Diamond Buying Guide
While technically this isn’t an article about investing, I can tell you that the next best way to earn wealth after specialized investing is learning to save money on big-ticket items. Before I got engaged, I was determined to learn everything I could about the diamond buying process, in order to get the best deal and save the most money. Considering the diamond I ended up buying was $15,000, I likely saved about $5,000 just having this information in my head while I was shopping around.
And here’s my first and most important tip: If you’re going to buy a diamond and want the best deal, buy online! For the same amount of money you might spend in a local jewelry or warehouse store, you can typically buy a much larger, higher quality diamond online.
Before we get into the steps you can take to safeguard your online diamond purchase, you should understand how and why the Internet is revolutionizing the diamond selling business – to the benefit of the consumer:
- The Internet provides a wealth of information to help buyers figure out where the bargains (and the rip-offs!) are. Because consumers are so much better informed, diamond brokers find it more difficult to sell low-quality diamonds at high prices;
- The Internet provides real-time information on diamond supply and demand. This means customers can easily find out the current price ranges for various sizes, styles, and grades of diamonds, allowing them to make smarter purchasing decisions;
- The Internet provides a “frictionless” mechanism for selling goods; in other words, the costs and overhead of selling online is greatly reduced or even eliminated. Many online brokers don’t have physical store space to have to lease or purchase, so the savings is passed on to the customers;
- The Internet allows brokers to sell to customers around the world. Someone looking to buy a diamond no longer has only a couple local stores to purchase from, he now has literally thousands of potential online shops who can sell him the same merchandise. All this competition has led to greatly reduced markups on behalf of the sellers.
You’re probably thinking, “Isn’t it crazy to consider buying something as expensive as a diamond online? Isn’t there a good chance I’ll get ripped off?”
Of course, there will always be shady dealers who are looking to rip you off and take your hard-earned money in exchange for a cheap piece of glass; but if you follow a few simple steps, you can almost eliminate any chance of getting defrauded when buying diamonds online. You can also ensure that you find a great stone at the lowest price.
Below are five steps to ensuring that your online diamond purchase is both secure and rewarding:
The most important part of being a smart consumer is to research the product you plan to buy so that you know a good deal when you see one. While the value of a diamond is always going to be somewhat subjective, there are some very strict guidelines used to determine the quality and price range of a specific stone.>
You may have heard about the 4 Cs (Carat, Cut, Color, Clarity) that indicate the major characteristics of a particular stone. “Carat” indicates the weight of the stone; “Cut” indicates the shape of the stone and quality of its cut; “Color” indicates how much color or tint the stone has (the highest valued “white” stones are actually colorless); and “Clarity” indicates the extent of blemishes on or internal markings within the stone.
While these are the four most common characteristics discussed when talking diamonds, there are actually quite a number of other more-specific characteristics that are used to determine the value and price of any given stone. For example, the diamond proportions (diameter, depth, symmetry, etc) are often what determine how “sparkly” a diamond is, so understanding the ideal proportions of a diamond cut are tremendously important.
Learn as much as you can about diamond specifications; when buying online, you can generally find (and even search on) all the specifications that make up the value and price of the diamond. Understanding all that information can lead to a more confident selection and purchasing decision later.
Some online resources you might want to check out:
- Wikipedia entries for Cut, Color, Clarity, and Carat
- The Diamond Buying Guide
- Pricescope.com Diamond Tutorial
- Bluenile.com Diamond Education
While the pricing of diamonds is always going to be somewhat subjective, there is a common pricing report published once a month (and updated weekly) that serves as a guide to diamond pricing. The report – called the Rapaport Price List (or “Rap Sheet” for short) – is the standard pricing guide used by sellers in the diamond industry.
The Rap Sheet defines the price per carat for various cuts, carats, color and clarity of diamonds. While the Rap Sheet serves as a good guide to diamond prices, remember that there are more diamond characteristics than just the 4 Cs, so a diamond that comes in cheaper than the Rap price isn’t necessarily a good deal. Likewise, diamonds over Rap price may still be a bargain if they rank high in terms of other characteristics.
So, now you’re probably wondering where you can get a copy of the Rap Sheet. Unfortunately, the price list is copyrighted and you won’t find them floating around the web just waiting for you to download. That said, if you can make friends with a diamond insider (dealer, retailer, appraiser, etc), you can probably get them to give you a peek at their latest Rap Sheet. And option is to look around at the prices of some reputable online dealers, which will give you an accurate price range for the type of diamond you’re looking for.
Not all online diamond sellers are created equal. Just like with every other business, there will be reputable seller, fraudulent sellers, and everything in-between. So, how do you find a reputable online seller?
Well, let’s start with some common sense. While there are probably plenty of eBay sellers out there who are perfectly reputable and have some great deals, I wouldn’t start my diamond search on eBay (though I should note that I once purchased a 3 carat stone on eBay that was everything the seller promised, so it can be done).
When it comes to online diamond buying, our best advice is to stick with the well-known sites who have years of positive feedback and satisfied customers. While there are plenty of other reputable sites out there, two of my favorites are Pricescope and Blue Nile (note: ThreeTypes.com has no affiliation to either of these sites).
Pricescope.com sells diamonds from dealers around the country who list on their site. The site provides customer reviews so you can read feedback about the site’s various sellers; it also provides a user forums where you can discuss every aspect of diamonds to your heart’s content. Bluenile.com sells diamonds from their own inventory, and has excellent online education and tutorials for diamond buyers. They have built a strong reputation over the years, and are well-respected in the diamond industry. Both Pricescope.com and Bluenile.com have clear and well-defined return policies if you’re not happy with your diamond.
Again, there are other very highly respectable diamond dealers online, and our best suggestion when looking online is to research those dealers who have been around the longest, who have positive feedback from other customers, and who have clearly defined return policies.
The scariest part about buying online for most people is the fact that you have no idea what you’re going to get in the mail. This is why many online dealers will now agree to ship your diamond to a third-party certified diamond appraiser in your area, who – for a small fee – will receive the diamond, perform a basic evaluation to ensure it’s what the dealer has represented, and will show it to you…all before you pay for the stone.
In most cases, the dealer will agree to hold off charging you for the diamond until you have had a chance to look at it and get the appraisers basic report. Once you have had a chance to look at the diamond and agree it’s the one for you, all you have to do is contact the seller, provide payment, and the seller will authorize the appraiser to release the diamond to you.
If you take a look at the diamond and it’s not what the dealer represented, or if it’s just not the right stone for you, the appraiser will ship the diamond back to the seller. While you might have to pay return shipping charges, you will at least have the peace of mind not to have to worry about losing thousands of dollars to a fraudulent seller.
While not all online diamond dealers will agree to send a diamond to an appraiser before payment is made, many will. We highly recommend asking the dealer you work with if he/she will do this, and perhaps even suggest that if they don’t, they won’t get your business. Reputable sellers generally will understand your concern and will do what it takes to make you comfortable in your purchase.
Most importantly, make sure that the stone you buy is the right stone for you. Ensure that the online seller you purchase from has an unconditional return policy – the return policy should be at least 15 days to give you enough time to get it looked at by an appraiser – and if you don’t absolutely love the stone, return it. A diamond is forever, and forever is a long time to have to stare at a ring you don’t absolutely love.
Any article focused on making a major diamond purchase wouldn’t be complete without one final reminder: even if you follow all the steps in this article, if an offer seems too good to be true, it probably is.