I'm a Gold Expert: 5 Ways People Lose Money Selling Jewelry
With gold prices near historic highs, many Americans are looking to turn unwanted jewelry into extra cash. But experts say choosing the wrong buyer can dramatically reduce your payout.
MoneyLion spoke with Barry Schneider, co-founder of Cash for Gold USA, about the hidden costs you can encounter when turning your precious clutter into cash. Here, he shares the costly mistakes to avoid when selling gold jewelry.
Look Out: I'm a Mechanic: These High-Maintenance Japanese Cars Will Crash Your Wallet
Be Innovative: 9 Low-Effort Ways To Make Passive Income (You Can Start This Week)
1. Selling to a Pawn Shop Without Comparing Offers
People are looking for the fastest, quickest option with anything. But with that convenience comes a price.
Oftentimes people go into a pawn store, for example. At a pawn store, they're really lenders first, so they're looking to make a profit on your items so that they can resell them down the road. They're taking a position on it to sit in their store and then they have to find someone to buy it. They have tremendous overhead as well, being a retail store, so all of that is coming out of your profit.
They also encourage quick decision-making when you go in there. They don't offer you time to compare prices or take your items somewhere else. They really are true salesmen and they're trying to close the transaction as fast as possible.
2. Selling Gold on Facebook Marketplace
Then people are looking to Facebook Marketplace. You have to worry about fraud, scams and chargebacks, and meeting random people with high-value items. I don't recommend that.
3. Selling at Pop-Up Gold Buying Events
Pop-up gold events really rely on encouraging quick decision-making. They're not allowing the consumer to take their time and sell at will.
4. Paying Taxes or Reporting Fees You Didn't Expect
It's always important to understand what the buyer requirements are. When you are selling through a lot of these online marketplaces, that may trigger taxes [via] 1099s. When you go to a pawn shop, there are rules around selling precious metals.
With [other buyers, like] Cash for Gold USA, there are no tax implications or tax requirements. We treat it as a private sale and because jewelry is sold at a loss from what you purchased it for, there aren't capital gains, so you can omit any of those tax requirements.
5. Losing Money to Marketplace Fees
There are all these other platforms that are pretty well recognized, like Poshmark. You just have to be aware of the fees that are associated with selling — they take 20% off the top. When you transact with PayPal, it's 3.5%; eBay is 13%.
So there are a lot of hidden fees a lot of consumers aren't aware of when they're selling their jewelry.
This article was provided by MoneyLion.com for informational purposes only and should not be construed as financial, legal or tax advice.
More From MoneyLion: