Most consumers aren’t fully informed on how diamonds fare when it comes to their resale value. As consumers, our perception is often misled by inflated retail prices or other assumptions. Many of us expect our diamonds to be worth what we paid for them. However, the retail price or insurance appraisal amount of a piece of diamond jewelry have no bearing on the actual market value of the diamond(s).
Why Your Offer is Less Than What You Paid?
With a better understanding of the market and factors that go into pricing, you can keep your diamond resale expectations realistic.
- Retailers inflate the price of low-quality stones.
Retail jewelers often overvalue their diamonds, pricing them for maximum profit rather than actual worth. Retail markup can be as high as 100-200 percent!1
- Brand names have a cost of their own.
Big, recognizable diamond companies like Kay Jewelers, Jarred’s, Zales, and even Blue Nile have established names that people associate with quality (regardless of whether that association is accurate). They aren’t afraid to capitalize on their prestige to cover huge overheard storefront and marketing costs and make a profit. Often times these retailers are marking up the cost of the stone by as much as 8X the value. Meaning a stone that they paid $400.00 is being sold to you for $3,200.00. If you purchased your stone at a mall retail outlet, you may be surprised upon learning the true value.1
- The market fluctuates over time.
Again, it’s hard to say how much your diamond will be worth at the moment of sale until you have a buyer’s estimate.
How Could Your Insurance Appraisal be Different from the Resale Value?
During an insurance appraisal, the appraiser is evaluating how much it might cost to replace the item. Because you are paying the insurance company for that protection, they know that a larger dollar amount will make earn them a larger premium (and potentially make you feel safer). For this reason, it is standard for insurance companies to exaggerate the item’s value. They only have to replace it, if it’s lost or stolen.
A resale appraisal, on the other hand, is based on the current market value of the diamond and factors in depreciation. The market prices are set by the Rapaport Report — the industry standard.
How Is the Value of a Diamond Determined?
With commodities like silver and gold, the value of the material is based solely on its weight, purity and market price. In the case of diamonds, however, the value of the stone is based on its assessed quality in various categories.
In their assessment, the appraiser will consider what are commonly called the “4 C’s” of diamonds:
- Carat: The weight or mass of the diamond, measured in carats. Larger stones typically fetch higher prices than smaller ones of the same quality.
- Cut: The shape and faceting of the diamond. The uniqueness, trendiness, and sparkle of the diamond can play a role in how desirable (and therefore valuable) it will be on the retail market.
- Color: The hue and richness of the material (white, yellow, pink, etc.). As with cut, consumer trends in colored diamonds can affect value.
- Clarity: How many flaws are in the stone, measured by how clear or cloudy it is. A clearer stone means fewer flaws and a higher price.
Ultimately, the price for a specific diamond depends on how it scores in these categories. Professional appraisal from an experienced buyer is the best way to get an accurate market value.
Why Do Buyers Offer Different Amounts?
In addition to the 4 C’s, buyers can offer different amounts based on their interests and needs. For example: A pawn shop or jewelry store will generally offer you less money than an online seller, in part because they have the overhead costs of running a store. And they, in turn, sell to a bigger diamond buyer. Like Diamonds USA.
Does a Diamond’s Value Increase or Decrease Over Time?
Diamond values fluctuate quite a bit over time, making it difficult to predict whether a given stone will increase or decrease in value. Regardless, the majority of cases don’t tend to see a significant increase. In other words, while some diamonds may appreciate in value down the road, they’re not a great investment vehicle.
Recently, market prices for diamonds have been on the rise, which is good news for those looking to sell. Whether the value of their diamonds will rise or fall down the line is more difficult to say.
The Good News
Although it’s good to manage your expectations with regard to diamond resale values, you’re still recouping money on something you no longer want. Even chipped or fractured diamonds retain value.
Diamonds USA always strives to offer you the fairest, most accurate amount for your stones. If for any reason you’re not satisfied with your offer, or you don’t understand how the offer amount came about — we’d be happy to walk you through the appraisal. And of course, we can always send your diamonds back to you free of charge.
If you have further questions about our assessments or the value of your diamonds, you can contact us online or call us at 1-866-300-5181.