How to Sell Your Diamonds: A Guide for Consumers
Selling a diamond: Who are the buyers? What is the reality of the secondary market?
The first step in a diamond sale is to understand exactly what you have. Diamonds are valued using a grading system that’s well-described in the diamond and jewelry tutorials here, but an inconvenient truth is that diamond grading standards vary. Any offer you receive will be based on how the buyer sees the diamond’s grades, so it’s in your best interest to anticipate what those grades will be.
You may have documentation (e.g. a lab grading report) that came with the diamond. This will be helpful but again; diamond grading standards vary. If the paper that came with your diamond called it “D” in color, but several experts say it’s “F” in color then you probably have an F… You may ask “How can this be?” It’s because many retail sellers use inflated grading and value-assessments when selling diamonds. For this reason any experienced buyer will not blindly agree with just any document. All data must be taken in the context of the credibility of the source.
Some documents are more credible than others: A laboratory grading report from the Gemological Institute of America (GIA) or American Gem Society (AGSL) is usually highly considered. Other laboratory reports are viewed with different levels of caution, depending on the reputability and consistency – or lack thereof – of that lab. The credibility of an “appraisal” document also depends on its origin: Seller-issued appraisals are frequently and notoriously inflated. A true independent appraisal from an outside expert (someone completely unattached to the original sale) can be highly considered, but such appraisals are rare unless you hire one done yourself.
The more reliable your sources of information the more persuasive they will be, but it’s possible that some nuances may not be addressed in the best of lab reports or appraisals: Subtle damage may have occurred in wear since the time of grading. Industry developments may have taken place, in the area of cut-quality for example, which can potentially reduce a diamond’s current value. Sometimes even the best of lab reports does not totally agree with the reality seen by an expert buyer.
Any buyer will want to examine a diamond in person, at which time they will make a bid. But before that time we suggest you make the effort to understand exactly what you have. In the end a buyer will assess the diamond and make an offer. If you have found common ground you can then agree…or disagree and walk away.
There are five primary sales strategies for private sellers:
Let’s start at the top.
This can mean Craigslist, eBay, diamondbistro.com, or a similar site. It can mean classified ads through a newspaper or on Pricescope’s own classified ads forum, Preloved PS Jewels (*note you must be a logged-in member to view this forum). It can also mean direct sale to a friend. Be prepared for skepticism from everyone you approach, even your friends. Don’t take it personally. It’s just the usual way to go about buying.
When using internet sites remember that the people who surf them are looking for a deal. That’s why they’re shopping there. Don’t expect someone to get impulsive and pay you full retail, it just won’t happen. List the diamond and post a credible lab report or independent appraisal from a source your target internet community recognizes as highly considered (this may take some research). Photos speak volumes and can be terrific aids, if you have the capability of taking good diamond and jewelry photos. Decide on your selling price and list it as firm – or build in a negotiation-cushion. Don’t use “desperation” measures along with inflated appraisals from unknown sources; i.e.: Appraised for $10,000, will sacrifice for $5,000… (this could be the subject of a whole tutorial by itself). Basically, if you’re someone who is good at the internet/classified avenue, you already know who you are and if you’re not, you might be wise to avoid going down a pathway that may not work well for you.
You might do better at a pawnshop or one of the Gold Buyers with the spinning signs on the street, but these guys will be extremely good at assessment. Remember that it’s their job to acquire your diamond in a way that assures them profit. This doesn’t mean they won’t be fair (ultimately) but it’s easier to reach common ground when you understand exactly what you have beforehand. This goes back to your documents and the credibility of the sources. Again, strong lab reports and/or excellent appraisals from sources they recognize are good will help here. You’ll find more on this topic in Section 3, below.
When dealing with a friend we respectfully suggest that it will protect both of you to have an independent appraiser involved. Many friendships have been lost over sales where misunderstandings occurred. Transactions with friends have more to do with YOU than with the merchandise being moved. Some people are better at this than others. Some count it as good fun. Others count it as pure torture (you know who you are). The minimal cost of an expert to verify value and provide updated documents could be a good investment, for both sides, when it comes to protecting your friendship.
VERY IMPORTANT: If you decide to do the direct retail path, especially selling to people you don’t know well, be aware of your personal security. You’re doing a high dollar transaction with a stranger and there are potential snags that can be severe. Don’t give out your home address, meet in a public place, don’t take a personal check, etc. Use common sense.
Selling on consignment or auction can be a great move for certain items. There are three basic styles here: Sale through a Jeweler with a showroom, a Jeweler with a website, or an Auction. There are advantages and disadvantages to all three. Jewelers who consign usually charge lower fees and often can get higher prices but there’s no end date. If you’re lucky it’s a matter of hours or days but sometimes it can take months or years depending on what you have. Consider the target audience, since some items may “need” an internet audience more than others.
While there is no hard rule, auctions seem to do best with eccentric sorts of things and Jeweler Consignment seems to do better with more mainstream sorts of things. Be aware that auctions usually take a while, even with a fixed-date; Production of the catalog, running the show, and collecting the money can add months to what seems like an event that only takes an hour. Also be aware that most of the auction houses have substantial fees and there’s usually a fee if the item doesn’t make your ‘reserve’ price – so try to set it realistically.
If you’re going to enter a consignment deal, be sure about the time frame, be very clear about the minimum price you’ll accept, how and when you are to be paid when a deal happens, and what happens if a deal doesn’t work out. Consignment to a Jeweler should not have any hidden fees. Consignments work well if you’ve got the time, you’re comfortable with the Jeweler, and you’ve got goods that don’t require much modification to resell (stones which need re-cutting are difficult to consign).
