Jump to content

Help On Selling A Diamond In New York's 47th St...


scottnyc
 Share

Recommended Posts

Hi,

 

About a year ago I purchased an engagement ring from a dealer on 47th st, and since then my ex-fiance and I have parted ways and now I am tasked to trying to recover as much as I can for this diamond (roughly 2 ct round brilliant).

 

I live in New York City, and I recently went to a 5-6 stores in the diamond district with a copy of the GIA certification trying to get ranges for how much they would buy the diamond for. It seemed that the "nicer/cleaner" stores were offering roughly 50-55% of retail price, while some of the more "aggressive" stores were quoting me anywhere from 70-85% of retail value. Naturally this was contingent on actually seeing the diamond (i didn't want to bring it in until I found 2-3 shops I felt comfortable with). I've been told that some of these dealers try to lure me back with high offers only to wratchet them down upon actual inspection.

 

I understand that dealers need to make margins, my question is more along the best practices for selling back a diamond. Some of these more aggressive dealers certainly make me feel less safe about doing business with them. They all say that they will pay me in cash, but that makes me wonder if I'm going to be robbed the moment I step out the door... I'm know I'm being neurotic, but we're talking about a decent chunk of change to be carrying on a person.

 

Does anyone have any recommendations as to who I should look at (and who I should avoid) in selling my diamond there? - as well as any tips on how to do it safely? (My biggest fear is they lock me in the store front, take my diamond, and say "what diamond?") I'm hoping to find someone who can be really good on pricing as well as reputable.

 

any help would be really appreciated...

 

scottnyc

Link to comment
Share on other sites

I'm curious what you mean by 'retail values'. This can be anything from the maximum amount that a store would be willing to write on a price tag before discounting to the prices that the discount stores are actually getting for things. Not surprisingly, these two numbers are dramatically different.

 

Start by looking up your specs in the 'find online jeweler' database at the top of the page here. These are some retailers who make their prices easy to find and who are pretty competitive with one another. Using these numbers as 'retail', I think 50% of these prices is a little on the low side if it's a decent stone with no issues. 85%, on the other hand, is out of the question. They're lying to get you into the store and are going to find some BS reason to drop the price after you arrive. Nah, no one in New York would do that.

 

Neil

Link to comment
Share on other sites

HI Scott,

I agree that the term "retail value" is completely useless in this situation.

Let's assume that whatever you paid for this diamond is it's retail price.

That said, I disagree with Neil about 50% of purchase price being low on a cash sale to a retail seller.

If a stone is purchased on 47th street for $20k- then the buyer wants to sell that diamond back to a retail seller, I believe that it will be difficult to achieve a $10k cash price.

I agree with Neil that a retail store offering 17k has tipped their hand as a scam artist.

 

Remember, a diamond purchased for $20k from a reputable seller is worth a lot less in the hands of a private individual.

Better retail sellers offer a lot of advantages to buyers, therefore they can command a higher price.

 

The qualities of the diamond will now become very important- sellers with stones bearing GIA's EX cut grade, for example, will be in a far better position that those with less well cut diamonds.

Link to comment
Share on other sites

HI Scott,

I agree that the term "retail value" is completely useless in this situation.

Let's assume that whatever you paid for this diamond is it's retail price.

That said, I disagree with Neil about 50% of purchase price being low on a cash sale to a retail seller.

If a stone is purchased on 47th street for $20k- then the buyer wants to sell that diamond back to a retail seller, I believe that it will be difficult to achieve a $10k cash price.

I agree with Neil that a retail store offering 17k has tipped their hand as a scam artist.

 

Remember, a diamond purchased for $20k from a reputable seller is worth a lot less in the hands of a private individual.

Better retail sellers offer a lot of advantages to buyers, therefore they can command a higher price.

 

The qualities of the diamond will now become very important- sellers with stones bearing GIA's EX cut grade, for example, will be in a far better position that those with less well cut diamonds.

 

I'm surprised to hear there is such a large drop in value (diamond only), considering being told by several vendors that the margins on diamonds is so low. Are you guys suggesting diamonds bought at 'online or discount prices,' such as those on the price finder drop 50% or more on resale. wow!

Link to comment
Share on other sites

David and I largely agree and the difference boils down to that definition of ‘retail’. The prices charged by most of the stores on 47th street (and elsewhere) are higher than the prices you see for comparable merchandise here. Obviously if the resale is going to be valued as a percentage of what you paid, one of the variables becomes what you paid.

 

Let’s take David’s theoretical $20k stone.

 

Let’s assume that the customer bought at Discount Wholesale Jewelry Land and they promised him it was a great deal. They quoted a ‘retail’ price of $40k and gave a discount! Let’s assume that the store bought it for $15k. This gives them a 33% markup to cover their costs and overhead, their salespeople and have a few bucks left over for themselves. Not a terrific deal but not bad actually. Online someone would probably sell it for $17k, about a 15% margin. Find someone really aggressive or just stupid and you may find something like $16k.

 

The seller, we’ll call him Joe, is the guy who sold it to the store for $15k was probably into it for $13k. He’s got a whole bunch of expenses in the deal. He bought the rough, hired the cutter, paid the lab and taxes etc. and he absorbed the financial risk if it didn’t work out the way he expected. He’s the one who has $13k of his money tied up until someone actually buys it (and actually pays) and until then he’s out on a limb. For that he’s getting about 15%.

 

So now you go back to DWJL and sell it. They don’t have any money, they have plenty of inventory like yours and their plan is to sell it back to Joe for cash money so they can keep on paying their bills. Joe offers $11k. That extra $2k below what he would pay his regular suppliers is to cover his risks associated with buying off of the street. It covers that he’s buying something that he may not really need but is going to buy it anyway because the price is right. When he buys from his cutter he gets to be picky and choose just what does well for him, when he buys from DWJL it’s a take-it or leave-it deal cash with one stone to choose from.

 

That leaves us back at the store. They expect to sell it to Joe for $11k so what do they pay you? It’s not like they’re doing this as a favor. If they offer $9k, they get about a 20% markup on the deal. They get to eat it if it turns out to be stolen and the cops grab it or some other unforeseen calamity or if Joe is out of money that day and just isn’t buying. They’re out on that limb now. Darned right they expect to be paid.

 

So, depending on how you define ‘retail’, we’re now looking at 9/40, 9/20 or perhaps 9/17.

 

As grim as this all sounds, it’s actually better than almost everything else you buy. Cars, clothing, food, electronics, art, you name it, are all generally worse. Real estate, stocks and bonds and gold do better in this regard although they have their own issues. All in all, financially speaking, diamonds are a crappy investment although they do last a long time so you do get quite a bit of ‘use’ for your money. It sure beats, say, motorcycles or boats. In the end, if you’re looking for an investment vehicle, talk to your accountant, not your jeweler.

 

Neil

.

Link to comment
Share on other sites

Like Neil says, price is all relative. It's relative to how fast you want to sell the diamond, really. If you have time, you can put it for sale in the local paper, or ebay, etc and if you got a really good deal on the diamond at the time and it's a very desirable stone that's in demand, you may only lose 10-20% of what you paid. on the other hand if it has an unreliable lab report, lacks a cut grade because it's an outdated GIA lab report, or is an odd quality combination like VVS2/J or like an oval or marquise shape you may have to be patient before it sells or settle for less. And if you want cash tomorrow, then you'll have to take whatever the jeweler offers you unfortunately which is dependant on everything Neil outlined above.

Edited by Adylon
Link to comment
Share on other sites

Thanks everyone for the great responses... definitely, very educational. I always figured that I would have to take a haircut if I had to sell this diamond, if I only lost 25% of the value I'd be pretty psyched...

 

All I meant by "retail" was how much I would probably have to pay to purchase the diamond today. I basically just went online to bluenile and averaged the prices of roughly 15 diamonds with very similar characteristics.

