Selling 3 carat diamond by consignment

afriend · Sep 10, 2006

Hi, I''ve inherited a 3 carat pear-shaped diamond that I''m probably going to sell. I''m currently getting it appraised, but I believe it''s a VS2 F. I would appreciate the board''s views on the best strategy for selling. I''m willing to do consignment, as I don''t have an urgent need for the money.

My understanding of the diamond industry is there are a set of wholesale diamonds that any of the Net retailers or others have access to, and where they only pay on sale. Is there a way to have my diamond circulated so that it is available to any retailer who wants to sell it? Or, do I have to pick a single retailer to hold it on consignment, so I''m limited solely to the people that come to that store (or that one website)?

Either way, could people please share their experiences selling more expensive diamonds by consignment. I''ve seen several dealers that want to set the price ahead of time. Why won''t sellers offer a flat fee or take a percentage of sales? If the diamond is appraised at ~$25,000, what percentage of that should I aim for? Should I consider an auction house instead? Currently, the diamond is on a gold ring with two emeralds. Is it more likely to sell loose or in the current setting?

Thanks very much for your thoughts.

denverappraiser · Sep 10, 2006

Several good questions here. Ask them all of your appraiser. The answers will vary depending on what you have, where you are and similar details that are unique to your situation.

The wholesale databases aren’t nearly as unified as you’re imagining and there are several competitors. Most work very much the same way as PriceScope. Some dealer lists a stone or bunches of stones that they want to sell, other dealers call up and express interest in a stone, Dealer #1 sends it out or not depend on creditworthiness and dealer #2 buys it or not depending on the merits of the stone and/or the deal. There are dealers who will consign stones and who will try to sell through these systems if you wish. Like all marketing, some dealers are better at it than others. When you talk to a dealer about consignment, ask them how they will market your stone.

Translating ‘insurance values’ in to resale prices is basically impossible and you should make sure to tell your appraiser that the purpose of the appraisal assignment is to estimate resale prices. That should result in an answer that's useful to you. With a 3 carat stone, especially if it’s truly VS2 F, it may be worth your trouble to have it pulled from the setting and sent to GIA for a lab exam and report. This will cost you a few hundred dollars but it increases the salability in most markets considerably. Again, ask your appraiser.

Neil Beaty
GG(GIA) ICGA(AGS) NAJA
Professional Appraisals in Denver