Buying an engagement ring? 7 tips
Diamond prices are falling, but that doesn't automatically mean better deals. Here's what to look for.
This post comes from Kelli B. Grant at partner site SmartMoney.
The wholesale price of a 1-carat diamond fell nearly 4% during the first half of the year, and is 14% lower than last June, according to diamond-trading network The Rapaport Group.
This plunge stems largely from economic woes in India, which along with China and other countries in Southeast Asia, saw demand for diamonds grow in recent years, says Martin Rapaport, chairman of The Rapaport Group. "Even the domestic market, which was very strong, got whacked as a result," he says.
But the drop won't necessarily translate to more favorable prices at retail, says Scott Gordon, an Oklahoma City-based jeweler gemologist and member of the American Society of Appraisers. The best stones are still being bought up quickly, so there's little incentive to discount, says Antoinette Matlins, the author of "Engagement and Wedding Rings: The Definitive Buying Guide."
In fact, consumers in the market for an engagement ring or other standout piece may actually have to work harder to find good deals this summer. Some bargain stones may be advertised at a discount for reasons other than a favorable market. "There are diamonds that are, simply, dogs," Matlins says. "An economic downturn is a fabulous time to unload diamond inventory that in good times is hard to sell."
Shoppers should be careful to make any purchase contingent on an independent appraisal, and to ask questions about a stone's quality, she says.
Here's how to find the real diamonds in the rough:
Compromise on some C's
The four C's -- cut, color, clarity and carat -- each affect the price of a diamond. (For full details of the various grading scales, peruse the GIA's guide.) Many experts say that cut is the most important of the four. "The cut is what brings out the fire and the brilliance," says Russell Shor, a senior industry analyst for the GIA, the nonprofit that developed the grading system. A great cut affords flexibility on some of the other C's, masking less-desirable clarity and color.
Even stones graded SI1 -- seven levels below flawless -- can seem perfect to the naked eye if the diamond is well cut, he says. The average price for a round gem of 0.9 to 0.99 carats with E color is $12,992 if it's flawless, according to pricing site PriceScope.com, while an otherwise similar SI1 stone is $4,661.
The ring's setting can also conceal certain imperfections, says Rapaport. "The yellow color of the gold makes the diamond look whiter," he says. "It's all about the contrast." Instead of the highest-grade D, which are colorless, shoppers might be able to go as low as an M, N or O. For a 0.9- to 0.99-carat round stone with VS1 clarity, that drops the average price from $8,100 to as low as $1,876. Even shoppers who pick a white metal may find that they can go as low as a K-color grade without the stone seeming overly dingy. (Post continues below.)
Buy light sizes
Prices tend to jump at the quarter-, half- and full-carat marks, Gordon says. Consumers who buy a little shy of the mark -- say, a 0.96-carat stone instead of a 1.0-carat one -- can avoid that premium. "If you weren't married to saying it's a carat and meaning it, then you could shop that way and pay a significantly smaller price," he says.
But again, experts say there are fewer such stones on the market. In that case, shoppers would be better off buying even a 1.01-carat stone than an exactly 1-carat one, Matlins says. "If the diamond nicks or needs repolishing, it can lose carat weight," she says, "and then you've just lost a significant portion of what it's worth."
Pick a fancy shape
Round diamonds are the most popular pick for engagement rings, and so tend to carry premium pricing, Matlins says. Shoppers can save significantly by looking to less popular shapes, notably ovals, hearts and marquise. In jewelry retailer BlueNile.com's current inventory, for example, a 1.03-carat diamond with very good cut, I color and VS1 clarity has a starting price of $6,339 in a round shape.
A marquise gem with the same attributes costs $3,957, and an oval one is $3,662. Fancy shapes also tend to look bigger than round diamonds of similar weight, because there's more surface area, Shor says.
But keep in mind that round is the go-to for a reason: Other shapes have their own pitfalls. "As popular as they are, princess-cut diamonds look smaller for their weight than a round diamond," Matlins says. Ovals may have a sparkle-free "dead shape" at their center, especially if they were cut too thin at the edges, and any diamond shape with corners adds to the risk of chips and other damage. Plus, shoppers may not have quite as large a selection to peruse as they would with round diamonds, Gordon says. "Cutters go where the money is," he says.
Assess other qualities
Beyond the four C's, grading reports often consider qualities like fluorescence, which can make a diamond look milky or glow blue under certain lights, Gordon says. A strongly fluorescent stone might lower the price by as much as 10%, he says, but the trait isn't necessarily one that would bother a consumer.
Some stones are lasered to remove imperfections, an enhancement that a grading report should note, Matlins adds. Those stones should be at least 30% cheaper because of that alteration, she says. But be cautious of other enhancements like fillings, they warn, which could affect the stone's quality long term. And even lasering can be overdone, Shor says. "It shouldn't look like it's been shot through with holes," he says.
Skip brand names
Brand-name stones like Tiffany & Co.'s "Lucida" or "Leo" from diamond polishing firm Leo Schachter use trademarked cuts to maximize a stone's fire and brilliance. "It's like Gucci or Cartier or Porsche -- the name sells the item," says Gordon. They may charge a price premium of 10% for the marketing and the experience. But although the stones are often high-quality, the added price doesn't necessarily translate to added quality, Rapaport says.
Consider estate jewelry
Baby boomers' rush to clear out their possessions extends to jewelry, too, experts say. There are plenty of good-quality older diamonds on the market, which may be more attractively priced -- especially if the setting is less trendy or the diamond is an older cut like the "old mine," a precursor to the brilliant round cut, Rapaport says. "There could be some really good deals there," he says.
But Gordon warns that there can also be dangers in the estate market for less-informed consumers, since rings may not come with a diamond grading report. Make sure the sale is contingent on having the ring value and qualities confirmed by an independent appraiser.
Employ negotiation skills
Summer tends to be a slow time for jewelers, which can give consumers more wiggle room to negotiate on price, Gordon says. Some offer discounts for buying wedding bands as well as the engagement ring, or for buying the stone and setting together. A few purveyors also discount for paying cash, often equivalent to the roughly 3% fee that credit card issuers charge for processing transactions.
More on SmartMoney and MSN Money:
Copyright © 2014 Microsoft. All rights reserved.
Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.
ABOUT SMART SPENDING
LATEST BLOG POSTS
If you're one of the millions of sleep-deprived Americans, here's how to find cheap sleep without pills.
VIDEO ON MSN MONEY
BLOGS WE LIKE
MUST-SEE ON MSN
- Video: Easy DIY smoked meats at home
A charcuterie master shares his process for cold-smoking meat at home.
- Jetpacks about to go mainstream
- Weird things covered by home insurance
- Bing: 70 percent of adults report 'digital eye strain'