GIA lab certificate premium

[chrono]

Does anyone know the approximate premium or mark up for a fancy diamond that is accompanied with a GIA lab memo?
Will this markup vary per the colour group of the FCD (pink, blue, yellow, green, etc)?

To make this just a smidge easier, let’s presume we have two identical stones that is a fancy intense purplish pink of around 0.25 carats. Say, the clarity is SI2. No fluorescence. One has the store in-house grading and the other has a GIA cert and both are from the same vendor. How much of a price difference will one see between the two?

 

[kenny]

Isn't the issue the believability of the grades from an independent lab vs. grades from the seller, who has an inherent conflict of interest?

(I am in no way accusing any particular seller of lying.)

 

[chrono]

Kenny,
That’s a good point about the conflict of interest. All right then…let’s take that out of the equation. Let’s say one has been appraised by an independent appraiser whilst the other has the GIA memo.

 

[kenny]

Personally, I will not buy an FCD without a GIA report.
There is not an appraiser on the planet who could get me to part with huge bucks for a tiny dot of a stone.

FCDs are very very expensive and if there is the smallest chance the color is not of natural origin I won't buy it.
My green would loose probably 98% of it's value if the color was the result of human manipulation.
Nothing against competent professional appraisers, but GIA is the only entity I trust to assure me I'm not being taking to the cleaners.

Yes, I am aware there are NO guarantees - as stated in the fine print on the back of every GIA report.
But when it comes to natural FCDs there is no higher authority than GIA.

I realize I'm not addressing your question, "How much of a premium is the result of the GIA report?".
While interesting to discuss, I'm afraid the answer will not be found on a public Internet board.
The only ones who know are sellers of FCDs and they are not going reveal proprietary and sensitive info.

Even if they DID speak up . . . uhm . . . consider the source.
They might say zero price difference because their grader is a GG, honest, competent, highest-integrity, blah blah blah.
On the other hand, if they said 40% difference they are revealing secret info to their competitors and confessing something that may lead the public to not have confidence in their in-house grading.
(Why throw away 40%? Just send it to GIA and make more money.)
Responding is a lose lose for them.

 

[denverappraiser]

GIA paperwork for a stone like that costs about $100 plus shipping.
EGL-USA paperwork costs about $75. Some 'labs' are as cheap as $25.

That makes the GIA ' premium' about $25-$75 depending on who you are considering as an alternative. Some, like Gueblin, are actually more but the difference is still likely to be a small issue in relation to the budget.

You may find a premium for other attributes as well because the labs do not all use the same grading scales or apply them equally, even though they have the same acronyms and that's the heart of the issue. There are some HUGE variables at play here and people pay more for a GIA pedigree because they believe GIA to be a more credible source of information than their competition. If you don't agree, and you really believe that all things are equal, take the generic report and save the $25. If you count another lab as more reliable, by all means base your decision on them and pay a premium there if necessary. If the difference in price is more than that, I suggest that this alone is evidence that there is something else going on.

Dealer margins are largely a function of their other costs, not the lab. That is to say, if a dealer needs to put 20% on to cover their overhead and profit, they'll put that on every stone regardless of what color it is or which lab graded it.

 

[kenny]

Neil, do you really think a seller only adds the $75 lab fee to the retail price of an FCD when it gets a GIA report?
Are you suggesting nothing is added for customer impression of a GIA stone?

I suspect something IS added, and this is the premium in question, not the lab fee which is well known.

 

[denverappraiser]

Neil, do you really think a seller only adds the $75 lab fee to the retail price of an FCD when it gets a GIA report?
Are you suggesting nothing is added for customer impression of a GIA stone?

I suspect something IS added, and this is the premium in question, not the lab fee which is well known.

No, I'm suggesting that what's being added beyond a token amount is for reasons other than the choice of lab, and that this is what drove the lab selection rather than the reverse.

