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Does low clarity badly affect trade-in and resale value?

icy_jade

icy_jade

Ideal_Rock
Joined
May 1, 2009
Messages
6,131
There was a discussion on another thread where a PS-er had mentioned her negative experience in finding a vendor to trade in her high color, low clarity (E, SI) diamonds as there is little demand for them.

“On high color and low clarity diamonds, they are not in demand and that is why they are priced low. My earrings are E, SI1/SI2. When I bought them, I was less educated and the SA said save money on lower clarity but get a high color. So I did. I am in the market to upgrade my earrings and inquired about trading them in with two online vendors. The response I got from one was there is little demand for low clarity high color diamonds and he did not want them. The other offer I got was a low offer, again, due to the low clarity high color combo. So... you get what you pay for. I will never again purchase a SI stone because even before I got this input, I always felt I sacrificed clarity to save money but I regret that now.”

o_O
I was extremely disturbed reading above as I am thinking of taking the same route for a super ideal diamond - the only way I can afford one is if I go down to SI2 grade. While the vendor I’m considering has great trade in policies if I choose to upgrade, I also don’t want to be 100% reliant on the trade in policy as:
  • I may not want to upgrade with the same vendor (say if hypothetically I fall in love with a diamond from another vendor in the future, say a giant pear shaped diamond or whatever) :rolleyes2:
  • The vendor may not be still around (not implying anything, but essentially the g’tee is valid only so long as the vendor is in business how ever many years later)
  • I’m not in US and international purchases can be tricky

So is it worth the sacrifice to go down in clarity and what was your experience trading in high color, low clarity diamonds. Most importantly, do you regret making the compromise re clarity and will you still do the same if you can choose all over again? :confused:
 
Hi! It was me who wrote that above. For me, I would not buy an SI stone and certainly not one for an e-ring. I think you will find others who must have that carat weight and clarity is a lower priority so they do not care about a SI stone. They are cheaper for a reason... my above experience was a "you get what you pay for" moment. But if clarity is low priority for you, it may not matter as diamonds are not investments.

In another thread, you mentioned SI is rare in your parts of the world. You may want to factor that in as well, not that it matters what people think, but it may be a weighing factor if it's important in your social circle. That's why some people want D IF and others want a jumbo 5ct with lower clarity/color.

In the end, you need to love it.
 
My opinion is completely different. I am all about sarficing on things that I don’t see (aka clarity) to get the features I want most - size (1), color (2) and assuming an ideal cut.

Nonetless, my advice is always to consider purchasing from a vendor that has a good upgrade policy or a buyback policy if you consider that you might not keep the diamond forever and want to have options for resale.

I believe that the stone you are looking at is G/SI2 from HPD- it looks like a beautiful and completely eye-clean stone, I would still strongly consider it.
 
Sorry, forgot... to answer your question of resale value... yes...lower clarity high color does affect trade in value. I am living proof. But I would not purchase a stone based on resale value as you will always lose money when you resell unless you 1) keep the stone for a long time or 2) trade it in to your original vendor you purchased it from.

Hope that helps.
 
Almost all my diamonds are eye clean and SI clarity.
I have not had any concerns about reselling them as I would not want to sell my bigger diamonds though.

My larger diamonds are from my local jewelery store and their policy is as long as the new diamond is 2x the cost of the old, they will trade in for full cost I paid.
To sell a diamond for cash though, no matter the clarity or color or cut- you are going to lose money.
 
IMO it's important to consider your local market preferences when selecting a stone. If you even want to trade-in or sell a diamond that's undesirable to local buyers, a local vendor is unlikely to want to purchase it from you. If you're not in US, then go with what your country's stats are for sought-after stones.

I'm in US, so having eye-clean SI1 or SI2 stones is not an obstacle. My first studs were GIA 2ctw J/SI1 and I ended up trading up to GIA 2.6ctw H/SI2. My vendor told me he expected to sell the original stones within couple of days because they were eye-clean.
 
