/craigslist, and consignment dealers. There’s quite a bit of overlap between these channels, for example many shoppers at live auctions are actually professional buyers and an increasing number of ebay sellers are actually consignment deals,but each of these channels involves some different strategies. Each marketplace has it’s own advantages and disadvantages so I’ll discuss each individually.
One additional area to consider but that isn’t really a ‘marketplace’is taking advantage of contractual deals you made with the jeweler when you bought it. Many will have trade-in and buy-back policies on things they sell, especially with branded merchandise. If you’re eligible for one of these they are often fairly attractive although with trade-in’s you need to be attentive to both the pricing of the new item and whether or not that store has something that you really want. A good price on the wrong thing is no bargain. If you’re not sure if you’re covered by one of these programs, call up the jeweler and ask them. The stores that have these programs are usually quite proud of them and they'll be happy to discuss it with you. Often there are important details included in the fine print so make sure to read the policy carefully.
There are lots of professional jewelry buyers including pawnshops,websites asking you to mail things to them or that hire local experts to grade things on their behalf, special events advertised in the paper and that set up at local hotels, home parties, jewelry stores,antique shops and more. You show them what you have, they make a bid and,upon agreement, they pay you on the spot. They then take the merchandise and either resell it as it is or, more often, will recycle the materials,repair any damage and possibly update the cutting to modern tastes, get new lab documentation on the stones and then resell them through the standard channels where you see freshly mined diamonds being sold. Like many things,diamonds recycle easily and there’s money to be made for dealers who are willing to go through the trouble to do it.
You can find professional buyers through a quick Google search of "jewelery buyer" and your city name or something similar, through the yellow pages or newspaper advertising or by referral from friends or even your local jeweler. Remember to check their references through your local BBB to see if others have had trouble before you.
The advantage of working with these folks is that it’s easy and you get immediate payment. There are no costs to you other than perhaps the gas to get to them and there’s really not much thought involved. They tell you what they’ll pay and you either take it or not. For many these are the driving issues and they find they just don’t want to mess with it. They want a fast and easy deal. Others are willing to risk a little bit of investment and take some time in the hopes of getting a higher price.
A few pointers on dealing with pros.
Get a firm bid first. There shouldn’t be an‘appraisal’ fee or any other cost to you associated with this. They should quote a price and you get to accept or decline with no obligation either way.
Don’t rely on a potential buyer as a source of grading information. Your interests are directly opposed to theirs. They aren’t going to be relying on you (or on the appraisal you provide) for the same reason. This is just sensible business. Remember,although they may be friendly, these are NOT your friends.
Be very nervous about buyers who put time pressure on you and won’t allow you to either shop the competition or to just think about it for a while. If you’re in a hurry so be it, but the pressure shouldn’t becoming from them.
Do not allow them to do destructive tests on either the metal or stones. One of the popular metal tests involves filing a notch in the piece and using acid to test the metal and some will want to scratch the stone, especially stones other than diamonds. That’s fine if it’s their own property but if they do these tests and you can’t come to a deal, you end up with a damaged piece. Tell them to give you a contingent price without the test and assuming the karatage and stone ID. If you accept the price, THEN let them do their tests. If it comes out positive, which you know it will because you started out this process by learning exactly what you have, then they do the deal and they’ve damaged their own property, not yours.
It’s extremely common for people to get an ‘appraisal’ that they then will list on Ebay as fact and hope for a price that’s some percentage of the value conclusion found on that report. This strategy rarely works out but a quick perusal of ebay will find a near endless stream of sellers using it with high asking prices and zero bids. It’s good for ebay but it’s frustrating and time consuming for prospective sellers. As a general rule, I recommend against selling diamonds on ebay except for experienced sellers with a substantial sales history and perfect or near perfect feedback ratios because most buyers won’t touch you unless you fit that profile or unless your price is so low that they feel like it’s worth the risk. They’re betting that you’re an idiot and it’s doubly a shame to bet against them and lose.
