What does an appraisal mean?

[Monty Hall]

In my limited experience, the actual price for which a piece of jewelry is sold always seems substantially less than its appraised value.

Why is this? Are appraisals always inflated--like the sticker price on new cars?

If you paid the appraised value for a piece of jewelry, will this have meant you'd been fleeced?

CarolK

[Heidi]

I'm interested to hear what others say.

My take on appraisals is this: If there was, god forbid, a theft, fire, whatever and I had to replace the piece in question right this second, the appraised value is enough to help me do that in the non-specialized (i.e. full retail markup) marketplace. So it's not about getting fleeced as much as getting a good deal.

Then there are those elements which cannot be replaced. Original design work and setting, limited editions, materials which are no longer available, etc..

[jerin]

Hi Carol,

an appraisal is often demanded by the buyer for an item with a high cost as in the case of natural pearls or other gem stones to make sure they are not cultivated, treated or enhanced in other ways (this is mostly the case with gem stones). And of course to make sure one doesn´t get a fake. As for appraised value - this is only for insurance companies so you can get a piece in approx. the same value as the appraisal has stated. If you are naive enough to pay the appraised value in a B & M store, you indeed are being ripped off in my opinion.

[Slraep]

Are appraisals always inflated--like the sticker price on new cars?

If you paid the appraised value for a piece of jewelry, will this have meant you've been fleeced?

CarolK

Appraisals reflect the inflated prices and subsequent fleecing you would have to endure if you were to quickly and easily replace your lost baubble/s at a fancy B & M store. This is not necessarily MY OWN understanding of appraisals, just what a lot of appraisers have told me. It makes sense though, eh?

Slraep

[Nathan Reed]

Here is my opinion, for what it's worth.

Most B & M stores sell at the appraisal price, but the pearls are actually worth less. Why the discrepancy? B & M stores have to rent a location, hire lavish decorators and pay a staff to wait around hoping someone will buy. All of this works up the price. However most online sellers and people who by direct from the producer, avoid that expense and sell for the real value of the pearls.

[Valeria101]

2c...

One possible approach: Take appraised value, discount according to authorship (i.e. appraisal only as good as the appraiser), divide by 3 and you've got somewhere Why? Because many of those papers are written with the assumption that you will do just that (a polite formulation: it is a 'moral' gesture to overvalue 'cause this serves the appraiser's client's interests in the long run... which sounds sort of right for the appraisal issue stance, but uncomfortable for the larger readership of these documents, so to speak...).

One common caveat trespassed: appraisal and identification are not just two different things, but two things that must stay different ... (don't take my word for it, just consider that none of the major gemological laboratories places any valuation on their reports). Preposterous as this confusion might sound, it is often questioned and ...

There's quite a bit about appraisal practice and value on the gemology forum, most posts by professional jewelry appraisers. Illuminating read, methinks.

[Slraep]

If you paid the appraised value for a piece of jewelry, will this have meant you've been fleeced?

CarolK

I forgot about the above question.

Yes and no. To be more exact---for the most part yes. But, there are so many factors involved in buying and selling gems and jewellery that is is sometimes on par with the mystery of how karma works. I can only tell you about my own anti-fleecing observations:

1. If you absolutely love the thing to death, even though it is gawd-awful to everyone else, and it sports an eye popping, yet still affordable price, you have not been fleeced.

2. If the bauble in question is just some blah generic thingy, with good workmanship, that you are, for some odd reason, forced to wear every day for the next 10-20 years, you've still not been fleeced, even though it makes you raise an eyebrow or two at the price.

3. If it's a trendy, throw-away-after-not-even-one-season type thing, you for sure have been fleeced even if the thing only cost $2.99. You are also not helping the environment recover enough so that your grandkids can have somewhere nice to thrive in the future. For shame.

4. If some sales dude/ette tells you to buy the thing because it is without question an excellent investment at the current price, and you take their word for it without doing your own homework and using your own common sense, you've been fleeced, even if the thing was originally $9570 and is now an unbelievable $29.99 This also applies to what some wholesale gem dealer's discounts amount to.

5. If you have commissioned a unique piece of Haute Joaillerie from a luxury B$M store or a master metalsmithing artisan, you have been undoubtedly 100% fleeced, BUT you secretly know it, AND can afford it. In fact, if you really study the matter, the poor artisan that has been pounding, soldering and setting your one-of-a-kind platinum masterpiece for months now, actually deserves to be overpaid for putting up with your silly pseudo-aristocratic brand name taste and total lack of thriftiness.