In my opinion, clarity is tied to diamond size. Getting a 2 carat E, SI2 is much different than getting a 0.5 carat E, SI2. Generally speaking, I prefer to see clarity (and color) get better in larger sizes as there is more surface area to view and compare but this isn't a hard & fast rule for me.

Also, I think some other factors come into play:
  • Different cultures can be more or less tolerant of different color & clarity grades.
  • The majority of people buying diamonds are not very well educated and may not be able to personally discern differences between various colors & clarity grades. So they simply want to buy a certain level because either themselves or their close knit social circles considers those parameters to be the norm of acceptability.
  • There is no industry standard definition of the term "eye clean". Many consider eye clean to mean no inclusions visible at 10" looking from the top down, but inclusions may be visible from the sides. I personally am more strict and like to utilize 6" from the top or sides. Others may be more or less sensitive and set their own criteria.
As such, I think many buyers consider VS+ quality to be preferred. We see it often with first time buyers on this board. The reality is that buying diamonds is a zero sum game and if you stick within your budget constraints then as you increase one of the C's then another one of the C's decreases.

When I do searches for other people, I normally look for SI1+ stones as there is a good probability I can find an eye clean stone. I think it's much harder to find a truly eye clean SI2 stone, and if you are searching that market then you need to be working with a vendor that has on-site vetted inventory that can pull the stone and have one of their gemologists review the stone and be "your eyes" and voice of reason. As such, this vendor also needs to exhibit superior customer service and operate in a manner that allows you to trust them completely. Lastly, I'd want a great return policy in-place with that vendor just in case I wasn't happy when the stone arrived. None of this makes buying an SI2 stone bad, but they are a more risky buy, so I personally like putting measures in-place to mitigate my risk exposure.

So is it likely when you try to trade-in or sell an SI2 stone with high color that you get a low ball offer? Possibly. But I think that's either because the jeweler isn't a true master of his craft, or they are simply using buy/sell 101 tactics, which is buy low and sell high. How do you do that? You find something you want to buy, and then use the least attractive feature about that item to drive the price as low as you can. Then that same guy uses the inverse strategy to sell to the next customer by stating it's got great color, size and cut. The downside is the clarity, but why pay extra for the something you can't see. And the circle goes round and round. Obviously the bigger gap between buy price and sell price is profit margin, and more times than not the primary objective of any jeweler is to increase profits.

That is why I like some of the vendors here. Sure, they are making money and trying to increase profit levels too, and they should. Hell, we should also want them to as it ensures their longevity. But you can do all that, be honest and transparent and build long-term relationships so that they have clients and not customers. There is a vast difference.
 
@Miki Moto when you say low trade in offers what % of the original price were you being offered? Were either of the offers from the original vendors?
 
cokitty said:
@Miki Moto when you say low trade in offers what % of the original price were you being offered? Were either of the offers from the original vendors?
Click to expand...

This is a very valid question. Unless you trade-up through the original vendor, resale on diamonds is rubbish. Winning means getting around 50 cents on the dollar.
 
I also think that it is important to state who the original vendors are. If we buy at a great premium, what can we expect as a “fair” value in return? HOF are known for notoriously overpricing their diamonds, so I am not sure that any other vendor can “match” their pricing especially on the resale side.
 
Well, some people want a D/IF, some are okay with an G/VS2, others want in-between.
And some people are just going for eye clean/no visible tint and will look at a very well cut H/SI1.

The problem with an E/SI2 is that the SI2 will put off the people who want a perfectly clear stone, and that the E will put off the bargain hunters who want the cheapest eye clean/no tint stone.

The advice that color is easier to see than clarity is mostly correct, but of course there are countless exceptions. But if it's any comfort, most people are unpleasantly shocked when they try to sell their diamond. In a quick sale like you're looking at, the stones would just be cleaned and polished and end up in the huge supply of diamonds that you can search through on this site. Once you factor in the hassle cost, a jewelry store has very little reason to bother.
 
SimoneDi said:
I also think that it is important to state who the original vendors are. If we buy at a great premium, what can we expect as a “fair” value in return? HOF are known for notoriously overpricing their diamonds, so I am not sure that any other vendor can “match” their pricing especially on the resale side.
Click to expand...

