Rap Sheet Positive Price Adjustments

[arkieb1]

I think you are a mathematical mind seeking some simple formula or percentage that will tell you what the best valued bracket is. Simple answer there isn't one. One month a 1.85 might be a better value, three months later a 2.60 might be a better % value. This doesn't stay the same over time.

Next point is that within each bracket that are perceived as better value so say the 2.80 carat to 2.90 carat range which ones will be the best. I wouldn't base picking a stone on these numbers because each and every stone is different. We have already worked out that generally they are better value than say a 3.00 carat. Go from there...

This is a tried and true formula;
1) Start with your budget
2) Work out which colour and clarity you and your partner can live with, because if you buy her the best darn percentage "I" and she is colour sensitive and hates it, then that makes your whole hunt irrelevant...
3) Find the best Cut you can because cut is king
4) Then work out based on the information above the size stone you can afford, if this happens to be a stone that is a magic number below or in between the 2.00 carat or the 2.50 carat or the 3.00 carat range that is fine... concentrate less on percentages and more on buying a decent cut, then colour and clarity.

 

[denverappraiser]

If you’re in finance you surely understand that ANY definition of value, and there are many options, has as much to do with marketplace as with the merchandise. The normal way jewelry appraisals are done is to estimate replacement cost new, at retail, locally. That’s probably not what you really want to know but given your parameter of refusing to supply information to your appraiser, they have to make some assumptions and that’s the most common. In the case of your 2.90, for example, the replacement assumption is that the replacement jeweler must meet or exceed the specs in some reasonable amount of time. Let’s make it a GIA/F/VS2/xxx for arguments sake and use the database here because it’s large and easy to navigate. There are 0 stones in the database that meet this exact spec and even if you include weights up to 2.99, colors up to D, and clarity up to IF there’s still none. The only repeatable way to meet or exceed is to move over 3 carats and pay what it takes to get there. That makes it easy but an implication is for this, the most common value definition, the replacement value of a 2.90 is NOT significantly less than for an otherwise similar 3.00. On the other hand, the price on the Rap sheet nearly doubles between these two.

 

[Duffy]

I know there are a ton of variables. And in my world, this is why you make assumptions. And different people are willing to pay differently for different qualities. In theory, I am not necessarily looking for what makes up the stated value of the diamond, just how much people value certain parts of it.

I still believe that cutters, wholesalers, retailers, etc have to attribute some value to certain items. Otherwise, there is simply no way to set their prices in the first place.

Neil, you are basically telling me that the only way to value a stone is to look in the market for the closest comparison. So, if you find the one in the million perfect 2.90, you would be forced to value that like a 3.00. The price doubles on the Rap Sheet, but the 3.00 would be offered at a discount, where the 2.90 at a premium. And even though the premium on the 2.90 should be less than the discount on the 3.00 (ie they shouldnt intersect due to the magic of 3.00), as an appraiser, you wouldn't be able to differentiate because a duplicate 2.90 doesn't exist.

What if I came to you asking to sell it? How much should I charge for this diamond? Would you tell me to list it like the 3.00 and see if anyone will pay that for it, and if not, lower my price?

I find it fascinating that no one really has a concept of value. When people come on here asking "did I get a good deal?", the people who answer really have no idea. They can comment on quality, but the opinion on price is worthless, especially for anything relatively hard to find.

 

[WinkHPD]

Almost never, as the 2.90 will usually be the largest a given piece of rough could cut and will very rarely be well cut. If it could have been a poorly cut 3.00 it would have been, simply because it would net more money to the cutter. An ideal cut 2.90 to 2.99 will be rarer than hen's teeth and will almost always then be the result of a very expensive mistake on the part of the cutter and thus will not be offered at the bargain price you are looking for.

I understand that an ideal cut diamond in that range is rare. But, at least the way I understand it, a 2.90 diamond is still cheaper on a per carat basis than a 3.00, due to the magic number. I just want to know how much cheaper. Finding the dream 2.90 might be impossible, but maybe there is a 2.85? Or a 2.80? Or a 2.75? My thought is to get as close to 3.00 (or 2.00, if I go smaller) as possible while still maintaining other standards. The Rap Sheet indicated that 2.50+ can trade at 5-10% premiums over similarly smaller stones. I was trying to narrow that down. Is a 2.55 1% higher, 2.75 5% higher and a 2.99 10% higher, all things being equal? Maybe 2.99 is completely unrealistic, so maybe 2.90 is where the 10% mark hits. Maybe 10% is wrong, and it is 15%. This is my question.

People have made it clear that there is no defined number. So, I wouldnt mind hearing opinions of the professionals on here.

In end, I find it interesting that people are quick to comment on a "good price" for a stone, but can't quantify how they determined that.

That is your question, and there is no such answer. Even if we could figure it out for today, by next week it would no longer be the "right" answer. You can make your own approximations by looking at real stones in a real market place, but only if you know enough to judge the differing issues that make for the tremendous price per carat spreads on seemingly equal stones. In the final selection you are still going to need to see the diamond to know if the paper is at all relevant. Your eyes may not even like the diamond that your endless paper analysis says is best.

