How to Buy Preowned Diamonds (Price and Risks)

    If you are like most people there will be several times in your life when you will have the opportunity to buy preowned diamonds – you probably won’t have to do anything, the opportunity will come to you! Most often this happens when someone you know gets divorced. Either the wife returns the diamond engagement ring to her husband, or she keeps it out of sentiment, not fully realizing that it represents a memory she would just as soon forget. In either case, neither the divorced husband nor the divorced wife will want to keep the diamond – so it goes up for sale.

    Know The Wholesale Diamond Price Before You Commit. Visit:

    JAMES ALLEN – Jewelers.NYC’s Online Discount Diamond Store of the Year – 2017 (~40% off)
    Most Popular: Round>GIA>Ideal Cut>VS2 Clarity> G Color> One Click

    1/2 Carat | 3/4 Carat | 1 Carat | 1-1/2 Carat | 2 Carat | 2-1/2 Carat | 3 Carat

    Divorce is not the only time that a diamond can find its way to you. There are as many ways as there are hard luck stories, jaded love affairs and deceased relatives. In all cases the seller knows the preowned diamond has significant value, but most of the time they don’t know how to extract it.

    Both the opportunity (for you) and the problem (for them) with diamonds is that they are harder to value than rare commodities like gold, platinum, etc. If you owned a one troy ounce gold coin you’d know how much it’s worth in about 10 seconds with a search engine query.  Yes, diamonds are very valuable; however, gold is a commodity, diamonds are not. This means diamonds have no standardized pricing and gold has “commodity exchange” pricing.

    What does this mean? First you friend may think the preowned diamond’s insured value is what you should pay for it. Perhaps a little bit off, but not much.

    On the surface this makes sense. Most people think diamonds are indestructible so they think they won’t wear out, scratch, crack, etc. If a used diamond does not “depreciate” then it must be worth just as much as a new one, right? The fact is about 70% of a diamond’s cost is markup if you buy it from a retail diamond store and 30% to 40% if you buy your diamond online at Blue Nile or James Allen. Unlike gold, when you sell a diamond, there is not an infinite number of buyers and sellers trading largely identical gems on a market, the way gold is traded. A diamond needs to be examined, often needs to be graded, held in inventory, etc. The price your friend would get for his or her preowned diamond is often closer to 50% of the original purchase price – if that. If he/she went to a pawn shop (a common mistake) that number is more like 25%. So, if you, as a buyer, are going to make an offer, know that they will get between 25 and 50% of their original purchase price when they offer their used diamond for sale to someone who will then resell it himself. The problem is that often they don’t know this when they approach you. How you tell them is up to you, but some people ask them to seek a price first and then talk to you.

    Advantages of buying preowned diamonds

    There are at least four positives reasons to buy a preowned diamond:

    1. Most of the time, particularly if the used diamond found its way to you, the seller is not an unknown quantity. This is quite important in the “trust factor.” When faced with buying a diamond from someone you see several times a week or buying one from a person you will never see again, all else being equal, choose the person you know.
    2. You are helping a friend and helping yourself. If you were going to buy the diamond anyway – and if this is the one you want – then you are keeping the cash “in the family,” so to speak.
    3. The price should be significantly less. Certainly, less than a retail store. Perhaps equal to or even better than an online store (for online store pricing – choose a carat weight below and click the link to see the price).

     

    Know The Wholesale Diamond Price Before You Commit. Visit:

    JAMES ALLEN – Jewelers.NYC’s Online Discount Diamond Store of the Year – 2017 (~40% off)
    Most Popular: Round>GIA>Ideal Cut>VS2 Clarity> G Color> One Click

    1/2 Carat | 3/4 Carat | 1 Carat | 1-1/2 Carat | 2 Carat | 2-1/2 Carat | 3 Carat

     

    1. Finally, if this is a close friend, you may have been part of the original selection process. AND, you may have been admiring the diamond for years. In other words, you know the diamond. While adopting a diamond is not like adopting a pet, there are some similarities. If you have seen the pet up close you know what you like and don’t like about it. The same is true for the diamond.