@Miki Moto shared on the other thread that she got HOF earrings. Does that also contribute to the lower trade on apart from the SI clarity?
 
baby monster said:
IMO it's important to consider your local market preferences when selecting a stone. If you even want to trade-in or sell a diamond that's undesirable to local buyers, a local vendor is unlikely to want to purchase it from you. If you're not in US, then go with what your country's stats are for sought-after stones.

I'm in US, so having eye-clean SI1 or SI2 stones is not an obstacle. My first studs were GIA 2ctw J/SI1 and I ended up trading up to GIA 2.6ctw H/SI2. My vendor told me he expected to sell the original stones within couple of days because they were eye-clean.
Click to expand...
+1 to this.

In the UK, people generally have zero clue about diamonds, other than 'high colours are better' - most diamonds I see in windows are terrible clarity but basically all are H or above, so in the UK, I think a high colour but lower clarity stone would not be an issue.

In the Asian markets, where my understanding is that high clarity is important because it apparently signifies 'purity of relationship' (or a concept along those lines), the high colour would be a winner but the lower clarity would present real issues.

AIUI, anyway :)
 
The bigger the stone the more valuable (and dear) both colour and clarity become - in large sizes improving clarity costs more than improving colour.

My personal feeling on the matter is that a given colour, considered in a vacuum, is neither good nor bad. High-coloured stones are prized because they're more rare, and high- and low-coloured stones will play with light differently, but there's nothing fundamentally wrong with a lower-coloured stone. Low clarity, on the other hand, is objectively "worse", and there's no question of personal preference: the only reason to choose lower-clarity is to save on cost to prioritize other factors. There's nothing wrong with that choice, especially for someone who does prefer a whiter stone, but yes, one of the consequences of that choice is generally a smaller, slower, and lower-pricepoint resale market.

My first stone was a J SI2 with a prong-able inclusion that I paid an SI1 price for. My priority at the time was size, and I'm one of those oddballs who prefers the J/K range. My current stone is a J VS1, and my priority was size - after meeting a minimum clarity threshold (VS2).


All of that said... another poster pointed out that you're looking at a CBI? You're paying a premium for precision cutting, and CBI deliberately and explicitly plans around inclusions to avoid detrimental effects on light return. I said earlier that "one of the consequences of that choice is generally a smaller, slower, and lower-pricepoint resale market"; if you're selling a precision-cut boutique stone your target audience is not the general populace with its preconceptions and oversimplifications - you will most likely be selling to people who know enough about diamonds to value an optically exceptional stone, and those people will have much more informed and personalized opinions on colour and clarity. "General perceptions" matter much less in this scenario.
 
sledge said:
This is a very valid question. Unless you trade-up through the original vendor, resale on diamonds is rubbish. Winning means getting around 50 cents on the dollar.
Click to expand...

Resale on diamonds isn't good, and of course the definition of "fair market price" varies, but if you're habitually getting 50 cents on the dollar you either paid far too much originally or you're representing the stones terribly and targeting entirely the wrong market :errrr:
 
icy_jade said:
@Miki Moto shared on the other thread that she got HOF earrings. Does that also contribute to the lower trade on apart from the SI clarity?
Click to expand...

That is one consideration, however, markets also change. Diamonds were trading at a high value several years ago. One can only reasonably expect to get 70% or so of current average retail price for a “like” quality diamond. If shopping through HPD, I wouldn’t be too worried about trade or secondary market, because they have a very generous trade back policy.
 
That's one of the main reason that I bought my diamond from HPD. It was a H Si1 diamond, and I know for a fact that I can always get 80% of the value back in the future if I were to trade it back.
 