Wink

 

[arkieb1]

Almost never, as the 2.90 will usually be the largest a given piece of rough could cut and will very rarely be well cut. If it could have been a poorly cut 3.00 it would have been, simply because it would net more money to the cutter. An ideal cut 2.90 to 2.99 will be rarer than hen's teeth and will almost always then be the result of a very expensive mistake on the part of the cutter and thus will not be offered at the bargain price you are looking for.

I understand that an ideal cut diamond in that range is rare. But, at least the way I understand it, a 2.90 diamond is still cheaper on a per carat basis than a 3.00, due to the magic number. I just want to know how much cheaper. Finding the dream 2.90 might be impossible, but maybe there is a 2.85? Or a 2.80? Or a 2.75? My thought is to get as close to 3.00 (or 2.00, if I go smaller) as possible while still maintaining other standards. The Rap Sheet indicated that 2.50+ can trade at 5-10% premiums over similarly smaller stones. I was trying to narrow that down. Is a 2.55 1% higher, 2.75 5% higher and a 2.99 10% higher, all things being equal? Maybe 2.99 is completely unrealistic, so maybe 2.90 is where the 10% mark hits. Maybe 10% is wrong, and it is 15%. This is my question.

People have made it clear that there is no defined number. So, I wouldnt mind hearing opinions of the professionals on here.

In end, I find it interesting that people are quick to comment on a "good price" for a stone, but can't quantify how they determined that.

That is your question, and there is no such answer. Even if we could figure it out for today, by next week it would no longer be the "right" answer. You can make your own approximations by looking at real stones in a real market place, but only if you know enough to judge the differing issues that make for the tremendous price per carat spreads on seemingly equal stones. In the final selection you are still going to need to see the diamond to know if the paper is at all relevant. Your eyes may not even like the diamond that your endless paper analysis says is best.

Wink

You know these guys answering your questions have years and years of experience in the Industry and are telling you it's a needle in a haystack answer and you still won't believe anyone. Get a heap of the best cut stones in your budget, go look at them and call it a day.

 

[denverappraiser]

When I talk to resale clients, the bulk of the discussion is about marketing, not diamonds. In the interest of time I usually have the conversation while I’m in the process of grading the stone since that answer is basically fixed regardless of the answers about the market issues but a value conclusion taken out of context is of no use. Although you’re correct that people here often do it, you notice that I and the other pros here do not.

The decision of whether you are going to sell to a jeweler, a friend, a Craigslist buyer, one of those spinny sign guys on the corner, someone whose browsing DiamondBistro or ebay for a deal or someone else entirely has a significant affect on both how to proceed and how it will play out. It is simply not (usually) like selling a piece of stock where you look up the price and pay some broker a few bucks to move it.

There’s no one answer to resale value any more than there’s one answer to purchase values but yes, it’s a matter of identifying the ‘value characteristics’, both positive and negative, and comparing the subject item to similar good in the appropriate marketplace. The tricky part is picking which ones to apply to which situations and weighing them appropriately.


For example, the reality of your hypothetical 2.90’s rarity is something of an illusion. As a buyer right now you are looking at a universe of tens or hundreds of thousands of stones and are wishing to be picky about this and other attributes. As a seller you have only one, and it is whatever it is. In the database there are currently 66 2.9x’s that could be yours within a few days. Every one of those is someone's proverbial haystack needle. As a shopper it's not just that you're looking for a needle in a haystack, you're looking for a particular needle. It different when you sell. Even though you could correctly point out that it’s a difficult item to find, a trade buyer, like the spinny sign guy, is unlikely to pay a big premium for it. He’s probably going to bid on it per carat what he/she would bid on a 2.50, not a 3.00. On the other hand, if you sell it on Craigslist this is likely that this will be your #1 promotional attribute along with that retail replacement appraisal that says it would be expensive to replace or the fact that YOU paid a lot for it. These are attributes that would be completely ignored by the trade guy. In the later market this attribute commands a premium and in the former it does not. You may or may not get your price, just like the sign guy may or may not get his buy, but the difference is with you and your buyer, not with the goods themselves.

 

[bgray]

I know there are a ton of variables. And in my world, this is why you make assumptions. And different people are willing to pay differently for different qualities. In theory, I am not necessarily looking for what makes up the stated value of the diamond, just how much people value certain parts of it.

I still believe that cutters, wholesalers, retailers, etc have to attribute some value to certain items. Otherwise, there is simply no way to set their prices in the first place.

Neil, you are basically telling me that the only way to value a stone is to look in the market for the closest comparison. So, if you find the one in the million perfect 2.90, you would be forced to value that like a 3.00. The price doubles on the Rap Sheet, but the 3.00 would be offered at a discount, where the 2.90 at a premium. And even though the premium on the 2.90 should be less than the discount on the 3.00 (ie they shouldnt intersect due to the magic of 3.00), as an appraiser, you wouldn't be able to differentiate because a duplicate 2.90 doesn't exist.

