Diamond Appraisals – Worthless or Worth It
Diamond appraisals can be tricky business. First off, virtually anyone can call themselves an independent jewelry appraiser. There is no law requiring appraisers to be licensed in the same way that lawyers and physicians are licensed.
Grant it, there are associations, schools and institutes that jewelers can attend in order to become qualified to appraise diamonds but even then, an appraiser’s “say so” does not necessarily make it so.
I have been reading where some jewelry appraisers are secretly on the payroll of jewelers in exchange for undervaluing items from competitors (which could ultimately result in loss of sales).
Secondly, appraisals are not the same as diamond grading certificates or reports. I have seen undercover investigatory reports conducted in shopping mall jewelry stores, where clerks show a reporter their “certificates” which contain appraisal values of various stones.
A clerk would say something like; “We are selling you this engagement ring for $900 but you can see on this diamond certificate that the stone was appraised for $2200.”
What a deal right? Well, ding ding ding – red flag!
For one thing, reputable diamond reports such as those done by the GIA, AGS and GCAL don’t offer appraisal values but rather give their independent evaluations of the clarity, cut, carat and color of stones. The price of getting a report done might be on the report but not a figure stating how much a diamond is worth.
The next thing is – don’t get drawn into the hype of an engagement ring “blowout sale”. If a particular diamond appraisal is one that a jeweler can put stock in, you can bet your last dollar that the jeweler would be selling the stone for $2200 and not for $900.
Many jewelers can afford to give blowout sales because initially, they are selling engagement rings at 200-300% above wholesale prices. And if you inspect those cheap engagement rings, don’t be surprised to find that they are not cut nicely or have poor clarity.
And if you decide to buy that “cut price jewelry,” good luck returning it and getting your money back. You might be told that there are no refunds on sale items.
When buying an engagement ring online, go with highly reputable retailers such as James Allen or Amazon. They offer a wide array of quality pieces to fit any budget plus they iron clad 100% money-back guarantees should you not be pleased with your purchase.
Profile Of A Credentialed Jewelry Appraiser
Simply put, you want to take advice from people that are trained to appraise jewelry and have professional experience in the area. Go through this checklist to see if your potential appraiser fits the bill of a credentialed appraiser.
1. At the very least, have your diamond appraised by at Graduate Gemologist (“G.G”) or the comparable Fellow of the Gemological Institute of Great Britain (“F.G.A”). The ‘G.G ‘is the jewelry industry’s most prestigious credential.
Professionals with these qualifications were put through rigorous approaches to comparing, grading, identify, buying and selling stones.
However, bear in mind that neither “G.Gs” nor “F.G.As” were taught how to appraise stones. Ideally a jewelry appraiser should have top gemological credentials as well as additional training and certification from a reputable appraisal organization.
2. Does the person doing the valuation have references? Ask for references. A professional appraiser with experience should be able to give you references from places such as banks and trust companies.
3. Have your diamond appraisal conducted by an independent third party – not someone connected to a jewelry store. When appraisals are issued in-store, they are typically done for the purposes of getting customers to buy the merchandise of that particular store.
What you want is to have an engagement ring appraised by someone who does not give two hoots about whether you buy the ring or not. The typical store clerk who so eagerly gives you his/her “expert opinion’ is neither independent nor professionally qualified to give a valuation. Hence, take store clerk or in-store valuation with two “grains of salt.”
Some popular independent appraisers include the Accredited Gemologists Association, American Society of Appraisers and the National Society of Jewelry Appraisers.
Anatomy of a Diamond Appraisal
An engagement ring is something you’d want to treasure but if you or your significant other loses his/her ring, then you’d want to have some sort of fall back position – insurance.
Some people think that if you buy a ring for $2000 and insure it for $4000, then if the ring is lost, the insurance company will simply issue a check for the $4000. Well, we all wish it were that simply – don’t we?
An insurance company would want to look at your ring’s valuation to help them reach a payout figure. But If the valuation does not contain explicit accurate description of the ring, then be prepared for the likelihood of getting a payout that is much less than the sum insured.
Because when the insurer goes to a jeweler and says that you normally sell this ring for $2000, how much will you sell it to me for; if the jeweler says $1000 or $1200 then that is what you’ll get.
But if the valuation contains the pertinent information and is reputable, then you have a greater chance of getting an appropriate replacement in kind. Why “in kind?
Because insurance contracts often limit cash settlements. Furthermore, since insurance companies have volume buying power and purchase agreements with their suppliers, they can get appropriate replacements for substantially less than what consumers can get.
Since different kinds of jewelry insurance policies exist, I would advise that you chat with your agent or broker for more details on your options and the settlement practices.
At a minimum, a thorough jewelry appraisal will have the following:
A picture of the jewelry.
Style number, brand name of the diamond, shape, measurements, and weight.
The 4Cs of the stone – color, clarity, cut, and carat weight.
The lab that issued the diamond grading report and the report number.
Karat of the metal
The type of construction, craftsmanship, and design.
The date, appraiser’s name and signature, addendum information, and qualifications page.
The value and the purpose and function of the appraisal. For example, was the diamond appraisal done at market value for tax purposes or at retail value of insurances purposes.
Transparency In Jewelry Valuation
An appraiser having credentials is one thing, but the valuation process itself should be one that takes place right in front of you. So a transparent appraiser will:
Not ask that the diamond be pulled from the setting. You want to safeguard yourself from an appraiser switching your stone to one of lesser quality. Although, there is greater accuracy in valuating a loose stone than one still in the setting.
Weigh a loose stone in front of you before the appraisal begins and after the process is completed.
Clean the piece in front of you
Only give you ranges in clarity, color and color if the stone is appraised while mounted. According to noted diamond expert Fred Cuellar, the highest grade for a diamond that is mounted is VS1 clarity and G in color.
Not give you an exact figure for what a piece of jewelry is worth but rather offer up a range.
Won’t ask or offer to buy your jewelry or sell you one of his/her own
Won’t charge you a fee based on the value of our jewelry. This should help remove the temptation to overvalue the merchandise.
Want to know if you want the dump, wholesale, retail (fair market), or premium value of your merchandise.
While appraisers are not Gods, you’ll ideally only want to deal with an appraiser that stands fully behind his/her work. That is, there won’t be any disclaimers on the appraisal saying the appraiser won’t be held responsible for any action that is taken with the appraisal.
If an appraiser doesn’t stand behind his work, then there is little point in having the valuation done in the first place.