Personal-Finance

Can you get a good deal for pawning or selling your jewellery?

2017-09-18 17:37

Jennifer Smit* says she was fleeced when she sold her platinum 0.75 carat Tiffany diamond engagement ring after her divorce to a jeweller in Cape Town. It cost her fiancé £9 000 (now R151 894), but she accepted an offer of R32 000.

“I got hugely ripped off. The ring was stunning, but [after the divorce] I just wanted to get rid of it,” she says.

Pete Coulbanis, the store manager of a jeweller in Cape Town’s southern suburbs, says many clients get upset when they are offered a price that is lower than they expected.

“It’s difficult as we get that with many of the people who come to us. But I am happy to explain to people how we arrive at a price. But often people are shocked. They leave and don’t want to know how you arrived at it.”

Selling jewellery can be a complicated business, so it’s important to know how much your item is worth and explore how it can be sold before making a decision. While it’s unlikely that you will get more than the retail price for your jewellery, there are factors that can work for and against you.

HOW TO SELL YOUR JEWELLERY

It’s important to get it valued for its estate value. Typically, the store from which you bought the item should regularly send you a valuation certificate for insurance purposes. If they don’t, you can ask for it or get one from most reputable jewellery stores.

Valuations should help you establish a fair price. However, Coulbanis warns that you won’t get the retail price for it. Included in the retail price is the jeweller’s time, craftsmanship and reputation. With Tiffany’s, for example, you’re also paying for the name.

“I can’t pay for his profit, mark-up and his labour. I could only pay for the value of the raw material,” Coulbanis says.

Wedding rings are usually made of gold, platinum, silver, titanium or tungsten, each of which has its own value. When it comes to pawn or jewellery stores, they are mostly interested in gold and platinum jewellery. Check the purity of the gold or platinum ring before you sell it.

You can establish the value by checking the stamp on the jewellery. Silver, titanium and tungsten are less sought-after and fetch a lower price than gold or platinum.

“We look at the diamond and gold. Of course, we also look at the carat, cut, colour, clarity and diamond weight, and we look at desirability for it as well,” adds Coulbanis.

SELLING TO A JEWELLER

If you are strapped for cash and want to sell your piece quickly, selling to a jeweller who is happy to take on second-hand jewellery may be your best bet – but you won’t necessarily get the best deal.

“If you want to sell it quickly, we are willing to offer you money based on the current market value of gold and diamonds. We look at what we would pay the factory for gold, and De Beers has a pricing matrix that the industry deals with,” says Coulbanis.

You may be in luck if your piece is rare or an antique. Jewellers may be willing to pay more for something if it is sought-after. But Coulbanis stresses that you’d be lucky to get half the full retail price.

He encourages sellers to shop around for the best price.

“Our quotes would stand for quite a while, but would be governed by the rand-dollar exchange rate.”

SELLING PRIVATELY

It’s possible to sell rings privately on websites such as Gumtree.co.za and OLX.co.za, and there are plenty of people who do just that. At the time of writing, there were more than 1 000 adverts placed by people trying to sell rings through Gumtree.

A number of the ads I viewed showed evaluation certificates, but sellers were willing to accept much less than the evaluation amount.

AUCTIONS

You may get closer to the retail price if you sell your jewellery at an auction. If you don’t want to sell your item for less than a certain amount, you can put it on reserve, which means you can enter into an agreement with the auction house that they will not accept less than what you want.

The auction house does, however, take a cut for selling the item. Strauss & Co, for instance, charges the buyer a premium on the final bid price.

This is calculated at 12% for lots selling for more than R10 000 and 15% for lots selling for less than R10 000. You also pay VAT on the premium at the applicable rate, according to Strauss & Co’s website.

PAWNING OR ASSET-BACKED FINANCE

If you need the money but don’t want to get rid of the item, you can consider asset-backed finance or pawning your jewellery. In other words, you can find a lender who is willing to give you cash and will hold the jewellery as collateral. Regular pawnshops and some small, private institutions typically offer this service.

Charles Meyerowitz, the co-founder of Lamna, a speciality finance company that focuses on short-term asset-backed transactions for high-net-worth individuals, says: “The benefit is that there is no potential legal suit against the borrower if he cannot pay back the debt. The asset stands as full security.”

However, there is a darker side to this industry, and not all companies and pawnshops act in good faith. If you feel intimidated, pressured or uneasy, it’s best to walk away.

Remember, it’s also more expensive than borrowing money through traditional means. When you pawn something, you don’t have access to or use of the item you put down as collateral, and you could lose your jewellery if you don’t pay back the money.

“You can get a good deal, provided you deal with the correct people. You need to be wary of who you are dealing with, and you need to deal with people who have integrity, honesty and abide by the laws,” adds Meyerowitz.

* Not her real name

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October 15 2017