Consignment offers an increased opportunity to get the sale done at a somewhat better than immediate cash price. With consignment, all you will have is a receipt, so be sure you trust the Jeweler. You are now effectively partners with them, and you need to care if they’re still in business, if they pay their bills, if they are displaying things in an attractive way, etc. Don’t just go for the jeweler/website who quotes the lowest commission and who will ask the highest price. Pick one who you believe you can work with who will actually make a sale. You need to get paid when the deal is done. They can ASK whatever they want but that’s not the same as getting it and if they sell it but don’t pay, who cares what they got? The asking price must be on target or there will not be any sale. You are wasting your time dreaming of a Jeweler who can get you a retail price. It won’t happen.
Dealers range from your neighborhood jeweler, online advertisers, connections through appraisers, to pawnshops and side of the road Gold Buyers. Selling to a Dealer makes sense if you don’t have the time or temperament for sales or consignment – or if you just plain need the money. How long it takes to find the end buyer then becomes their problem, not yours.
Immediate payment comes with a trade-off: The end path for anything sold to a dealer will be another consumer down the road. The Dealer must make the investment, secure new lab inspections, possibly repairs, re-cuts, marketing expenses, bank interest and delay before turnover. Any dealer who offers immediate pay is agreeing to do all of this. In exchange he must have room for additional costs, as well as eventual profit, on the way back into the retail market. That’s why consignment or auctions, while taking longer, may ultimately pay better: There is no investment on the dealer’s side and very little added expense while you both wait for an eventual customer.
When a dealer makes an offer you consider low don’t be insulted. This is business and the buyer must offer what he or she can while dealing with all of the above. Here again, if you understand exactly what you have you will have the confidence to ask what that dealer saw (if you want-to) and find out if and where you are not arriving on common-ground.
When a dealer makes an offer that seems great don’t say “yes” until you know the deal is fair and that payment will truly be immediate. Never confuse a carefully worded question such as “Would you be willing to take X for your diamond?” as an offer to buy. Many consumers believe that question was actually an offer but it wasn’t. It was just a probing question, and possibly not a fair one. Respond to such a question by asking if he will pay you NOW for the amount just quoted.
Be aware that you are a novice in this endeavor to sell a diamond compared to any diamond business “expert”. They have a competitive advantage. Yet again, it helps if you understand exactly what you have to start with. If the negotiation doesn’t feel right, walk away. You can always come back later. Having some experience helps, and the best buyers to work-with may be those who have seen a lot of diamonds and successfully worked with a lot of people before you.
Pricescope’s Sell Your Diamond System for a free preliminary quote from professional diamond buyers.
A Trade in or Trade up deal usually happens at the time of purchase with your original seller. That seller has agreed to give you a credit or refund for a certain amount against your next purchase. Sometimes this is a fine deal, but terms vary quite a bit and they’re importantly different from other approaches in that this offer is not based on your diamond, but rather on the original cash-outlay you made. These deals may have expiration dates or limiting conditions such as periodic visits to the store, a new purchase double the original amount and so-on. No cash flows to you here, and for purposes of this tutorial, the main issue of how to sell your diamond is not really addressed. But if you’re covered by one of these programs, you are interested in buying something that store has for sale now, and you’re not hurting for money this deal may deserve consideration as an alternative to an outright a sale.
This deal also comes from your original seller. It is different than Trade in / Trade up because it represents a standing cash-offer for your diamond, should you decide to sell it. The Buy-Back offer will usually be expressed as a percentage of your original cash-outlay. Like other policies, Buy-Back terms differ from seller to seller – and may have expiration dates or other stipulations. Unlike other policies this is a rare situation where cash actually flows back to you from the seller. A Buy-Back offer can be extremely handy to have in your pocket as a “default” price when seeking other bids.
*Make sure you understand your chosen vendor’s Trade-in/Trade-up and Buy-Back policies. Read the fine print before you buy. For more information, visit Refunds, Buyback, Trade-up and Trade-in by Neil Beaty.
Selling a diamond can be quick and easy, moderately time consuming, or quite a slow process. It depends on what you actually have and what you want or expect from it. If the item is of relatively small value your selling skills are not as critical. But as the value of the diamond increases the skill-level of both the seller and the buyer becomes far more meaningful.
To understand exactly what you have professional assistance can be very helpful. Such assistance ranges from using laboratory grading services to hiring an independent appraiser to asking various experts what they think.
Keep it “real,” whether offering your diamond on the internet or classifieds, working with a Jeweler to consign or auction it or taking it to pawnbrokers, Gold Buyers and dealers. Don’t be insulted by any offer. If it’s not what you want keep looking, but record those offers in case you decide to adjust your expectations later. If you don’t get much interest in the item you’re selling try to figure out why. And if you get a crazy number do find out if you’re only getting a “probing question” – often confused with being a real offer – mentioned earlier in this tutorial.
The best offer may come from someone outside your area. If you’re interacting with a potential buyer via email or phone, get a feeling for what price range to expect before you drive across the state or ship your diamond across the country. Logically they will need to see the diamond before finalizing anything with you. It’s best to work with someone reputable that you have reason to trust or have a means of checking out.
You tell your children “Don’t ever take a ride with a stranger”… and we are telling you just about the same thing. We want you to get a fair price based on the secondary market for your diamond, not a feel-good situation followed by the sinking realization that you went for a ride with a predator.
When it comes to the secondary market knowledge is power: When you understand exactly what you have, determine your timeline and set realistic expectations there are many avenues to choose-from. We wish you a smooth, pleasant and professional journey.
by Neil Beaty
by David S. Atlas
*Edited by John Pollard
Special thanks to authors, Neil Beaty and Dave Atlas, and editor John Pollard, for creating this tutorial and for their support of Pricescope’s knowledge base.