What if you need to resell your lab created diamond engagement ring at some point? Will you be able to recover all the money that was originally spent on the ring?
What is the resale value of lab-created diamonds? Used diamond rings almost always sell at a discount. That’s true of lab-created diamonds, but it’s also true of earth-grown diamonds. Where and how you sell, are the biggest factors in how much you’ll be able to recover. It’s typical to see 30% to 70% discounts, on average, when diamond rings are resold.
In the remainder of this post, we’ll talk about why you shouldn’t worry much about resale value, how you can get the most for your ring if you need to sell, and how lab created diamonds differ from mined diamonds for resale price.
Why You Almost Always Take a Loss on Used Diamonds.
I’m sure you’ve heard that the value of a new car plummets the moment you drive it off the lot. Decided to resell your brand new car as soon as you got home, you would typically have to sell it for at least 10% less than your purchase price. Why? Because anyone would rather buy brand new from a car lot than used from a stranger if the price is the same or similar. Risk is another major factor. When you buy a used car, you often fear that someone could be trying to dump a problematic car on someone new. Your 10% discount makes it worthwhile for a buyer to choose your car instead of heading to the dealer
The same factors are at play when you’re trying to sell a used diamond. Fear and skepticism are, understandably, a much bigger deal when you’re re-selling a diamond, than they are when you’re re-selling a car. Most people feel much more competent and comfortable evaluating the quality of a vehicle, than they do with evaluating a diamond to ensure it’s genuineness and quality. There are dishonest people that would sell glass or simulants as diamonds if they could.
Because of all this, even if you just purchased your diamond moments ago, you would have to resell at a discount. If the discount isn’t significant enough, most buyers would rather purchase directly from a retail location, where they have greater trust.
Diamonds typically lose between 30% and 70% of their value when resold. That’s quite a drop! It’s also a really big potential range of value. Your actual discount percentage is going to depend on the channel that you use to resell. You’ll find different types of buyers and a variety of fee structures in each potential area. We’ll get into specifics on the various sales channels that are available, and we’ll highlight the channels that tend to provide the highest resale value below.
Resale Value for Lab Cultured Diamonds vs Mined Diamonds
For decades now, the diamond industry has propagated the false belief that diamonds, the kind you might see on a typical engagement ring, are some sort of investment. The insinuation is that they will hold their value and even grow over time. Reality is a rude awakening, for anyone that had that expectation. Your natural diamond ring will fall up to 70% in value—just like lab created diamonds do. It has nothing to do with where the diamond was found or created, it’s just a reality of the product. Diamonds are commodities.
Some might argue that earth-grown diamonds are better ‘investments’ than man-made diamonds because they resell at higher prices. While it’s true that earth-grown diamonds will typically resell for more, they also cost a lot more to buy new. Take a look at the following table and tell me which ring performed best:
|Diamond Type||Original Price||Resale Price|
|Earth Grown Diamond||$6,000||$3,000|
|Lab Grown Diamond||$3,000||$1,500|
Was the earth grown diamond a better investment in the above example? Of course not, both diamonds lost 50% of their value, so the resale amount really can be a misleading focus.
Some diamond peddlers claim that lab-grown diamonds can’t be resold, and have no value once they’ve been purchased. It’s a ridiculous statement, but it’s a piece of fiction that really is being promoted. Think of how absurd the statement is. Lab grown diamonds are DIAMOND. They don’t just look like diamond (and they do), they aren’t just hard like diamond (and they are), they are literally the same thing as a diamond that was mined from the earth.
There is no visible difference between lab-grown diamond and earth-grown diamond. Both are made of Carbon. Both are equally hard, durable, and beautiful. In fact, they’re visibly indistinguishable, even for trained professionals. It takes extremely expensive equipment, which few people and businesses have, to positively identify a diamond as man-made. There are less expensive machines that can determine the Diamond ‘Type’ (or grouping) that a particular stone belongs to, but the process isn’t conclusive, because both earth-grown diamonds and man-made diamonds are spread across multiple ‘types.’
So they’re identical, but also 30% to 50% less expensive on average. Why wouldn’t every bride want that? Believe it or not, there are some reasons.
- Fear of judgment
- Diamonds help them feel a sense of personal worth (elitism)
Some may love the sense of wonder that comes with the notion of a diamond being formed deep in the earth over millions of years. What’s perhaps even MORE amazing, is that man can now create that same substance with equal aesthetics and durability (an identical stone with all the same key properties) in 6 to 10 weeks!
We’re told that earth-grown diamonds are valuable because they’re rare. Are they? It’s estimated that 147 million carats of diamonds were excavated from the earth in 2018 alone. It’s believed that worldwide diamond reserves are at currently at 1.2 billion carats! With so many diamonds available, where’s the ‘scarcity’ coming from? The diamond supply is carefully controlled to keep prices artificially high—supply can’t be allowed to outpace demand. Why?
- Diamonds couldn’t help insecure people chase a feeling of self-worth if they weren’t expensive
- There has to be a price tag that is aligned with a sense of elitism
- Obscene profit margins on each stone sold
According to publicly released records from DeBeers from 2015, their average cost per carat for mined diamonds was just $104. Imagine the margins based on the retail price of your average diamond!
So if diamonds aren’t actually very rare, why not just buy the version of the gem that’s created in labs, where buyers can be sure there are no blood diamond issues related to slave labor, child labor, or the arming of brutal guerilla forces? Well, actually, that shift is happening. People are becoming aware of lab created diamonds, and are embracing them in mass. In fact, in 2010, only 9% of people had awareness of what lab diamonds were. Today, that awareness has climbed all the way to 51%
The trend is especially pronounced among the younger generation (today’s college students and young working professionals). A research group recently noticed a real jump in interest and acceptance of lab-cultured diamonds for engagement rings. It’s a trend that seems to be here to stay.
Since lab-grown diamonds are just like earth-grown diamonds, but much less expensive—and since awareness, and interest, is rapidly expanding—how could there be no buyers and no resale value? Of course, they have value, and of course, there are buyers for used lab-grown diamonds. Someone that’s in the market anyway, might jump at the chance to save an extra 30% by going the previously owned route.
Why Resale Value Shouldn’t be a Very Big Concern
Jewelry professionals often talk about the resale value of diamond rings. We’ve already discussed the reality of resale, but at an even higher level, when you’re getting married, why would you be concerned with future resale? Yes, it’s possible to get a ‘No’ response when you propose, but most couples have talked about marriage well before the proposal happens. The proposal is more of a formality than a gamble.
Resale value should be even less of a concern for your wedding ring. If you’re happily married, why would you ever want to resell your ring? If things aren’t going well and you end up divorcing, the resale value of your ring is going to be least of your concerns. Who the proceeds of the ring sale go to, could be a point of contention anyway.
My point is, that when you get married, you expect things to go well. You anticipate being together for the rest of your lives. If that’s what you expect, then resale is irrelevant, because you would never want to sell a ring with so much sentimental value.
3 Things That Determine How Much You’ll Be Able to Recover
- Where to Sell:
One of the largest determining factors of how much you’re able to recover from the resale of a diamond ring, is where you sell it. Here are a handful of possibilities. We’ll talk about the merits of each below.
- Pawn shop
- Local classified sites & offline bulletin boards
Jewelers could be a good place to resell a lab-cultured diamond ring, except for a couple of common issues.
- Many are still resistant to lab cultured diamonds (they don’t want them to cannibalize mined diamond sales).
- They have the ability to buy from their suppliers at great prices, with favorable payment terms. That makes them less likely to want to part with cash upfront to buy your diamond.
In order to sell to a jeweler, you would likely have to provide an especially deep discount, to provide motivation for them to part with cash upfront. For that reason, jewelers probably won’t lead to your highest possible sale price.
Pawn shops get their inventory when collateralized loans aren’t repaid, or when they buy valuable items at low prices from desperate people. They can’t pay top dollar for used items and still make a profit. Their customers shop them because they hope to find items at big discounts. In order to supply those, they need to acquire items at REALLY big discounts—allowing for both an attractive retail price tag and a healthy profit margin.
Pawn Shops should be avoided if you’re trying to maximize your selling price (minimize your loss) when reselling.