A $38k green is simply unsalable to a rational customer without paperwork. It's a tough sale anyway but it would be tougher with an off brand pedigree, even if it graded out with better sounding stats from some other lab so the dealer decided to get it graded by GIA and pay the fee. It's entirely possible that they had it graded by several different labs and chose to sell it with the one that they felt resulted in the highest price. In your case that was GIA, and in that price point it usually is, but not everyone markets things in the same way. The choice of lab was made strategically and by an expert and the objective was to maximize the sales potential for the stone. If it were really true that adding a $100 report would allow a dealer to increase the price by thousands of dollars and actually get it, there would be NO stones graded by other labs. The 'premium' is an illusion.

 

[ChunkyCushionLover]

As Neil said your question cannot be answered.
But the uncerted stone has a huge red flag already to me.

Why would the vendor not send this one for a GIA grading report?

Probably because seller feels it has a greater value or saleability without one. Or the cost of the report in comparison to the sale price of the stone does not justify spending the $$$.

 

[kenny]

Neil, do you really think a seller only adds the $75 lab fee to the retail price of an FCD when it gets a GIA report?
Are you suggesting nothing is added for customer impression of a GIA stone?

I suspect something IS added, and this is the premium in question, not the lab fee which is well known.

No, I'm suggesting that what's being added beyond a token amount is for reasons other than the choice of lab, and that this is what drove the lab selection rather than the reverse.

A $38k green is simply unsalable to a rational customer without paperwork. It's a tough sale anyway but it would be tougher with an off brand pedigree, even if it graded out with better sounding stats from some other lab so the dealer decided to get it graded by GIA and pay the fee. It's entirely possible that they had it graded by several different labs and chose to sell it with the one that they felt resulted in the highest price. In your case that was GIA, and in that price point it usually is, but not everyone markets things in the same way. The choice of lab was made strategically and by an expert and the objective was to maximize the sales potential for the stone. If it were really true that adding a $100 report would allow a dealer to increase the price by thousands of dollars and actually get it, there would be NO stones graded by other labs. The 'premium' is an illusion.

When the "Illusion" translates into real dollars was it really an illusion?
Did I get ripped off?
Is everyone buying any diamond getting ripped off?
Is a high house price at the peak of the real estate bubble or the low price at the bottom of a crash an illusion?
People pay what they perceive something is worth, and every seller will get the highest price they can.

Granted, I'm not a neutral party here but right or wrong, fair or unfair, I'd say the GIA premium is real not illusion.
Without the GIA report that $38K green would be worth much less than $38K minus the cost of the lab report.
I'd guess the "GIA premium" was over $37K in this case, since a man made 26-point stone with man made green color will sell under $1000.

 

[denverappraiser]

Kenny,

Why are there stones available with non-GIA grading?

 

[chrono]

This is totally hypothetical question and there is no such vendor or stone. I merely gave the example to make it easier to answer the question. As said, it will have greater salability and value with the added GIA report. Therefore, what is this “value” of the GIA paper worth? It cannot merely be $100, can it?

 

[kenny]

Kenny,

Why are there stones available with non-GIA grading?

Business decisions that maximize profits.

Also the OP only mentioned GIA; while, yes there are other labs and business decisions maximizing profit determine which lab is picked, you are changing the conversation.

 

[kenny]

This is totally hypothetical question and there is no such vendor or stone. I merely gave the example to make it easier to answer the question. As said, it will have greater salability and value with the added GIA report. Therefore, what is this “value” of the GIA paper worth? It cannot merely be $100, can it?

I think not.
The actual value of the GIA premium will vary with the stone.
I also belive it will vary not only in dollar value, but the percentage will vary dramatically with the stone.
Consider a $250,000 pure red with GIA report.
Without that GIA paper what would someone pay for it?
Not $200K
Not $100K
Probably not even $1K.
Why would anyone throw away $1K on a seller's in-house graded red diamond?
Any buyer with a brain knows the seller would get such a stone GIA graded.

