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Question About Selling A Diamond


SUSANMLY
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Trying to find some information for a friend.  He bought an engagement ring 6 months ago and spent an outrageous amount on this ring. . . over $25,000.   Things have since went sour and  he's trying to find a place to sell the ring and get at least 80% back on what he paid.   The ring was never worn and the jeweler he bought it from won't buy it back.   Any suggestions on places that will buy high end jewelry?

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Sorry, but if your friend wants "at least 80%" back after 6 months he is on a non-starter.

 

The price he paid - regardless of whether it's fair or not in the first place - very likely includes 5-10% of sales tax, and even though the profit margin on a diamond ring isn't huge it's more than 10%... which means that no trade buyer would offer him 80% (they need to make at least as much margin as the first guy to stay alive - this is a fiercely competitive business).

 

If he tries to sell through a private sale... he's competing with trade sellers who can offer someone a NEW ring (which alas matters) and trade conditions ranging from a wide choice of setting designs and stone qualities, to guarantees to upgrade plans to resizing to return periods. All of which have a value - and as a private buyer, I'm very unlikely to be interested in "your ring" if all I can get is 20% off it (and I don't have a guarantee that what you are selling to me is a diamond, or recourse if it isn't).

 

The only chance I see is if he happens to have a friend or acquaintance that a] trusts him and b] happens to be looking right now for exactly that ring design with a similar diamond.

 

If the question then becomes "OK, so how much can he expect?", the answer is that it depends a lot on precisely what he bought ("A more-than-$25,000 diamond engagement ring" covers a lot of possibilities), how quickly he wants/needs some money and how good he is at marketing and selling.

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Start with a competent appraiser.  One that is NOT affiliated with the place selling it and one that is NOT trying to buy it.  The document given to him by the seller along with the sale for his insurance purposes doesn’t count. 
 

He can want 80% or 100% of what he paid, but I have to say this almost never happens with private sellers.  I wish I were taller too.  How much he can actually reasonably expect to get is going to depend both on what it is and how he plans to market it.  What he paid is basically irrelevant beyond the observation that the fact that the guy who sold it the first time doesn't want his deal is not a good sign (typical, but not a good sign).  The answer to the first is the reason for the appraiser, and the answer to the second is going to depend both on what it is and how much work/skill/money/time/luck he’s willing to invest into the selling process.  Some people are a lot better at this than others.  Most appraisers are prepared to give a certain amount of advice on this topic as well although it’s not usually part of the appraisal assignment.  Ask.

The way jewelers get high prices is by renting showrooms in expensive places, hiring and training a staff of people to work there, making attractive displays, promoting it for years or decades, and then adding a bit of luck in the form of choosing the right merchandise and having the right client walk in the door.  They do these things because they work and they can't think of a cheaper way to do it.  It's not for lack of interest or even lack of trying.  I don't say this to be harsh, I'm just pointing out that what's called for here is a reality check, and the way to get that is through professional advice from someone who is working for YOU.  

Edited by denverappraiser
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60% is good, and in line with what David and Neal are hinting at.

 

We don't have details on the ring, but -- the stone is where most of the value resides.  If it's a GIA stone, it's simple to look up what the current prices are.  Then subtract 20% for selling expenses.Weigh the metal, subtract the alloy weight, and you know what that's worth as scrap.

 

The setting, alas, is much more problematic. If that was a major part of the purchase price, he has to be very fortunate to find someone sharing his tastes.  Fancy metal whorls and melee encrustations don't add much to the value of a piece of jewelry, but they do add to its cost.  (It was noted you called it "high end jewelry", which makes me tend to think there's an elaborate and expen$ive setting involved.)

 

Conclusion?  He has a friend indeed who's giving him $15K cash.  And the friend is buying well below market.  This is a true win-win! 

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Is $15k laughable and he could get $18k if he tried?  Is that a one-in-a-million client that he happened to find quickly and if he doesn't jump he may find himself selling later for $10k?  There's a terribly important difference here, and independent professional advice to separate them is going to run something like $100.  Maybe I'm missing something and I'm obviously biased but that seems like a slam dunk 'investment' of $100 to me.  