The really great thing about eBay, is that you can get your lab diamond in front of a lot of prospective buyers very quickly. In general, bigger audiences can lead to a faster sale and more money. The downside to eBay, is that the fees to sell and collect funds from the transaction come to about 13% in total. In addition, buyers are still going to be looking for a bargain in most cases, meaning that you’ll need to give them a compelling discount from the retail value of the ring. You also have to arrange for shipping. Since rings are small and light, your main cost will be the cost of adequate package insurance.
Another potential challenge with eBay is gaining buyer trust. There’s a lot of fraud, misleading, and misrepresentation that happens on the site. Ebay does their best to control it, but it’s still prevalent. People may sell a ‘Man Made Diamond’ that’s actually a Cubic Zirconia or a piece of glass for example. Buyers rely heavily on seller feedback ratings from past transactions to quickly determine if they can trust the seller and the accuracy of their product descriptions.
If you’ve done very little buying and selling on eBay in the past, the total quantity of your reviews will be very low. If you have 0-25 reviews, potential buyers will look at your listing with extra skepticism. Dishonest sellers can game the system to get a small pool of reviews as a buyer. That feedback builds trust that they use to rip off a buyer. Buyers stand a much better chance of getting the item they think they’re buying when they buy from sellers that have hundreds or thousands of transactions with positive feedback.
If you don’t have a strong base of positive reviews already built up, you could sell through a friend or family member who does, or use an eBay consignment company that sells on eBay. Just be aware, that the consignment company has significant fees too. Their fees combined with eBay’s fees would be a deal killer. You wouldn’t walk away with much compared to alternative avenues for selling.
Craigslist connects you with local buyers that are looking to save money by buying used. It’s an easy way to let your community, and surrounding areas, know that you have a diamond ring for sale. While you’re still going to have to sell at a discount, the good news is that Craigslist doesn’t charge any fees for connecting parties for the transaction.
You need to exercise some caution when using sites like Craigslist. Scammers prey upon unaware sellers constantly. There are a few common tricks that they play to entice you to part with your item and/or your money. These scams almost always start with some story about how they’re temporarily out of town and need you to ship the item to them, or hand it off to someone that stops by on their behalf. Only sell in person, and only take cash. If you follow those two rules, without exception, it will be hard for scammers to take advantage of you. If you feel unsafe meeting people at your home for the exchange, ask them to meet inside a Barnes and Noble, or some other public place where you feel safer and more comfortable.
Local classified sites & offline bulletin boards
This last category is very similar to Craigslist, because you’re promoting to a very local audience. Offline bulletin boards is a low tech approach. You’ve probably seen bulletin board at the front of libraries, grocery stores, and a number of other facilities. All you need to do is design a flyer and post it. That’s typically free. It may amount to nothing, but it could also catch the attention of someone that might be very interested in your ring. Here again, you have no real costs for seeking a buyer this way, so it’s certainly worth trying as one approach among several.
Finally, there are local classified sites in almost every community. In my community, there’s a classifieds site that’s run by a local news station. It’s heavily used in my area. In fact, Craigslist is rarely used (by comparison) where I live because this other site is easier to navigate and more trusted. Don’t overlook sites like that where you are. You may need to ask around to find out what’s available if you aren’t already familiar.
Of all the selling methods outlined above, the approach that’s going to yield the highest net cash, is likely to be a person-to-person, local, sale through Craigslist, word of mouth, a bulletin board, or a local classifieds site.
The place that you choose to sell isn’t the only element that matters. It’s also the quality of your listing.
- What’s the tone of your ad?
- How clear and complete is your information?
- How many images did you include?
- How is the lighting?
Spending time to get great images and perfect your description, can really pay off. Your lab grown diamond ring can sell much faster, and for more money when you present it well.
- Color/Quality Factors
The 4 main drivers of value for diamonds are often referred to as the 4 C’s (color, cut, clarity, & carat-weight). The better your ring does in each area, the more value it has when you go to resell. Here’s a high-level overview of what you should be aware of in each of those key areas:
Diamonds at the extremes of color are most valuable; completely colorless or vivid coloring. Of the two, diamonds with vivid coloring are often most valuable, though not all colors are equally valuable. Some colors are much more rare in nature, and even much harder to create in a lab.
