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15.01.20
Here’s Why You Shouldn’t Shop Based on Diamond Resale Value
There are a lot of reasons to shop for diamonds. Love. Romance. Tradition. Bling. But when someone mentions the word “investment,” admittedly, our eyes start to roll a bit. Why? Because unless you’re buying celeb-worthy, auction house type rarities, diamonds just flat out aren’t a great investment. Yet, the lack of resale value is one of the most common objections we hear to the affordability of lab created diamonds. Honestly, tho, natural mined diamond resale value is pretty underwhelming too.
For as long as the tradition of diamond engagement rings has existed, the expectations around their resale value have been inflated. Diamonds are a gorgeous, sparkling symbol of your love, commitment, and partnership. But, my darlings, they are not an investment in a strictly financial sense. Here’s why you shouldn’t shop based on diamond resale value. And some better things to base that bling on.
Running Numbers
Because there’s always someone who asks, here’s the real deal on diamond resale value, which for a mined diamond can vary widely. While resale value is determined by the carat and quality of the diamond, it’s also largely dependent on the larger commodity market for diamonds, which is constantly changing. No matter who you sell it to, how many quotes you get, or how well you negotiate, you’ll never get 100% of the purchase price. In fact, you’re going to get less. A lot less. But, why is it the resale value so much lower than what you paid for it?
Capitalism, Darling
Think about it. At its most basic, you are purchasing a diamond from a retailer. Just like when you buy a new handbag, go out to eat, or get your nails done. The price you pay has a lot more built into it than what the seller paid for it. Overhead, commissions, customer service, the list goes on. And everyone in that chain needs to make a profit. So if you paid $6,000 for a 1 carat platinum and diamond solitaire engagement ring, the commodity value of your diamond is going to be an estimated 20-40% lower. But, hate to break it to you, it actually gets worse from there.
Power Players
Yes, reselling diamonds is kind of like reselling last year’s fashion to the thrift store down the street. Only, diamond retailers rarely ever own their inventory in the first place. If they do, they’re certainly buying it in bulk (think Costco, but all diamonds). More frequently, diamond inventory is maintained by wholesalers and manufacturers all over the world—this is especially true for today’s plethora of online-only diamond retailers. Their listings often come straight from the wholesalers, and they don’t ever see the diamond until you pay for it. So why on Earth would anyone want to buy your diamond? That’s money they have to shell out and hold at a loss until they can resell it. Unless your diamond is super unique and rare, most retailers will get a better deal to buy diamonds from somewhere else.
Loopholes
One alternative to approaching a diamond wholesaler yourself is going with Worthy. Worthy will present your diamond ring to it’s network of wholesalers, and receive all the offers. You can accept the highest offer, and Worthy handles the rest. The only catch with this is that Worthy’s commission for the service is a whopping 20%. For your $6,000 ring, there’s no way you’ll get an offer for $4,200, but even if you did, you’d pay $840 of that to Worthy. Going this route, you’re virtually guaranteed to get less than half of your original purchase price, but the convenience might be worth it.
Not Pawn Stars
This might not be where you thought you’d end up, but, here we are. The pawn shop. Sure, chuckle now, but, pawn shops are actually one of the fastest and most popular ways to sell engagement rings. They don’t pay particularly well, but they do provide a service if you’re in a hurry. Unfortunately, they’re also known for low-balling to reduce their risk of overpaying, and aren’t usually the most experienced in gemology. So, if you get anywhere close to 50% of what you paid for a ring by selling at a pawn shop, you deserve a medal.
Back at the Lab
If all of the above is the case for mined diamonds, then maybe you’re wondering what on Earth is the deal with lab grown diamond resale value? Well, yeah, it’s worse. Unfortunately the market for lab created diamonds just isn’t powerful or large enough yet to command similar commodity pricing, and even the retailers who will buy back used diamonds often just flat out won’t accept lab created stones. Plus, your original purchase price is already 40-50% lower than a comparable mined diamond. And this is all to say that every example we’ve given above is also totally assuming that your diamond is 100% undamaged, no nicks, chips, etc.
Down the Drain
At this point, you might have been wondering why you thought diamonds go up in value. Well, they can. Kind of. Obvi, there’s inflation, and fluctuations in the market. But as we said up top, real value growth is generally reserved for investment-grade diamonds that are bought at auction or through private gemologists. So…likely not the diamond you’re thinking about putting on your partner’s ring finger. But here’s the heart of the issue. You shouldn’t be proposing because you’re going to get money out of the ring, right? It’s about loooooove, y’all.
The Do’s of Diamond Shopping
Now that we’ve talked you out of buying a diamond based on resale value (we have, right?), let’s talk about how you should buy a diamond. First off, let’s talk budget. Because this is really one of the most important factors and we always recommend not starting to look at stones until you know what you’re prepared to shell out (and whether or not you have any wiggle room). Of course, there’s the “2 months’ salary” concept that’s unbearably out of date…but there really are no rules here. And that’s where your preferences come in. Would you rather spend money on a 3 carat diamond because size matters? Or is flawless important? Maybe you and your partner want diamond bands instead of a big ol’ rock…deciding your budget and priorities are the first step.
Feature Story
You already know your own style, what you wear day to day, how you dress up. Well, that all plays into what style of engagement ring you need. I mean, no matter what you end up with, it has to work with your lifestyle (and your wardrobe, right). Our advice? Don’t worry too much about what’s trending and instead focus on what you’re going to want to wear every damn day for the rest of your life. Besides, who wants the same ring as everyone else on the block? If you’re super active, you might want something with a low profile. Or maybe you love lots of tiny sparkle instead of one big rock. There are gazillions of options out there. Or you can totes create one that’s unique to you by going custom.
Making the Cut Grade
What’s really going to make your diamond stand out and make you smile? Sparkle. We’ll say it again for those in the back—cut grade is the most important of the 4 Cs. Why? Because cut is what determines how much and how well your diamond sparkles. It’s all about the proportions, symmetry, and polish. And it’s worth the dollars to dial in on as high of a cut grade as you can afford. I mean, nobody wants a big dull rock. But only round diamonds have cut grades. Not to worry, that’s where diamond grading certificates (which list proportions, symmetry, polish, all the fun stuff) come in handy. Also, pictures. Video. A ring concierge.
Certifiable
To get back to value for just a sec, those diamond grading certificates can definitely come in handy for this as well. We recommend only purchasing a diamond that has been authenticated and certified by a reputable diamond grading lab like GIA, IGI, or GCAL, who keep very high and consistent standards. And don’t lose that report! If you do need to resell your diamond or get insurance (this is a must-do, folks), having one will make your life a whole lot easier.
Prepare for Compliments
Think you’re ready to rock a real one? Check out our diamond search where you can view 360-degree images of more than 10,000 diamonds and compare diamond clarity grades, or book a virtual or offline appointment at our New York salon to view certified lab-grown and natural diamonds in person. Not finding what you’re looking for? Email us with what you’re looking for at hello@shop.frankdarling.com. We’ll curate a list of 5-7 exclusive stones that are just right for you.