What makes this whole conversation a mess is we are pretending a particular stone would be offered for sale with and without a GIA report.
Business practices makes this virtually impossible.
This is all hopelessly hypothetical, as you say.
But it's fun to talk about.

 

[denverappraiser]

Kenny,

Why are there stones available with non-GIA grading?

Business decisions that maximize profits.

Also the OP only mentioned GIA; while, yes there are other labs and business decisions maximizing profit determine which lab is picked, you are changing the conversation.

If we're not comparing prices of GIA graded stones with stones graded by other sources, what is the 'preimum' being compared to?

 

[ChunkyCushionLover]

This is totally hypothetical question and there is no such vendor or stone. I merely gave the example to make it easier to answer the question. As said, it will have greater salability and value with the added GIA report. Therefore, what is this “value” of the GIA paper worth? It cannot merely be $100, can it?

Not true.

If the color grading would be light but uncerted they can call it normal or intense.
If the stone is an I1 but they can call it an SI2 or SI3.
If the color modifier has brown in it as graded by GIA but they sell it has only a purplish red.

If the stone is MMD not natural.
If the stone is not a diamond at all.

There are many situations where a seller would rather sell it uncerted, except for on cheap items where the cost of the report would weigh significantly on the price, none of these benefit the buyer.

There is no automatic premium on GIA certed stones, but the value of the stone with a GIA report is much more standardized than without a report. The sellor decides if they want comparables or not and if they want to represent the stone as GIA has graded it. For expensive items the saleabulity goes up dramatically with a GIA report. For less expensive items I'm not sure that either the value or saleability would be enhanced by a GIA report which will highlight flaws.

 

[kenny]

Kenny,

Why are there stones available with non-GIA grading?

Business decisions that maximize profits.

Also the OP only mentioned GIA; while, yes there are other labs and business decisions maximizing profit determine which lab is picked, you are changing the conversation.

If we're not comparing prices of GIA graded stones with stones graded by other sources, what is the 'preimum' being compared to?

IN-house grading, just like the OP stated.
QUOTE
To make this just a smidge easier, let’s presume we have two identical stones that is a fancy intense purplish pink of around 0.25 carats. Say, the clarity is SI2. No fluorescence. One has the store in-house grading and the other has a GIA cert and both are from the same vendor. How much of a price difference will one see between the two?
ENDQUOTE

 

[chrono]

It indeed is fun and not likely to happen anytime soon. I have no illusions that if a stone is likely to be graded favourably by GIA, it would have been sent for grading ASAP. I do have to admit that this hypothetical question crossed my mind because I just purchased my second FCD, but it is my first with a GIA report. I doubt that the vendor will be able to sell it for the asking price if it did not come with the report. In essence, I am paying a lot of money for this reassurance of treatment (or lack of) and colour grading.

 

[denverappraiser]

This is totally hypothetical question and there is no such vendor or stone. I merely gave the example to make it easier to answer the question. As said, it will have greater salability and value with the added GIA report. Therefore, what is this “value” of the GIA paper worth? It cannot merely be $100, can it?

You're quite right that the 'cost' is $100. 'Value' is a completely different question. Kenny is absolutely right that there are certain stones that are simply unsalable without it so 'premium' isn't really an applicable term. It’s like asking how much of a premium applies to your car to have a clean emission sticker (At least in Colorado it’s illegal to sell a car without one unless you are calling it scrap metal and you can’t get a license plate without it). The test only costs $20 but the value is in that lack of it is a deal killer and a dealer arguing that it’s unnecessary if you just do the deal in cash or whatever is a HUGE red flag.

 

[denverappraiser]

IN-house grading, just like the OP stated.

Assuming the in-house grader is completely unpaid, the 'premium', or prehaps a better word would be 'discount' is $100. The rest of the difference is price comes from other reasons (and these other reasons are the reason that it's coming with in-house paperwork). This difference can be in the hundreds or even thousands of dollars.

 

[kenny]

In essence, I am paying a lot of money for this reassurance of treatment (or lack of) and colour grading.

I feel your pain . . . and pleasure.