Pink diamonds are an example of a color that’s in great demand and much more expensive than colorless diamonds that are similar in all other ways.
Color is an area where you can sometimes make a strategic tradeoff to get more of what’s more important to you. By accepting a diamond that’s slightly yellowed, for example, you can afford to get a larger diamond.
Cut is a critically important factor, because it influences the positioning of inclusions and the overall way that a diamond gathers, and uses, light to create sparkle. A high-quality cut has exceptional symmetry. It has facets that are perfectly sized and positioned to maximize the collection, refraction, and reflection of light.
Clarity primarily has to do with the presence and positioning of inclusions in the diamond. Some inclusions are visible and obvious without magnification. Others are considered ‘Eye Clean’ because inclusions can’t be seen without searching for them under magnification. Clarity is also important to the brilliance of a diamond, because a diamond with major inclusions, or inclusions in the wrong places, can block a great deal of light from entering the ring. Without proper light flow, the ring won’t sparkle much—it ends up looking dull and lifeless.
- Whether you have a lab certification/grading for the diamond
Certification reports from respected grading laboratories like GIA and IGI provide a great deal of information and confidence regarding the condition and characteristics(the color and quality factors mentioned above) of a particular diamond. It essentially substantiates that the diamond is the value that you claim it to be. Grading reports often come with new rings, so you may already have one. If not, and you decide to order a new report, it’s typically going to run $75 to $100. Just be aware, that you’ll probably need to have the diamond removed from your ring before sending it in.
How You Can Minimize Your Risk of Loss BEFORE You Buy
- Buy used. If you buy a used diamond ring, someone else has had to absorb the initial loss of value. If you purchase a $3,000 ring for $1,500, for example, and you need to resell in the future, chances are that you can sell for $1,500 (or close to that price). Even if you had to drop the price to $1,200, you would only realize a $300 loss, while the original owner last $1,500.
- Buy a new ring at bargain prices. The closer you can get to wholesale prices, the less you stand to lose if you have to resell in the future. Some liquidators buy inventory from companies that have too much on hand or go bankrupt. They can sometimes provide attractive rings at real discounts.
- Buy a very low-cost lab-grown diamond ring. The lower the cost, the lower the less you have to lose. Here’s a beautiful three-stone lab-grown diamond ring, for example. It’s IGI certified, and comes in at less than $300— perfect for those on a tight budget!
- Buy a simulant ring first. Instead of proposing with a more costly diamond ring, go buy a beautiful diamond simulant to propose with. You’ll be able to get a gorgeous ring for less than $100 pretty easily. Once you get the ‘Yes’ you’re hoping for, go shopping together to buy that forever ring. This approach has two HUGE benefits. It eliminates most of the risk of having to resell. It also allows your Finance to pick the ring that she likes best. If she’s going to wear it for the rest of her life, you want her to love it!
Cubic Zirconia (CZ) is the most widely used diamond simulant. Moissanite is a more durable simulant that’s also a bit more expensive. A fancy colored version of either of those options, or Morganite, could be considered if you want a center stone with some color.
If you use the suggestions that we’ve covered in this post, you’ll be able to eliminate the need to resell your lab created diamond engagement ring. If you ultimately do find yourself in an unforeseen position where you do need to resell, however, you’ll be able to recoup as much of your original purchase price as possible.
1. Will Lab Made Diamonds Pass a Diamond Tester?
Results from lower-end diamond testing devices aren’t always conclusive. In order to know for sure, you’ll typically need a very expensive machine that GIA created specifically for this purpose. The chances of a man-made diamond getting past those specialized machines undetected are incredibly low.
2. What do Lab Diamonds cost in comparison to Real Diamonds?
Lab diamonds are just as ‘real’ as earth-grown diamonds, however, their prices do differ substantially. A quality one-carat earth grown diamond that’s colorless (or nearly colorless), with good cut and clarity, would cost roughly $5,000. A very matching lab created diamond would like cost about $2,800.
3. How Long will Lab Created Diamond Rings Last?
Lab created diamonds are actual diamonds. In reality, they’re just a hard as the earth mined version. As the saying goes, ‘Diamonds are Forever.’ Because of their incredible scratch resistance, lab created diamonds can last through generations and still look as beautiful as the day you first put it on.