You can find a jeweler (not someone who sold you the stone) who will "work with you" for a trade-in. You won't get your purchase price back (unless the value of diamonds in general has sky-rocketed) but that is usually the case no matter what the color or clarity is of any stone.
My understanding is that on a trade, the jeweler will establish the "current value" of the stone based on RAPNET (wholesale) and then work from there. You'll have paid less at the time of purchase than a stone of high color and high clarity for your stone based on RAPNET, so "today's price" should be in line with that- the value of your stone is still the value of your stone; it doesn't change because you've decided to sell it.
Theoretically, when doing a trade, a jeweler has the potential to make money on your trade-in when he goes to sell it, as well as with the new stone you'll be buying from him. But the potential ease of selling your stone to a new buyer comes into play here, because the jeweler will be more enthusiastic about taking your trade if he or she feels that there is a demand for your stone. (The opposite of this may have been the issue that Miki Moto had when she tried to sell her studs.)
I don't think that the value of a stone with higher color and lower clarity will net less than it's value on RAPNET on a trade or private sale than, say, a higher color/higher clarity stone, per se', but the willingness of the jeweler might be affected by trends influencing the "market" at the time.
Would an expert weigh in on this and correct me if I'm wrong? :)
 
Take two folks buying a 2ct diamond.
1) buyer chooses G/VS1- cost is $35k ( I'm making up the numbers, but they will illustrate my point)
2) buyer chooses G/I1 for $15k
Which buyer will lose more if they need to sell back to a dealer?
(Hint- the answer is #1)_
 
SimoneDi said:
My opinion is completely different. I am all about sarficing on things that I don’t see (aka clarity) to get the features I want most - size (1), color (2) and assuming an ideal cut.

Nonetless, my advice is always to consider purchasing from a vendor that has a good upgrade policy or a buyback policy if you consider that you might not keep the diamond forever and want to have options for resale.

I believe that the stone you are looking at is G/SI2 from HPD- it looks like a beautiful and completely eye-clean stone, I would still strongly consider it.
Click to expand...

I'm of the same thinking as @SimoneDi... I don't want to pay for what my eyes cannot see and/or appreciate. If money were no object and there were no budgets to stay within, my feelings might be different... but, to me, an eye clean SI is where it's at when it comes to value for my money. ;-)

FWIW, I have a 3.33 ct GIA I/SI2 (tiny white feather) 60/60-type stone with an AMAZING spread (at 9.8 mm). It scored "Excellent" on all four criteria of the HCA and has a bit of fluoro and fire to boot! Had I gone to VS, I don't think I'd have been able to hit the 9 mm mark... not even close. It's eye clean and white enough to me and allowed me to have the look of a 3.6+ ct stone. IMO, that a *UNICORN* diamond!! ;-)
 
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Thanks
msop04 said:
msop04
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!

I've heard countless people make the mistake of assuming any diamond graded SI is a piece of junk. ( and many times they tell me- "I don't want an S11".) OK- no S11's for you!!!
I think a lot of sellers use this incorrect assumption to upsell buyers.
 
Rockdiamond said:
Thanks !

I've heard countless people make the mistake of assuming any diamond graded SI is a piece of junk. ( and many times they tell me- "I don't want an S11".) OK- no S11's for you!!!
I think a lot of sellers use this incorrect assumption to upsell buyers.
Click to expand...

Yep... I'd say you're correct! :) I think some of the issue (thinking SI's are junk) has to do with non-GIA/AGS grading, where an SI1 could actually be an I1/2 if graded by a more precise and consistent lab. So, when buyers see an SI, it really does look like junk -- because it's not a "true" SI!

My last diamond was an SI1, and it was totally eye clean as well. To me, a clean SI is simply a great value!
 
LOL @msop04. You stay away from soon to be Mrs Sledge. She already thinks she's a unicorn and my wallet nearly fainted thinking about a 3.6ct stone that would match her unicorn status. :mrgreen2::cool2:

Great point @Rockdiamond. I agree the dollars lost are substantially more; however, the analysis fails to recognize overall financial strength/wealth and how the person spending $35k MAY be more easily able to afford to lose the extra $6k (assuming 70 cents on the dollar resale).

Many times smaller dollar loses impact a higher percentage of overall wealth and creates a larger hardship as a result.
 
sledge said:
LOL @msop04. You stay away from soon to be Mrs Sledge. She already thinks she's a unicorn and my wallet nearly fainted thinking about a 3.6ct stone that would match her unicorn status. :mrgreen2::cool2:
Click to expand...

