How to Sell your Diamond Engagement Ring
- Know that you will not break even
- Avoid pawn shops
- Attempt to do it yourself
- Try Abe Mor who offers the best price for second hand diamonds
Can I Turn a Profit Selling my Engagement Ring?
It’s one of the most common questions we get asked. And there is a long and short answer. The short answer is no. The long answer is addressed below.
What Happens When you Sell a Diamond Ring
We’ll start by looking at the most likely scenario. Most people still buy jewellery from a brick and mortar jewelry store in their hometown.
Normally, this will be an independent jeweler and one that is not part of a larger chain. They should only sell GIA certified diamonds.
If this were the case, then the best (i.e. the lowest) profit percentage you are likely to encounter in these stores is around 25%. Other scenarios, such as chains and larger, high-end stores, the profit margin could be much, much higher.
Let’s get a bit technical for the moment. First, we shall assume that the diamond ring will cost the jewelry store $100.
If we factor in a 25% profit margin, the price you paid was $125. We can also be very generous and say that diamond prices have risen 10% since your purchase. (Note, this is not likely to happen.)
At this point, you are losing 12%. You paid 125 and you get 110 for the stone. That’s a difference of 15. 15 divided by your original purchase price of 125 is equal to 12%.
But the problem is this is all theory. Because who are you going to sell a diamond to at the market price?
The answer? No one.
Where can you Sell Diamonds?
There are several places where you can sell your diamonds. We shall look at each of them in turn.
You could sell your diamond in a jewelry store similar to the one in which you bought it. When they bought your original diamond, they probably had it on consignment from a wholesaler. That means they effectively borrowed it at no extra cost. As such, the diamond was significantly cheaper than the 100 they paid on paper.
They will want to buy your diamond cheap, too.
If a store is going to buy a diamond, rather than just borrow it, they will be making an investment. In order to justify this, they will need to be getting it at a cheap price. Otherwise it isn’t worth it. There’s also an opportunity cost of a store buying a diamond from you rather than using the money to invest in a wholesaler relationship. These relationships are important so they will need to be getting a very good deal to forgo it.
Businesses also know that buying privately provides a great opportunity to buy at well below the market price.
As such, unless your diamond is incredibly rare ,there is no reason for a jeweler to offer you the market price. It is simply not in their interests.
Pawn Shops are an even worse place to sell your diamonds. That’s because they are already expected to sell below the market value. So they have to buy well below the market value to make a profit.
Direct to a Consumer
You could try selling it privately to someone. We all know the issues with Craigslist, however. And while eBay could be an option, why would someone pay you the same price they could go and get the ring from a jeweler for?
The Best Case
We reckon that the absolute best case scenario is you finding someone to buy the diamond for 90. That means you will be left with a loss of 28% ((125-90)/135).
Selling a Diamond Bought Online
There are several reasons you would be better selling a diamond that you bought online.
It’s Better Value
Let’s say that you originally bought that diamond online. If so, you would have received significantly better value for money. This will help you to minimize your losses.
Diamonds cost significantly more when bought in store compared to when bought online. So you can carry that extra value over when you sell which can make up for losses.
Better Return Policies
The biggest online vendors, James Allen and Blue Nile, both offer full refunds for 30 days. Even better, they also both offer a lifetime upgrade policy.
That means if you want to return the ring and buy a new one, you get the full value back. Regardless of how long you leave it or what the price of diamonds does.
This isn’t the same as when you upgrade through a traditional retailer as they usually won’t give you the full value towards a new purchase.
How to Sell Your Diamond Online
We recently did a test to see which vendor was the best for selling a diamond. Here are the results. The ring we originally purchased cost a nice round $4500. How much did we sell it for?
This company placed last in our test and was the lowest offer by miles. The estimate we received was a low ball $900-$1000. Even after saying that it came with full paperwork they were not able to raise the price.
This company made us a middle of the road offer. After sending the ring off to them, they came back with a bid of just below $1500. But this didn’t include the commission they would have taken to sell it at auction. That commission was $300 so the total would have been just $1200.
This was the winner. We were provided with an estimate within a day of sending them a message. This was an offer of $1,850 in cash.
Abe Mor the Winner by Far
We’ve heard good things about Abe Mor and they seem to have a significantly larger number of satisfied customers compared to the other two companies. Of course, the figure on offer was still well below the original price we paid for the diamond.
A Diamond’s Market Price
What we think of as a market price for a diamond doesn’t really exist. Given the offers we got and the other information in this article, you can see that there is a huge difference in prices.
The Different Prices of a Diamond
In reality, a diamond has lots of different market prices. The lowest is a cash price, what someone will give you in cash for it. As we have discussed above, this will always be the lowest because of the risk a company takes by purchasing it from you. They need to ensure value.
Don’t sell your diamond in store. As we have discussed, there is no reason why a store will offer you a fair value. It just isn’t in their interests. If you do need to sell, sell online. And if you do need to sell, we can help.