Do Diamonds Have A Resale Value? Or Are They Worthless?
Does a Diamond have any resale value?
There isn’t a simple yes or no answer to this as not all Diamonds are the same but a broad answer is:
- Larger, higher-quality Natural Diamonds can retain between 25-50% of their original purchase price (this is the Diamonds price, not the pieces price)
- Lower-quality Natural Diamonds don’t retain as much value due to being less desirable
- Small melee size Natural Diamonds (up to 2mm) and lab-grown Diamonds of all sizes retain little to no value
But there are many different factors that impact the resale value of a Diamond and I will be covering this in more detail below.
What Factors Impact The Resale Value Of A Diamond?
Not all Diamonds are equal and not all Diamonds are sold equally and this is why there are many factors that impact the resale value and in this section, I will cover what these are.
Where you sell your Diamond is also very important but I’ll cover this in more detail further down in this post.
Diamond Quality
One of the biggest factors in the resale value is the quality of the Diamond because better quality stones are easier to resell, whereas lower quality ones are much more difficult (especially with the rise of lab-grown Diamonds) but what are these quality factors?
1. Color
The color of the Diamond is very important and there are two ways that color is important for Diamonds:
- For Colorless Diamonds, stones ranging from D-H, which is colorless to nearly colorless will have a better resale value than stones with lower color grades that have a tint (this can be yellow, brown or grey)
- For Fancy Color Diamonds, how vivid and intense the color is will have an impact of the resale value, with better color stones selling for more than ones with paler and less noticeable coloration
This is because consumers want colorless Diamonds to be as close to colorless as possible and fancy colors to be as noticeable as possible.
2. Clarity
This is how free from inclusions the Diamond is and Diamonds with higher clarity grades, such Flawless to VS1 will generally have a better resale value than Diamonds with SI or I clarity grades as Diamonds with better clarity are easier for the buyer to then sell on.
3. Cut Quality
Diamonds that are cut to a higher quality standard generally look a lot better as they have more fire and brilliance and this makes them more attractive to potential customers and the better the stone looks, the higher the resale value as it makes the Diamond easier to sell on.
I do need to stress though that it is a combination of these quality factors that will lead to a higher resale value as a Diamond with:
- Good color and cut but poor clarity
- Good clarity and cut but poor color
- Good color and clarity but poor cut
Won’t have a good resale value as they are going to be harder to sell on than a stone that is good across all three.
Diamond Weight
A common thought is that a larger Diamond is worth more than a smaller one but this isn’t always the case as the quality factors I mentioned above also play an important factor, for example at the time of writing this, I saw a:
- 5ct, I Color, SI2 Diamond for $61,000
- 2ct, D Color, Flawless Diamond for $65,000
That is 3 carat difference in weight but the smaller, better-quality Diamond is worth more per carat and would likely attract a much better resale price as the stone is more desirable but if all quality factors are the same, then a larger stone will be worth more.
What About Small Diamonds?
Many pieces of Diamond jewelry are often set with many small Diamonds, up to 2mm for Round Brilliants and these are known as melee Diamonds and they have no resale value as they are very common, even high-quality melee and can be easily sourced.
Even for slightly larger Diamonds that still weigh less than half a carat, they still have little resale value, although it does depend on the quality of the Diamond and where you sell it.
Total Carat Weight (TCW)
Something that is very important if you are selling a piece of Diamond jewelry is whether the carat weight is for a single stone or all of the stones set in the ring as there can be a big difference in the resale value.
For example, an engagement ring that is set with a single 1ct Diamond is going to be more valuable than a ring that is set with multiple Diamonds where the combined carat weight is 1ct (depending on the quality of the Diamonds).
This is because the size of the main Diamond in the ring set with multiple Diamonds is going to be a lot lower than one carat and depending on the style, the main stone could weigh less than 0.5ct, which is going to be worth less than a 1ct single Diamond of the same quality.
Diamond Reports
These are often called certificates (they are actually reports but I digress) and having a report with your Diamond can make it easier to sell your Diamond but only if the report is from a reputable gem lab such as the GIA.
This is because the report will give the seller the information they need about the Diamond, including:
- The size and weight
- Quality (color, clarity, cut quality, fluorescence)
- Whether the Diamond is natural or lab-grown
- Whether the Diamond has been treated or not
And this information makes it easier for the buyer to find comparable Diamonds, see what their market value is and this makes it easier for them to come up with a price to buy the Diamond and makes it easier for them to then sell it on.
Tip: If your Diamond doesn’t have a report, it makes it more important to choose the right place to sell your stone as there needs to be people there who are trained in Diamond grading so that they can assess the quality of the Diamond and give you an accurate value for your Diamond.
Do Lab-Grown Diamonds Have Resale Value?