6. Does someone else what to do no. 6??

Slraep

[Heidi]

I forgot about the above question.

Yes and no. To be more exact---for the most part yes. But, there are so many factors involved in buying and selling gems and jewellery that is is sometimes on par with the mystery of how karma works. I can only tell you about my own anti-fleecing observations:

1. If you absolutely love the thing to death, even though it is gawd-awful to everyone else, and it sports an eye popping, yet still affordable price, you have not been fleeced.

2. If the bauble in question is just some blah generic thingy, with good workmanship, that you are, for some odd reason, forced to wear every day for the next 10-20 years, you've still not been fleeced, even though it makes you raise an eyebrow or two at the price.

3. If it's a trendy, throw-away-after-not-even-one-season type thing, you for sure have been fleeced even if the thing only cost $2.99. You are also not helping the environment recover enough so that your grandkids can have somewhere nice to thrive in the future. For shame.

4. If some sales dude/ette tells you to buy the thing because it is without question an excellent investment at the current price, and you take their word for it without doing your own homework and using your own common sense, you've been fleeced, even if the thing was originally $9570 and is now an unbelievable $29.99 This also applies to what some wholesale gem dealer's discounts amount to.

5. If you have commissioned a unique piece of Haute Joaillerie from a luxury B$M store or a master metalsmithing artisan, you have been undoubtedly 100% fleeced, BUT you secretly know it, AND can afford it. In fact, if you really study the matter, the poor artisan that has been pounding, soldering and setting your one-of-a-kind platinum masterpiece for months now, actually deserves to be overpaid for putting up with your silly pseudo-aristocratic brand name taste and total lack of thriftiness.

6. Does someone else what to do no. 6??

Slraep

Awesome rundown!

Let's let 6 be for the inherited piece that appraises fairly well but which you really don't love or wear. Aim to sell for appx 1/3 of that price and you're good to go.

[eric-anandia-pearls]

CarolK,

I can't speak for how others do appraisals, but as someone who has done appraisals on pearl jewelry for our clients some time, I can chime in that the most common reason we see people requesting an appraisal is to specify the REPLACEMENT VALUE of the item for their insurance coverage. Replacement value is supposed to be a *reasonable estimate* of how much it would cost to purchase/rebuild a like item if (God forbid) it is lost, stolen, destroyed, whatever.

A legit and reliable appraiser determines this valuation based on looking at today's pearl/gold/diamond/ retail market prices, and/or any labor costs to rebuild an item if it's not an easily obtainable commodity. At the time of a loss, the insurance company does their own research to determine "reasonable" value in the market at the time of the loss.

The point to keep in mind is, an appraisal is supposed to be a protection for the purchaser: a statement of an item's reasonable replacement value at retail prepared by someone who understands its market value. It's not a receipt for how much you paid due to one-time discounts, sales, a "blue-light special", or its sentimental value. These are two different things.

Eric Rautman
@ Anandia Pearls
http://www.anandia.com

[Monty Hall]

Dang. This is great information. I love this forum!!!

Many thanks to everyone who has answered my clueless question!!!
CarolK

[J Marcus]

Folks--I gotta tell ya--the only respondee to CarolK's question that didn't irk or even exasperate me in some way was eric-anandia-pearls'. Perhaps many of you have either had, or known someone who has had, a bad experience with appraisals. However, I think it is only good sense to remember that anecdotal bad experiences do not define what appraisals are about. Drawing upon years of working closely with a number of good, knowledgeable and highly ethical appraisers, I make the following comments.

1) There really isn't such a thing as a generic appraisal. Every appraisal is made to serve a purpose--which, by the way, should be clearly stated on the appraisal.

2) The appraisal that most jewelry consumers are likely to encounter is: the Retail Replacement Appraisal. This is for insurance purposes and is an appraisal made to insure that the client can replace the item even if they don't have, or know how to obtain, access to the least expensive means of replacement. How this replacement is to be carried out is to be found somewhere in the wording of your individual policy.

3) The next most common type of appraisal for jewelry is the Fair Market Value Appraisal. This appraisal should show what one might expect to be paid for the item should they sell it on the "open market." Unless you have a very exceptional piece that makes it particularly desireable such as rarity, this price will always be lower, usually significantly lower, than the retail replacement value. (Think of used cars.) Also, it will not normally take into account expenses incurred in selling an item such as consignment fees, etc. This value is sometimes quite difficult to ascertain and, I believe, is most appropriately expressed as a range of price.