Craigslist is better although it has it’s own set o problems. Be prepared to hear from a steady stream of lowball bidders and requests to mail it to Nigeria in exchange for a credit card number. Some find this frustrating and some find it to be an exhilarating part of the game but don’t let it drive you to drink and please don’t mail anything to Africa or Indonesia. In most cases, simply refuse to deal with anyone who isn’t local and where you can’t do the deal in person. Most real buyers will want to have it appraised by their own expert rather than rely on whatever paperwork you have(at least the ones with sense and who aren’t experts themselves will) and you should be ready to accommodate this. Most independent appraisers will allow both you and the buyer to wait and watch while they inspect the piece and then make the grading and value determination for the buyer. Since you already know what you have from your own expert, there should be no surprises but, if there are, try to figure out what the problem is and talk it over with your own appraiser later. No matter how the appraisal goes, it should be at the buyers expense, not yours. For many appraisers this is a standard part of the business and you’ll find well established procedures that protect both the seller and the buyer.
Don’t give out your home address, always meet in well lit public places like a bank lobby or at the appraisers office and do the deal in cash, not with checks. Use sensible precautions like you would in any other situation where you are dealing with astranger and large amounts of cash.
Quite a few jewelers will make a deal with you to put your stone in their store, use their skills and resources to sell it to someone and collect a commission on the deal. This should result in higher payment than outright sale to a dealer and, presumably, they can get higher prices than you could get by retailing it yourself and that this offsets the commission and then some. That and someone else get’s the headaches of doing the work. Often it works pretty well and this really does get the top dollar but there are a few key issues to remember. You are, in effect, becoming partners with the jeweler, at least for this deal. That means you have to care if they remain in business, if they are paying their bills, if they maintain sound security procedures and insurance, if they are displaying things in a reasonable way and to the right people, etc. It pays to do some homework on the dealer before you sign the contract. Check them out with the BBB, JVC, ripoffreport.com and similar services. Ask how the experience has worked with others. Shop the store and see if they present things in a way that YOU would buy there. Talk to friends and coworkers who may have done business with them before. Get a contract that spells out how it’s going to work, how much and when you are due to be paid when it sells and how long you are required to wait until you can retrieve it and try a different approach if it doesn’t. Also spell out in advance who will be responsible for expenses like lab exams and repairs or resetting if they are going to be needed.
Decide how flexible you want to be over time. It’s common to leave an item with a jeweler for a while at what seems like a reasonable asking price and then have them call you up and tell you they have a customer who will buy if they can get a discount. Everybody likes to negotiate and you should know in advance how much of this comes from your cut and how much comes from the jeweler. Also watch out for how these things can accumulate. For example, you may find yourself agreeing to a 10% discount to get a sale that doesn’t come through and the jeweler has now lowered the price by 10% for future shoppers. When they ask for another discount of 15% in a few months, you’ve actually now agreed to 25% off from your original price. This process costs the jeweler very little and it can be used to attract sellers by promising artificially high asking high prices that they KNOW they can’t get but they also know that after they’ve had your merchandise for a while you are likely to get frustrated and tired of the process and won’t drive such a hard bargain about changes later on.
Although there is a certain benefit to both of you to make a deal with friends, this can be a setup for irreparable damage to a friendship. If you’re going to do a deal with someone close to you or with someone like your boss or an employee, make SURE that there’s an independent pro involved to confirm all of the statements of grading, reports of condition, etc. Hire an appraiser. Actually,insist that the buyer hire an appraiser and it shouldn’t be the same one that you hired. If you're not careful this can be far more costly than you ever imagined.
Not surprisingly, everyone wants top dollar and almost everyone has unrealistic expectations about prices. To some extent this comes from how much people paid and what they were told during the original sales presentation and to some extent it comes from ‘appraisals’ that report things as being enormously valuable. A reality check is essential. Thanks to the Internet, it’s easier than ever to work this out, at least with diamonds. For starters, with the exception of certain designer and antique items, your resale price is almost always going to be based on the materials, not the craftsmanship or design of the mounting, and the major item on the materials is that center diamond. As with many of the issues above, it’s essential to know what you have before you can sensibly set your prices and the easiest way to get this is to hire YOUR OWN expert grader. When you’re confident that you know the grading details of your stone, use the ‘Pricescope your diamond’ engine to search the database here for comparable offers. What you’ll see is your competition. Usually there are dozens to hundreds of superficially similar stones being offered by the dealers here and usually the range of prices will be a factor of 2 or so. Choosing the right one as ‘comparable’ can be a little tricky but here’s an approach.