Not really and there are two main reasons why:
- Lab-grown Diamonds are relatively new – they have only really gained popularity over the last few years and this means that there isn’t a lot of information about how well they are selling on the second-hand market
- Rapidly falling price of new lab-grown Diamonds – over the last 5 years, the price of lab-grown Diamond has fallen dramatically and this makes it very difficult to price them on the second-hand market
These two factors combined mean that many companies that buy Diamonds and jewelry are very wary about buying lab-grown Diamonds and many treat them in a similar way to Synthetic Moissanite and CZ, meaning they have little to no resale value.
This sucks for some people who were told that their lab-grown Diamonds would hold value just like a natural Diamond when they bought it.
It Depends How Much You Paid Your Diamond
I’m not talking about the $ figure here, instead what I’m talking about is the margin that the person/business you bought the Diamond from put on the stone when they sold it.
Profit margins are part and parcel of business and they aren’t going to sell you a Diamond for what they paid for it but this does vary between businesses and has an impact on the percentage value that your Diamond retains, for example:
Let’s say we are talking about a 1ct E/VVS1 Diamond. If you bought it from somewhere that put a 100% markup on the stone, the percentage value that is retained is going to be higher than if they put a 300% markup on the stone, even though the actual value of the stone will be the same when you come to sell it (hope that makes sense).
It Depends Where You Sell Your Diamond
One of the biggest factors when it comes to how much you get for your Diamond is where you sell it and there are a few options to choose from, including:
Peer to Peer
Selling directly to another customer is one of the best ways to get the most money back for your Diamond and can be done using online marketplaces or sales platforms but there are some drawbacks:
- It can take time for you to sell your Diamond, especially if you price it too close to retail!
- You run the risk of being scammed and this does happen, especially with sites like Ebay that nearly always side with the buyer (I ran a jewelry store on Ebay and this does happen a lot)
So while you can get back more for your Diamond, there is also more hassle on your part.
Chain Pawn Shops
These are the pawn shops that are in every town or city, they may operate under different names but a bit of investigation soon shows that they are owned by large corporations, two of the biggest in the US are FirstCash and EZCorp.
They offer a way to sell your Diamond or Diamond jewelry in a quick and hassle free way but you will likely get a lowball offer from these as they have strict pricing policies in place, which can be something like $1 per point (a point is 0.01 carats).
Plus, their staff aren’t usually trained to a high level when it comes to appraising jewelry.
Independent Pawn Shops
Independent pawn shops in my opinion are a better option over the chain ones as the owners/team are a little more in tune with their business and they understand the local market better, they may also have more knowledge and skills around appraising jewelry but this does vary between businesses.
But in general, this does mean that you are more likely to get a better offer from an independent pawn shop.
Estate Jewelers
I would put these on the same level as independent pawn shops as they are very similar in many ways and share basically the same pros and cons as it does depend on the owners/team as to how good they are but once again, Estate Jewelers are likely to offer a better price for your jewelry than you would get from a chain pawn shop.
Some Estate Jewelers may also offer to take your Diamonds on consignment, which means they sell the item on your behalf and take a commission for doing so, this may take longer to get the money for your Diamond but you will probably end up getting more for it.
Auction Houses
There are many different types of auction houses, ranging from ones that sell everything and anything to ones that either run specialty sales or focus on a certain product type, such as jewelry and watches.
Selling your jewelry at a specialist auction will likely get you the fair market value for your jewelry as buyers will pay what they think the piece or stone is worth but there are some drawbacks to selling through an auction:
- It can take time as they may only run sales every few months for jewelry
- You can get more or less than what you would selling to any of the other options (you can always set a reserve but it will probably cost you)
- There may be fees such as entrance fees, sale fees etc for selling your item, which reduces how much you actually get for it
- It might not sell and this does happen
So there are pros and cons to selling your Diamonds and jewelry at auction and if you are considering this, it may be worth checking out some of their previous auctions to see what similar pieces sold for.
Specialist Pawn Shops
There are different levels of pawn shops and there are ones that deal with the higher end of the market and for larger, more valuable Diamonds, they may be an option worth considering as they usually have better-trained staff, such as gemologists along with better connections for selling more expensive stones on.
When you are looking to sell your Diamond, it is worth doing some research and taking it to a few different places to see what they offer as this will give you an idea as to what you can expect for your Diamond.
Conclusion
As you can see, it really isn’t a straightforward yes or no answer as some Diamonds retain a decent amount of value and others, little to none, with things like:
- The quality of the Diamond
- The weight of the Diamond
- Whether it is natural or synthetic
- Where you sell it
All have a big impact on whether the stone has a resale value and how much you get for that stone when you sell it and I hope that this post has not only answered your question but also given you a bit more understanding as to how and why your Diamond is only worth a fraction of what you paid for it.
I'm Paul Haywood FGA DGA, the owner and founder of Haywoods Gems, I'm a fully qualified Gemmologist and Diamond Grader from the Gemmological Association of Great Britain.