4) There are various other types of appraisals that serve other purposes. As an example, one might have a materials value appraisal done of the value or cost of the materials that a piece is made from. Another example would be an appraisal of an item that would include it's value as an antique.

5) It is the responsibility of an ethical appraiser to research the amount that the item(s) in question have actually been selling for, in the very recent past or currently. In the case of obscure or very rare items this may take quite a bit of research. Also, this may vary quite a bit by factors such as location. ie.: Natural pearl sale prices in Dubai vs. the U.S.

6) As economists are wont to say: Prices are set by the marketplace--a very messy process indeed. It is another way of saying that a thing is worth what one is willing to pay for it. We do not, as was attempted in some of the communist states, have a central authority that establishes what the price of things are. There are however, a number of statistical and other devices for determining many prices to a reasonable, though not exact, degree.

7) No ethical, legitimate, jewelry appraiser will appraise a piece of jewelry according to it's supposed value as an investment that is highly likely to increase in value over time.

8) To say that one has been fleeced--much less 100% fleeced!--if one orders and has a piece hand made by an artisan is, quite frankly, offensive for a number of reasons! First of all, I have found that for over 30 years, in a number of retail, custom-jewelry settings, I have very consistently been able to sell most of my hand made pieces at or below the prices that the chain stores charge for their mass produced jewelry. When one has a piece hand made, the piece is being crafted according to your personal specifications by a craftsperson, who, if they are good, has undergone years of study and training and practice, practice, practice to get to the point that they can faithfully create this piece for you just the way you want it. It's not just an "off the rack" casting. I can also tell you that when I work with a customer to make them a custom piece, on the average I spend some serious time, measured in hours, helping them settle on a design, choose materials, check with them along the way to insure that they are happy with the results. This is done in a place that is leased, decorated, staffed, serviced, etc. etc. in a way that it incurrs an inexorable overhead that must be amortized into the prices of things so that we won't have to just lock up the doors and take our little red wagon down the road. All of this is incurred, unavoidably, before I even put in the time to craft their piece. How much is your time worth? How anyone with even a few minutes of actual thought can call this a fleecing is beyond me and I find it rather insulting to boot.

9) Persons who buy from "high end" retailers that charge a premium for their goods are, almost always, buying prestige as well as a piece of jewelry. This is a matter of what is called "perceived value." If you think that such a purchase will confer prestige upon your person and you wish to acquire this intangible, then: You wanted this prestige. You paid for it. Where's the fleecing?

10) To have any value as a term of something undesireable, it would seem to me that "fleecing" must involve some level of deception. Often what one perceives as deception is only the fact of being disabused of ones' fallacious assumptions. Many people, I find, will often assume that something, such as an appraisal, is something other or more than it actually is. If one is not absolutely sure what something represents, then it is your right and responsibility to ask and your right to receive direct and factual explanations.

_________________________
Marc
http://www.flyrodjewelry.com/home.html

[Pearl Dreams]

Love Srlraep's tongue-in-cheek list!!

On a more serious note, when appraisals are provided by the seller (rather than by a third party appraiser) do insurance companies tend to disallow the appraised value on the assumption that sellers may have overstated the value?

I am specifically concerned with a gemstone ring I bought earlier this year; the only appraisal I have is from the seller. The replacement value stated on the appraisal is significantly higher than what I paid, but the seller was also the stone cutter. I bought the stone loose, and he then cast the ring and set the stone, thus eliminating some middle men and enabling me to get a better price than I might have otherwise.

I'm considering getting an independent appraisal before paying premiums based on the high value he stated. But if I didn't get an independent appraisal, would the insurance company honor the value on the appraisal, or challenge it?

[pearlescence]

ask them! that way you will know and they will have to stick to what they stay and not wriggle later (get their decision in writing)

[Pearl Dreams]

Hmmm...good point!

[pattye]

Marc,

Thanks for stepping up and giving some seriously thorough info on appraisals. The appraisals I receive when I purchase from Pearl Paradise or The Pearl Outlet are very different than the multi-page ones I receive from Sharon Wakefield, yet each has its purpose, and are prepared by one with appropriate credentials.