Edited by denverappraiser
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Is $15k laughable and he could get $18k if he tried?  Is that a one-in-a-million client that he happened to find quickly and if he doesn't jump he may find himself selling later for $10k?  There's a terribly important difference here, and independent professional advice to separate them is going to run something like $100.  Maybe I'm missing something and I'm obviously biased but that seems like a slam dunk 'investment' of $100 to me.  

 

Absolutely, the best answer.  Get a real sense of what it's worth in the market.  If the appraisal is anywhere close to the numbers, then just do it; don't quibble over the last 5-10%.

 

BTW, Neal isn't hawking his own business in this thread, but you'd have a hard time finding a more reputable person in this work.  See that number of posts under his grinning avatar?  That's kind of a guarantee of his dedication and professionalism.  Google threads from this forum 5 years ago and he's there, solidly contributing to the public's greater knowledge.

 

in the immediate situation, a $10K haircut isn't the worst that could happen to the seller.  It hurts, but probably not as bad as the situation that led to the decision to sell the ring.

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Wow, you guys are amazing!   Don't know much details of the ring except that the main stone is 2.5 carats and then the band was platinum and has another .5 carats.  Living in a smaller town in the midwest I'm sure won't help in finding a buyer willing to spend what he did.    

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Hi Susanmly --

 

You can use the diamond finder roughly, even with this limited amount of information.  For a 2.5 carat stone ... $25K is cheap for a good GIA-graded stone of that size.  Searching for stones costing around $22K (to allow an extra ~10% for the setting cost) puts you down in the range of I-J color, with visible inclusions.

 

Or else the stone could be EGL graded (or possibly ungraded). If it has one of these other documents, regardless of what the graded claim is, it's going to be worth at best what the GIA equivalent in the first paragraph would be.

 

That doesn't mean it's a bad stone or ring.  But it complicates resale.  Assuming first that the stone is not graded, then to be properly assessed, a jeweler would have to remove the stone, send to a grading authority (preferably GIA) for grading, wait a number of weeks (for them), and then re-mount on return. All these steps cost time and money.  Even if Neal appraised the ring, he would not be able to weigh the stone without taking it out of the mount.

 

The situation is different (but not much better) if there's an EGL (or IGI, etc) "certificate".  Their grading systems are not as consistent as GIA.  In other words, they might call a GIA I/J I2-clarity stone to be F/G color and VS1-2 clarity.  In a case like this, someone like Neal could help, because he'd be able to evaluate color and clarity of the mounted stone against reference stones in his tools.

 

So, although you started out by saying your friend paid an outrageous amount for the ring ... if it's a 2.5 carat main stone, he actually paid too little for a very good stone.  In this case, it's even more important that he take a reasonable offer before it's withdrawn.

 

Suggest to your friend that before he buy any diamonds in the future, he should invest a month or so reading older threads in this forum/website (and the dozens of alternatives) before he go in a jewelry store.

 

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Once again, hire a pro.  My advice to resale clients does routinely involve pulling the stone and submitting it to a lab in order to get documentation that will be useful in the sale, but there are numerous nuances to this transaction.  For example:
 

GIA is currently quoting return dates as late as October (It’s June now).  Depending on the client circumstance, that can be a serious issue.
 

Lab services are not free.  Counting shipping and insurance, the investment in the pedigree will be on the order of $300-400.  If the marketing plan is to retail it this may be a good buy while if the plan is to sell it to a dealer it may not be.  This is doubly true if the strategy is likely to involve more than one lab and/or other sorts of services.

 

Certain stones do better with paperwork from different labs.  I know that’s blasphemy in the forum here but it’s a fact.  GIA-I2 is a tough sell for example.  Cuts below ‘very good’ have more of a millstone than a bad brand lab.  At the same time, a stone that will get ‘ideal’ from AGS lab will usually sell better if it’s got that brand.  

 

Some stones are damaged from the original setting or from wear.  Yes, it matters.  Repair is often an option but, at the least, it’s important to understand the facts even if the sale is going to be to a dealer who will do the repairs themselves.  Sending a chipped stone to GIA is going to get hammered on both clarity and color grades and the document will do more harm than good if it’s used as an advertisement.  In some cases, previously unknown damage can lead to an insurance claim by the way. 
 

Pulling a stone is a job for a pro by the way.  Really.  It’s not that it’s usually all that difficult, but the penalty of screwing it up is severe.  See the note above about damage.  This can be a many thousand dollar mistake.

Edited by denverappraiser
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