Trade in: What

[isis~goddess]

 

[isis~goddess]

whoops, trust me people, I don't know what just happened here. I was just going to say that I took a ring in to a large jeweler today to see what the trade in value was. THey needed to know what I wanted to trade it in toward BEFORE they would give me a value. Now what's wrong with that picture. Doesn't the ring have a value of its own? Then what is it? It's as if they need to know before hand so they can calculate an acceptable discount on an item, and viola, that just HAPPENS to be the value of my ring! I left, it just does not seem right to me. Does anyone know if that is actually what is going on with trade ins? I'm better off selling it and getting fair market value. At least its fair and not calculated.

 

[kcoursolle]

I always think it''s better to continue to buy and trade in from a reputable company that already has a 100% trade in value. Then you know it''s worth and know that you can trade it in. If you don''t have an upgrade policy, you will take a substantial hit from anyone you try to trade in with or if you try to consign the ring first.

 

[Skippy123]

Date: 2/9/2008 4:12:24 PM
Author: kcoursolle
I always think it's better to continue to buy and trade in from a reputable company that already has a 100% trade in value. Then you know it's worth and know that you can trade it in. If you don't have an upgrade policy, you will take a substantial hit from anyone you try to trade in with or if you try to consign the ring first.

I agree w/this that is why I purchased my stone from Whiteflash and GOG has a similar policy and a few other vendors (I think ERD and one other but look at the policy's on their websites for that info).

 

[isis~goddess]

yep, i do too. that''s why i have other pieces that DO come with a trade in, and even a BUY BACK policy for what I paid! i don''t consider this the same thing. this store i went to sells vintage pieces, so if you have one, you can trade it in to upgrade to something else. i just dont think its good policy to ask first what you want to put that piece toward for your new purchase. i think its some kind of scam. sorry, if the ring has value, it has value, i dont see why they need to know what you want to buy in its place first before they can assertain that value. furthermore, they said that value they gave me was only for that day! what the? i thought they were reputable, and believe me, they are BIG and prominant sellers in this area, but something just seems scammish to me about it and i wont be going there anymore. we bought my ering there, so i feel bad about it, but you live and learn.

 

[denverappraiser]

Fair market value is a legal term that really doesn’t apply here.

A dealer considering accepting a trade-in has several things to consider.

1) What is it? That is to say, what are the gemological properties of the stone. This may or may not be what you are expecting or what your ‘certificate’ says and this often leads to some problems that sensible dealers would just as soon avoid in the midst of a sales presentation, especially if they were involved in the original sale.

2) What would it cost them to get it from their regular sources? Most jewelers get diamonds from regular suppliers as they need them. Someone else is tying up their money in inventory, someone else takes the risk of ending up with an item that doesn’t sell well or if the store falls on hard times. Since the terms of sale from you are so much less generous, they won’t have much interest in buying yours unless you’re cheaper. How much cheaper is a matter of negotiation.

3) Is it something that will do well for them? Not all dealers do well with the same sorts of goods. A 1.00ct J/I1 ‘bluff’ stone is unlikely to do well in the same store that sells 2.00 E/VVS super-ideals and visa versa. They may or may not want your stone.

4) Do they have the money and, if so, what else might they do with it? Just because it’s a trade doesn’t mean that it doesn’t cost them anything. They still have to pay the supplier on the new one you’re buying. They may already have sufficient inventory of stones like that, they may need the money to by chain or pay taxes or any number of different things.

5) In the case of a trade deal, they need to be careful of the store image. They’re making money on the one they’re selling you and if they take your tradein, they expect to be able to make money on that one when they sell it to someone else. Jewelers are notoriously closed lipped about how these margins work and they like it that way. Sometimes this leads to some outrageous assumptions about the profits going on at jewelry stores but going into the details of how much overhead and other costs are involved is way beyond what belongs in a sales presentation.

It’s also worth noting that most consumers have a seriously inflated impression of what their stones are ‘worth’. This tends to come from appraisals that are being used as sales tools to demonstrate a bargain.

The solution is to charge a high enough price on the new item that they can allow a large credit for the tradein. Everybody goes away feeling good even if it has nothing to do with reality. It's the same thing when you trade in your car. You can’t have it both ways (high tradein, cheap sale). If you really want to know what you can expect if you cash in the stone, get it appraised and ask the question flat out to your appraiser. We get this a lot.

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

 

[gulliverseyes]

So, what is the mark up a B&M has to go with a loose diamond ... I''ve heard 4X - 5X the cost. Any truth to that? I''m not judging, I''m sure the overhead is high and sales are few and far between.

I used to sell furniture, and know the cost was double + $100 for negotiating room. Sounds high, but furniture storage and prime rent takes up a lot of money.

 

[denverappraiser]

Date: 2/9/2008 10:49:01 PM
Author: gulliverseyes
So, what is the mark up a B&M has to go with a loose diamond ... I''ve heard 4X - 5X the cost. Any truth to that? I''m not judging, I''m sure the overhead is high and sales are few and far between.

I used to sell furniture, and know the cost was double + $100 for negotiating room. Sounds high, but furniture storage and prime rent takes up a lot of money.

It depends on the store and on the diamond. For larger and better stones, say things over $10k, it’s hard to get 25%. Some will go into the single digits. For smaller stones at the credit granting jewelers it’s not unusual to see 200%

Stores will often tag things at sky high prices with the expectation of discounting them to where they really expect to make a sale. If they hope to sell for 2x cost during their 70% off sale this can lead to some really ridiculous things written on price tags and ''appraisals''.

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

 

[isis~goddess]

thanks for the detailed insight into how this works. sounds like i was right then in assuming that the store is going to calculate an acceptable discount for the item they want to sell me and basically take my trade in at that discount. that makes sense, but it also makes sense for the consumer to avoid this totally. if i have something i want to get rid of first before buying something else, i think i''m better off selling it locally, or online and getting whatever value it brings, then using my money for the next item i want to buy. i know there is overhead and they have to make money on my trade in, but i would rather not have to pay for that overhead if i can find a way around it.

 

[denverappraiser]

You’re probably right. The most money on resale usually comes from direct sale to a consumer. This might be a ‘friend of a friend’ type deal or you can advertise in places like Craigslist, ebay or the local newspaper. Some people are far better at this and some items are better suited for this than others. The next highest paying alternative is a consignment deal with a jeweler where they do the legwork and such in exchange for a fee. They may have a showroom, an internet site, an auction house or a combination of these things. They may be in a better position than you to market things effectively but whether this pays better or worse than the above depends on the item, the dealer, the market, your skills, their skills and a fair number of variables that are hard to quantify. Usually the bottom payoff is to sell it to a dealer for cash. The bright side of this is that it’s very low pain. You get your money and you no longer have to care if it’s been sold, if the buyer is going to return it for a refund, etc. You’re out of the loop. For some this is a good payoff and they wouldn’t even consider retailing it themselves while others would prefer to do the dance and end up with a little extra money. A trade-in is basically two deals combined. Unless there’s a contractual issue that requires them to pay more than market value as part of the initial sale, it’s almost certainly financially better to separate them.

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