While there are ways to sell your gold jewellery and watches in Singapore, you may not be able to let them go at the correct price.
It’s often said that watches and gold jewellery are an investment, as you can sell them when needed. That’s certainly true, but what this saying ignores are transaction costs.
Unlike shares or bonds, for example, you cannot easily resell these assets at the correct price. Here are the things to watch for if you want to sell your gold jewellery or luxury watches in Singapore:
Jewellery and Watches Lack a Single Exchange
The biggest issue with watches and jewellery is that they lack a single exchange. When it comes to oil prices or bond prices, for example, it is quite easy to check the rate through an exchange. It’s rare to find truly big discrepancies between the price of one seller’s gold and another.
However, jewellery* and watches are a different animal. These are often sold privately, or via small auction circles. Price comparison is much more difficult, especially if you are not a seasoned trader of such items. For this reason, one buyer may fork out a much higher (or lower) price than another.
So bear in mind, when trying to sell your jewellery and watches, that comparison is necessary. The more time you have to look for alternative buyers, the better the odds of finding a good price.
That said, here are some of the costs you have to note:
The True Cost of Online Transactions
There is usually no direct transaction cost from selling online, such as on eBay. However, note that you have to be fantastically lucky – or have a rock solid reputation – to even stand a chance of selling expensive watches and jewellery online. Most people simply will not buy your S$30,000 pearl necklace on eBay or Carousell, as the risk involved is too high.
This risk works both ways: while there may be no obvious costs from an online sale, you are at the mercy of the website and the buyer. You might discover, for example, that the buyer purchased your jewellery using a stolen credit card number. Even if you don’t have to pay the money back, you may be involved in legal contortions afterward.
In the worst case scenario, the buyer may not pay the full amount and simply leave with the item. Remember that if you don’t collect full payment up front (again, difficult given the trust issues involved online), you stand the risk of giving an unintentional “discount” to a thief.
If you agree to mail someone your expensive watch and they don’t pay you, there may not be much that the police can do about it. The buyer may be using a fake identity, and is probably not even in Singapore.
So while online transactions seem to be free of transaction costs, they carry a massive amount of risk. Most of the time, they are best avoided for high priced items.
The True Cost of Store Consignments
A store consignment is one of the most popular ways to sell your jewellery or watches. In this arrangement, you bring the piece to any non-chain seller (e.g. a family owned jewellery store under your block, instead of Soo Kee or any other big brand).
The shop will keep your item on consignment, and add it to the display. The sales staff will then try to sell your jewellery or watch as they would any other product. In exchange, you will pay them a commission for the sale.
In most cases, commissions range between 10% to 15%. So if you sell a S$10,000 watch, and the store has a 15% commission, you’d get S$8,500 for the sale (S$1,500 goes to the store).
The main advantages to a store consignment are that:
- You are effectively getting free safe-keeping for the item
- There is a professional salesperson attempting to sell on your behalf
- Transactions take place between the buyer and the store, which means there is proper paperwork such as a receipt. There are fewer chances for legal or cheating issues by the buyer.
- People who walk into a jewellery or watch store are usually already looking to buy, so this could make the sale happen faster.
The drawback to store consignments, besides having to pay a commission, lies in the enthusiasm of the sales staff.
If the commission for your item is significantly lower than that of others, they may be disinclined to “push” your sale. If the salesperson would make S$5,000 more from selling another watch, why would she convince a buyer to pick yours?
The True Costs of Selling Through a Pawnshop
Pawn shops also flat out buy jewellery or watches. In general, you will lose between 10% to 20% of the purchase price for older pieces, but sometimes as much as 60% off the newer pieces (purchased in the past 10 years or less).
The reason is that many newer pieces are bought from chain jewellers, which were less common in the 1950s or 1960s. Chain jewellers have much higher markup, which adds to the cost of the items; you’re paying for the brand and marketing. As such, older pieces often sell closer to their actual value (and would have appreciated with inflation).
Pawn shops do give good value, but you have to be prepared to shop around. Different appraisers will put a different price tag on your item.
The True Costs of Selling Via Auctions
Auction houses are the preferred option for high-cost items, which you cannot normally sell through regular channels. An example would be a S$3 million necklace, which is obviously beyond the capacity of most people (and even shops) to buy. The main advantage of the auction house is that they have the right contacts – they know the people who can afford it.
That said, not all auctions deal in only high-cost items. But in any event, most auction houses charge both an administrative fee, and a cut of the item. For example, the price to auction your item may be S$150, plus a 15% cut of the final sale price.
Again, the advantage is that auctions attract many qualified buyers – most people who turn up for the auction are prepared to spend. This can mean a quick sale. However, the downside is that you may not fetch as high a price as you want (it depends on how the bidding goes).
Another downside is that you may be paying administrative costs even if your item does not sell – you will have to check the terms and conditions before signing.
Think About Illiquidity
When rushing off to invest in jewellery or watches, remember these costs: time, and the commissions you have to pay. Be aware that you can make a capital loss (sell the item for less than what you initially paid).
* Note that jewellery prices, while related to gold prices, are not necessarily on par with actual gold prices. This is because jewellery includes the cost of marketing and craftsmanship at the purchase point, and branding can affect resale value.
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By Ryan Ong
Ryan has been writing about finance for the last 10 years. He also has his fingers in a lot of other pies, having written for publications such as Men’s Health, Her World, Esquire, and Yahoo! Finance.