 

I guess one of my questions is suppose I come to terms on the price, should I be concerned about dealing with some merchants on 47th st?.... Most of these guys say they normally pay in all cash.. is that standard? (is there a safer form of payment I should request - I know I'm just paranoid but I often fear large sums of cash as being linked to laundering/counterfeiting!)

 

Has anyone had a good experience with a dealer there?

Link to comment
Share on other sites

Hi Scott,

Sorry the relationship didn't work out. As for getting the most money for your ring, it depends how much time/energy you want to put into selling it. You'll get the most money for it if you eliminate the middleman and sell it privately. Just a month ago I was looking for someone in your position (I have since bought a ring online); when I was looking, there were dozens of guys selling "broken engagement" rings on Craig's list, typically asking 75-80% of what they paid. As a consumer, I'd be thrilled to pay you, say, 15-18K for a properly documented diamond that sells at about 20K (the online jeweler prices available on this website are an excellent approximation of a "retail" price--it's about the cheapest way to buy a diamond). Whereas, as others have pointed out, a gem dealer is going to low-ball it because of the risks involved.

Try selling it privately--my guess is that a 2CT round brilliant is very much in demand.

 

Best of luck,

Anne

Link to comment
Share on other sites

If someone offers you cash, just take the cash. Odds of it being counterfitted from a jeweler that's been in the same location are slim to none. If you're really worried about it you can always ask for a company check, but that could bounce if they try to play games I guess... I'd rather have the ca$h. :unsure:

Edited by Adylon
Link to comment
Share on other sites

They are offering cash because they are accustomed to customers preferring that as a means of payment. They mean it as a feature, not a problem. People fear checks bouncing and some want to avoid banks and IRS reporting requirements. I wouldn’t worry about it and agree with Yosef that your risks from the merchant here are minimal although it’s always prudent to be aware of your personal risk in walking around with large or even small amounts of cash. I’m fairly confident that most would be happy to pay with a check if you prefer.

 

As pointed out, the top money comes from direct retail sale. This will depend on both what you have and your temperament for the sales process. Be aware that Craigslist is chock full of scammers and here's a situation where you definitely don't want to take a check. Some people are definitely better at this kind of thing than others and some items are more popular and easier to sell. The reason people want to buy from an individual is because they are looking for lower prices and I think, in general, they are looking for more than a 15% discount over what it would cost elsewhere but I guess this depends on what they are looking at as the alternatives.

 

A compromise solution is a consignment deal where you pay a dealer a commission to do the sales process for you but where you don’t get the money until the deal is done (and consequently they aren’t tying up their money in the inventory costs). As with direct sales, some items are more suited to this than others and it’s important to choose your dealer carefully. You are going into business with them, at least for a while, and this comes with certain risks. Some partners are better than others. On diamonds, commissions of 15% - 40% are fairly common depending on the store although I've seen them as low as 10% and as high as 50%. Usually the seller, meaning you, get to pay the costs like repairing any damage or getting an updated lab report.

 

Neil

Edited by denverappraiser
Link to comment
Share on other sites

Thanks everyone, this certainly helps ease some of my fears. Since I'm not really in a hurry, I think I may try the craigslist route to see whether it works, and if not I will just settle on a merchant.

 

When/If I do sell it successfully, I'll let everyone know how it goes!

Link to comment
Share on other sites

A final thought--

If you're not superstitious, you could always take the diamond out of the ring and keep it until Miss Right comes along. At that point, you could design your own setting, or add a couple of side stones, etc. Just keep it a secret...a diamond is a diamond, after all!

Link to comment
Share on other sites

A final thought--

If you're not superstitious, you could always take the diamond out of the ring and keep it until Miss Right comes along. At that point, you could design your own setting, or add a couple of side stones, etc. Just keep it a secret...a diamond is a diamond, after all!

 

I would advise against this.... women are very cunning and if she were to find out say after too many beers you could wake up one day a few marbles short if you catch my drift :unsure: Not worth the risk!

Link to comment
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

Loading...
 Share

×
  • Create New...