 

[denverappraiser]

In essence, I am paying a lot of money for this reassurance of treatment (or lack of) and colour grading.

You're paying $100 for that reassurance. You're paying a lot of money for the details of the stone and the deal.

 

[chrono]

Kenny,
I don’t know about the pleasure part yet. We’ll see when I receive this FCD tomorrow.

 

[chrono]

In essence, I am paying a lot of money for this reassurance of treatment (or lack of) and colour grading.

Yes

This is not reassuring at all. I feel as though it is a lot of money wasted on a piece of paper.

 

[denverappraiser]

In essence, I am paying a lot of money for this reassurance of treatment (or lack of) and colour grading.

Yes

This is not reassuring at all. I feel as though it is a lot of money wasted on a piece of paper.

That's why I edited the post above. Sorry I didn't get it done before you answered. What you are buying is a diamond, not a piece of paper. What the paper is doing is providing you reasurance and confirmation that you're getting what you expect.

 

[kenny]

Kenny,
I don’t know about the pleasure part yet. We’ll see when I receive this FCD tomorrow.

The pleasure is the peace of mind.
A GIA report on an FCD means it is as unlikely as possible that you were not ripped off.
Depending on the stone that can be worth a few bucks or a many millions.

 

[kenny]

. . . I just purchased my second FCD . . .

Well, spill the beans.
Whadja get?

 

[ChunkyCushionLover]

In essence, I am paying a lot of money for this reassurance of treatment (or lack of) and colour grading.

Yes

This is not reassuring at all. I feel as though it is a lot of money wasted on a piece of paper.

Well if $100 is a lot in proportion to the sale price of the item, ie a $300 item costs $400 because it has a GIA report than many shoppers will weigh this against the risk it won't come back graded as as represented and decide if they want a graded or ungraded stone.

Considering the high cost of FCD usually stones above a certain cost, this tradeoff is simple and the cost of the report is not significant in the transaction.

 

[oldminer]

When a seller has sufficient capital not to be forced to sell in a dire rush, then maximizing profits and increasing the saleability of the items in inventory becomes crucial. One maximizes profits not just by marking up based on additional costs, but by turning over inventory more rapidly during the fiscal year. Making a diamond more universally accepted leads many dealers to get GIA reports rather than go with no report or with some Brand X report. This is especially the case where increased risk of exact identity, treatments or color origin exists. The safer you make the potential client feel, the smoother and hopefully, faster the transaction will happen. There will be less haggling since there is less unknown at the time of making the deal. If there is a "premium" it comes by the way of easing the process and giving all parties more equal amounts of knowledge and comfort. I wouldn't call it a premium so much as I'd call many of these reports an absolute necessity if one is going to try to do more business and more business rapidly concentrating on inventory turnover rather than making a huge, non-competitive profit on one item that was undocumented.

There are many individuals qualified and able to identify the origin of color of diamonds, but few are recognized as experts to people who do not know them personally. It is a lot more beneficial to use a worldwide recognized lab than to give some gemologist's name to a client and say how much your guy knows. No one else cares and will never trust the outcome. If someone offered me a diamond of importance without a report from GIA where a report is what I'd call a necessity, I'd make a deal pending the outcome of the report from GIA. Gambling can be entertaining, but unless you are the House, you can't win the majority of the time.

 

[chrono]

I shall be “tough” and hold out until I get the little thing in my hands tomorrow. It is going to be a challenge to mentally receive a microscopic speck after being used to purchasing 10 mm sized coloured gemstones, not to mention this miniscule speck cost more than most of my other gemstones. Perhaps I am being too negative or naive about this entire thing when I see similar ungraded stones being sold at a fraction of the price, in addition to having friends tell me I am overpaying for my stone by at least one zero, even with a GIA report.

 

[chrono]

This question probably sounds like a total noob but I’ve been told not to purchase around Christmas time as prices increase around this time? I’ve never heard that prices for FCDs are better at other times of the year. Can anyone dispute this?