    Disadvantages of buying used diamonds

    Now that we’ve covered off the rewards of buying a preowned diamond, we need to cover off the risks. And there are quite a few. All of which can be dealt with – with a diamond inspection from a reputable diamond dealer.

    1. Unknown diamond. Even if you have admired the stone from afar for years, you don’t really know much more about it than its size. People don’t really discuss that. Can you tell whether it’s a D or a G color? What about if it’s an excellent or a very good cut? Is the clarity just “eye clean” or is it internally flawless? You get the point. Diamonds have a lot of variation and look very similar to one another. Then there is of course the possibility that the diamond is not a diamond at all. Diamond fraud is a very big problem and you may not know if your precious stone is a 2 carat, VS1 clarity, excellent cut, D colored master piece, or cubic zirconium.
    2. Unknown damage. At the beginning of this article I said, “most people think diamonds are indestructible so they think they won’t wear out, scratch, crack, etc.” This is not true. A three-stone ring with a loose diamond on either side of the center stone, can easily find the center stone scratched on its side. Repeated banging (for example if the back of the wearer’s hand tends to hit walls, rails, etc.) can crack a diamond if repeated over a prolonged period. And a pointed edged, such as the one found on a round brilliant stone’s cutlet, or a princess cut diamond’s corner, tends to chip.
    3. Uncertain ownership. Jewelry gets stolen and then resold – that’s just life. Diamonds are perfect for thieves because the chances of them being found are remote, and if they are, the seller is usually long gone. Understand that if it’s stolen, even if you paid for it, it must go back to the original owner.
    4. Not knowing the correct price. This is common. You may think the diamond is worth a lot more than it is because of all the stories around it. The bride oversells the quality “a little” to her friends. The groom boasts about how he spent four month’s salary when he only spent two – not knowing that you would use this in your internal calculator years later when making an offer on the stone, etc.
    5. Sometimes the only “C” known is carat weight. Finally, when you ask a person to tell you about their diamond they almost always know the carat weight, but they usually don’t know the color, cut or clarity without looking it up. This can lead to some “interesting” discussions re. the actual value of the stone.

    Preowned Diamond – Risk Mitigants

    1. Diamond certificates – A diamond certificate, particularly a GIA diamond certificate, will give you a lot of comfort. Unless it is a GIA special report called a “diamond dossier,” the certificate also maps inclusions – tiny specs usually not visible to the naked eye that almost all diamonds possess. These act as the diamond’s finger prints so when you get a diamond inspection (and you should) the diamond dealer will be able to make sure the diamond in your possession is the diamond on the certificate.
    2. Informal inspection – You are not a jeweler. But when you buy a used diamond you can cover a lot of ground with a simple $10 jewelers Loupe. This device is what jewelers use to inspect diamonds every day. It has a 10X magnification and it will allow you to take a look at the diamond to look for chips, abrasions and inclusions. Most importantly it will you give a sense of comfort that you did not miss anything. It may even get you to a quick no, or in the very least, allow you to ask some good questions.
    3. Jewelers’ Loupe – You can buy a jeweler’s loupe on Amazon.com for about $10. You should have one anyway they are great for many things.
    4. Formal inspection – After the diamond has made it passed your informal inspection it’s time to have the stone examined by the experts. Go to our Best Jewelers of the Diamond District review and call one of them. Tell them what you want and importantly tell them that Jewelers.NYC sent you – they know who you are. Also. No matter where you go, please come back here and tell us about your experience using that tab on the bottom. We want to know how the NYC jewelers treated you. Also. If you did not use one of our Top 10 let us know that as well. We are always looking for feedback – good or bad – from NYC Jewelers.

    In summary, if you are looking for a preowned diamond, you can get a great deal, but you need to do your work. Proceed slowly, ask a lot of questions and conduct an informal inspection yourself. Then, if things look good, give it to a professional to examine again. In most cases a used diamond is no worse (or better) than one that is newly cut. Remember a diamond has been around for millions of years…

    Have fun.

     

    JW