What if I came to you asking to sell it? How much should I charge for this diamond? Would you tell me to list it like the 3.00 and see if anyone will pay that for it, and if not, lower my price?

I find it fascinating that no one really has a concept of value. When people come on here asking "did I get a good deal?", the people who answer really have no idea. They can comment on quality, but the opinion on price is worthless, especially for anything relatively hard to find.

Duffy:

Because you are not getting an answer you want you choose to, quite arrogantly, dismiss what you have been told by many industry professionals and by many experienced aficionados. 1)Assumptions: sometimes yes and sometimes no depends on OTHER variables. 2)Closest Comparison: yes, just like in finance. How do you know if something is cheap or expensive if you aren't comparing it to anything? 3)You find it "fascinating that no one really has a concept of value.": That is not only wrong but rude. As in finance, many things are relative. You can know something is a fair price or a reasonable price (value) based on research of comparables but often with diamonds as in finance price is never exact; it is dependent on WHO is willing to buy at a set price. That is more or less the definition of value NOT the price itself-- just like houses and a any number of other items. My 4.90 carat stone was a needle in a haystack that I looked for for quite some time. I wanted a stone that was approximately 5 carats. Not just 5 carats but that looked like 5 carats and was DE, VS and optimally cut. When I found the stone, I bought it after looking at it. It was less expensive than every 5 carat stone I looked it even when those 5 carats+ were less well cut, faced up smaller and so on. Why, because it is not 5 carats. Much of the pricing in diamonds is muddied by human psychology and what people want and the price they can pay. Just like tulip bulbs and twitter.

 

[thediamondshopper]

...I am not necessarily looking for what makes up the stated value of the diamond, just how much people value certain parts of it. This question has been answered very accurately by the experts thus far. When you say "people" this allows for an infinite number of determinations of value as each individual wholesaler has different margins, customers, reputation, expenses, competition ect. As does each retailer. What complicates the idea even further is that characteristics like color and clarity are ranges, one could say infinite if the technology was there to grade them that way. This all being said, I have always been told that in essence something is worth what someone else is willing to pay for it. This simple timeless statement is what Denver Appraiser has been driving home, and what makes the answer to your question as impossible as what came first the chicken of the egg.

I still believe that cutters, wholesalers, retailers, etc have to attribute some value to certain items. Otherwise, there is simply no way to set their prices in the first place.

There are other factors out side of the 4 C's that influence the prices that the market sets, from experience the 4cs act as a guideline for my pricing, but the main determinant is what others are selling similar goods for in the market with a similar level of service and policies to what I have.

Neil, you are basically telling me that the only way to value a stone is to look in the market for the closest comparison. So, if you find the one in the million perfect 2.90, you would be forced to value that like a 3.00. The price doubles on the Rap Sheet, but the 3.00 would be offered at a discount, where the 2.90 at a premium. And even though the premium on the 2.90 should be less than the discount on the 3.00 (ie they shouldnt intersect due to the magic of 3.00), as an appraiser, you wouldn't be able to differentiate because a duplicate 2.90 doesn't exist.

What if I came to you asking to sell it? How much should I charge for this diamond? Would you tell me to list it like the 3.00 and see if anyone will pay that for it, and if not, lower my price?

I find it fascinating that no one really has a concept of value. When people come on here asking "did I get a good deal?", the people who answer really have no idea. They can comment on quality, but the opinion on price is worthless, especially for anything relatively hard to find.

I dont think its fair to say no one has a concept of value, what is more accurate to say is that everyone has their own individual concept of value, and that is what is complicating the answer to your question. Denver Appraiser is very bang on saying that it isnt necessarily correct to give an idea of value especially without seeing it. In the same breath they are offering "their opinion" of value which should be taken for what it is. Some times questions of value can appear to be easy to answer like a retail customer who is being charged a 20% markup on something that others have in virtual inventory for a 10% markup. But the vendor with a 20% markup offers a much better trade up policy and has a local store which is important as the buyer is young and is certain they would like to get something bigger in the future and prefer to see the diamond before handing over money.

Rather than trying to find a formula for success in selecting the best value diamond, which is almost impossible. Work with someone who is honest and fair and has your best interests in mind. An almost 3ct stone isnt going to be cheap, and involving an independent appraiser in the selection of your stone will truly offer value.

 

[Dreamer_D]

Duffy, is the goal of your questions and your buying enterprise to purchase a diamond whereby you pay the smallest markup over what the seller paid for the stone? Is this how you define a "deal"? Because that is where it seems like you are headed. And if so, I am not sure that is how I would define a "deal" in diamonds!

Something to consider that you likely have not before: If you are interested in buying a diamond that meets the cut quality standards of most PS consumers, your search will be limited to a very small sample of the entire population of diamonds on the market. Same if you want a specific color or carat. Determining the regression equation, if you will, that applies to the whole diamond industry is fruitless in that case. Yet that seems to be what you are doing. What you should be looking for is a set of variables you can input into your equation to yield the best buy *within the targetted field of desirable stones*. Limiting in this way a priori will make it much easier for you, and for those of us who are interested in helping you.

 

[heididdl]