HAHAHAAA!!!! Well, her gorgeous rock and setting IS UNICORN STATUS!!! ;)
 
sledge said:
Great point @Rockdiamond. I agree the dollars lost are substantially more; however, the analysis fails to recognize overall financial strength/wealth and how the person spending $35k MAY be more easily able to afford to lose the extra $6k (assuming 70 cents on the dollar resale).
Click to expand...

thanks Sledge!!
A few points
1) to the person who bought the I1 diamond, the funds they aquire from the distress sale may have a much larger impact on the life of the seller compared to the more costly stone. IOW- if the person spent $15k recovers $8k it might save their life. Using your assumption ( which I agree with btw) the recovered funds of the seller of the $35k purchased diamond might make little difference in their lives.
2) based on what I see in the market, assuming 70 cents on the retail dollar will lead to a lot of disappointment.
 
A different way to look at this is appreciation in value, not loss in value.
Everyone knows when you resell a diamond, you will lose money. On that statement though...you cannot include a trade-in diamond into this equation because the dealer has already made his original profit on that stone when you first bought it. So of course he would buy it back at a higher rate because he’s still making profit from the trade in. He is basically getting back his original stone for zero cost. Then the dealer can resell that same stone again for profit. On top of that, the dealer will make a profit from the new stone you buy. This is standard business so no surprises here as I am sure everyone knows. Trade experts... feel free to shoot me if I am I incorrect on this business model.

Appreciation in value is how I would look at it and it surprised me how little my high color low clarity stone appreciated. I have never sold any diamonds as I either keep them or give them away. However, since joining PS, it seems a lot of folks do, so I became curious in case I wanted to sell my stones.

My earrings...
The earrings are 2ctw, HOF super ideal E SI1/SI2 (one of each). One super ideal online vendor said yes, they do trade-ins but if I did not purchase the original stones from them, they would give me an estimate and not a fixed percent back. I sent them my certificates. After a few days, the vendor came back and said there is low demand for high color / low clarity stones and said they were not interested. Another super ideal vendor offered 53% of what I paid.

My ring...
The stone is 3.15ct Tiffany GIA H VS2 ideal, not super ideal. I was looking to upgrade my Tiffany e-ring. I went to Tiffany to look at new rings. Tiffany will take your original ring back and give you 100% of what you paid toward another ring. The SA was very upfront and said “you will get more for your ring if you try and sell it yourself vs. a trade in as I am sure your ring has appreciated.” I said ok. Sure enough, a dealer offered me 163% of the price I paid.

Both my earrings and e-ring were purchased within one year of each other so the duration for appreciation (or depreciation) is roughly the same.

On brand name... aside from a few brand names such as Tiffany, Cartier, VCA, I know it does not help much with resell value. For example, a HOF, CBI, ACA, JA... all these do not really command a premium on the resell market short of being a super ideal. So resell for a HOF I would expect to be the same as a similar super ideal. Tiffany does command a tiny bit of a premium, but certainly not 163%.

Of course no one buys diamonds or jewelry for investment (a few do, but you know what I mean). I am just quite surprised about my findings on the appreciation, or lack of, and how extreme it is with my two experiences.

PS has opened my eyes to a lot in terms of stones and this is a great forum for sharing and I hope this info might be helpful.
 
Miki Moto said:
Sure enough, a dealer offered me 163% of the price I paid.
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Wow!! That's remarkable.
How long had you owned the 3ct?
Also, you mentioned you were offered 163% over cost- did you actually complete that deal?
 
@Miki Moto, I may be wrong, but I would imagine any appreciation you experienced on your Tiffany & Co. ring had more to do with the brand attached than the actual stone that was set in it. Maybe someone in the trade can speak about this??

ETA: When did you purchase that T&Co. ring?? I imagine diamonds have just increased a lot over time, so that would also make sense that someone pay that much more than what you did originally...
 
Ah, well. Tiffany has a certain cache for the average buyer. HOF nope.
 
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