Start by searching for the same shape/clarity/color and a size range of a few points around yours being careful about crossing over a critical weight barrier like 1.00cts. or 2.00cts. If there’s only one or two results, make a bigger size range and if there’s more than a few hundred results make the range smaller. You can sort the list by price by clicking on the column header to the price column. Scan the list for comparables. Make sure to pay attention to the lab doing the grading and to the cutting. If you’ve got a GIA, look for GIA’s, if you’ve got an IGI, look for an IGI,etc. Don’t forget the cut grading. If you don’t have it, don’t assume it’s‘Ideal’ or even ‘Excellent’. You can be sure your prospective buyers won’t. Assume‘good’ unless you’ve got some reason to believe otherwise. If you’ve got a fairly ‘standard’ sort of stone, this should zero you in on a price from your aggressive dealer competitors to within about 15%.
If you’re selling to a dealer, expect to see about 40% - 75% of that price. Popular things, like 1.00/VS1/G/GIA/XXX are going to sell easier and for a higher percentage than the things they will expect to need to own for a while before they can find a it new owner, like a 2.85/VVS2/K/IGI/Marquise. It doesn’t matter what you paid, and it doesn’t matter what the selling jeweler/appraiser said the ‘retail’ value is.
Pricescope is a pretty price competitive place and a lot of consignment dealers can get higher prices than the dealers here. They’ll be selling for anywhere from matching these prices to 50% above, again depending on what you have but also depending on the nature of their store. Commissions will range from 15% up to as much as 50%. A quick note on consignment pricing. It isn’t always best to go with the dealer who charges the lowest commission and/or the one who asks the highest prices. ASKING a lot isn’t the same as GETTING it. By all means if you’ve got a dealer who can get top prices and is willing to do it cheaply, go for it, but these two things rarely go hand in hand.
Direct retail sale prices will be somewhere between the above two depending on your own selling skills, what you have and just plain luck. If your buyer can get it cheaper from a ‘real’ dealer, they almost certainly will prefer to do it that way and if you can sell it for more to a pro then there’s no reason for you to go through the brain damage of dealing with a retail buyer.
Most people already have a certain amount of paperwork to back up their sale but what you have may or may not be helpful to either you or your buyer. Take a hard look at it. There are 3 general categories of documents that are common with jewelry. Lab reports aka Certificates, appraisals, receipts and warranty related documents.
If you’re selling directly to a consumer, you want top dollar and you are expecting more than a few thousand dollars for your transaction, a GIA lab report on the diamond is nearly essential. They’re easy enough to get, they’re not terribly expensive and it’s almost always one of the first steps in an effective sale if you don’t already have one. Similarly, if you are selling a designer piece, for example something from Tiffany, the manufacturer’s warranty info and receipt are going to be essential to your sale. If you’re selling to a dealer or consigning through a dealer, talk to that dealer first,before you spring for a GIA. It may save you money and go faster by having THEM pay for the fees and if they are going to recommend any repair work it should be done before the lab inspection.
Although appraisals can be very useful for your own knowledge about what you have and I’ve recommended that you get one for this reason, they don’t generally make very good advertisements. What an appraiser can do for you is help you with the above mentioned reality check and to guide you through the process of choosing a market, setting your prices, taking the photographs, writing the description and sometimes even serving as an escrow or transfer agent service between you and your buyer. Different appraisers offer different services and the range of choices is quite large. When in doubt, call them up, tell them your situation and ask if they have services that may be of assistance.
Don’t forget your own sales receipt. It protects you as well as your buyer. It should document everything, including pictures and it should spell out if and how you will deal with problems that may come up as well as make a record of how you’re being paid and what you will and won't be delivering as part of the deal.
by Neil Beaty
Professional Appraisals in Denver