Why Is the Resale Value of a Diamond So Low?

When we buy something as extraordinary and beautiful as a diamond, selling it at a later date or in the future is the last thing we think about. But when the day finally comes that you need to resale it, why is diamond resale value so low?

Diamonds are products that are easily found anywhere else, that is why they are found in special stores that are taken care of by jewelers or retailers that are trained and knowledgeable in the world of diamonds.

Diamonds are not common items to be sold so simply. If you want to sell your diamond again, you might be disappointed as its resale value can be lower than you expected.

If you can’t help it and need to sell a piece of jewelry with a diamond on it or sell a loose diamond because of unforeseen reasons and know you need to sell it again, you should know that its value might drop than what you originally paid for. Here’s why.

Why is diamond resale value so low?

To understand why a diamond’s resale value can get so low is to first look at the retail prices of the diamond. In many retail diamond stores, management sets the prices at a high margin to earn a profit. So the diamond can be priced twice the amount than it originally is.

The reseller normally buys diamonds in bulk amounts and at wholesale prices from wholesalers of diamonds. They get diamonds at a low price but sell them with a high markup.

Factors that contribute to this markup can be high operations costs, rent prices if they are in malls or places with high foot traffic, which raises rent costs.

When the jeweler or retailer buys diamonds from the manufacturer or wholesalers, the diamonds have already finished the process of the 4C’s of diamonds ( carat weight, cut, clarity, color).

The diamonds have already been assessed and were recorded and certified by an institute to check the quality of diamonds, institutions like the GIA or AGS.

The wholesaler will set the price of a diamond by considering the whole process and expenses the diamond incurred in the creation process and the final touches such as polishing and cutting. The diamond retailer will buy the same diamond and will increase the price twofold and that will be the price of the diamond at its stores.

3 Main Reasons Why Diamond Resale Value is So Low

1. Resale Value

   In today’s market trend on diamonds, a piece of jewelry that has a diamond such as engagement rings or wedding rings can be subject to a low resale value.

   When diamonds are resold, later on, the price normally falls 25%-50% of the price you originally paid. Yes, diamonds can be worth half what they were before.

2. Purchase Value

   Retail products are known to have high mark-up prices and retail diamonds are in no way different.

   Diamonds especially can have high mark-up prices set by retailers. If a retailer of diamonds buys a piece of the diamond at $1000, he will be expected to sell it twice the original price at $2,000.

   Retailers normally set high mark-up prices because diamonds are what they call “slow-moving” items.

   Diamonds are not so easily sold as bread and cheese. People take their time and money slowly because diamonds are heavy purchases for normally special occasions like birthdays, weddings, engagements, and other special milestones like anniversaries.

   

   The high markup also covers the original costs and the slow time it takes for it to be bought. So, the high mark-up is only the retailer protecting him or herself as diamonds are a special commodity that can take a lot of time to be sold.

   If you sold your wedding or engagement ring to another jeweler or the same one where you originally bought it, be prepared for a low price as the jeweler or retailer can always buy the same kind of diamond at a low price at the wholesaler where it was first bought.

3. Appraisal Value

   The retail shop or jeweler where you bought the diamond might have given you the diamond’s details in appraisal value so that you won’t know the excess charges if you might need a replacement in the future.

   You might think that you got the diamond at a cheaper price because the real idea is, you did not. The appraisal value usually only raises the diamond’s insurance premium.

   Related: How Much Is Appraised Jewelry Really Worth?

How Can You Know The Real Resale Value of a Diamond?

To know the real resale value of your diamond you need to know the quality of the diamond you have. This is done by checking the diamond’s 4C’s.

1. Clarity

   To check the quality of a diamond is to look at its clarity. Clarity refers to how many inclusions or blemishes are found within the diamond. Inclusions can be seen as dark spots and will affect the appearance of the diamond’s luster. Blemishes are typically caused by heat, pressure, or chemicals from mining processes.

   

   Types of Clarity Grades:

   • FL – for flawless diamonds
   • IF – diamonds are internally flawless
   • VVS1 VVS2 – Very, very slightly included
   • VS1 VS2 – very slightly included
   • SI1 SI2 – slightly included
   • I1 I2 I3 – imperfect diamonds

2. Cut

   According to the AGS ( American Gem Society ) if your diamond is a well-cut diamond it will have more life and sparkle than a diamond with lesser cut quality.

   The cut can have major importance on the aesthetic aspect of how your diamonds look. If a diamond is well cut it can dazzle and shine in every angle and facet of your diamond as the light hits it.

   Cut Grades of Diamonds:

   • Excellent
   • Very Good
   • Good
   • Fair
   • Poor

3. Color

   The color of your diamond can say a lot about its value and quality. The truly perfect diamond is devoid of color and any hint of color will have a huge difference in the quality of the diamond.
   

   Types of Diamond Color Grades:

   • DEF – Colorless
   • GHIJ – Near colorless
   • KLM – Faint yellow
   • NOPQR – Very light yellow
   • STUVWXYZ – Light yellow

4. Carat

   The carat weight of a diamond refers to its actual weight and not its size. If the diamond has a higher carat weight does not necessarily mean it has a higher value if other factors such as color, clarity, and cut are poor.

   A diamond with the same weight can also vary in size, depending on how it was cut.

Where Can I Sell My Diamond?

If you want to effectively sell your diamond, look into different online brokers. Online brokers are currently the best option when it comes to the diamond resale process as they have knowledge about the quality of diamonds and their resale value.

You can also sell your diamonds to online brokers for the most money.

If you are strapped for cash, you can always try to sell it back to where you bought it or many pawn shops but they might not always give you the best price for your benefit.

Contact us at Shira Diamonds to learn more about diamonds!

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