Written by Neil Beaty of the American Gem Registry
Many customers who end up buying a diamond end up buying an independent appraisal shortly thereafter. There’s a whole litany of reasons for this that are discussed at length elsewhere but there is very little discussion on how to shop for an appraiser and how to get the most out of your session after you’ve chosen one.
Most cities have a large listing of people who are willing to sell you a document that they will call an appraisal. These will range in price from zero to hundreds, or even thousands of dollars. The difference is in the details. There follows a brief explanation of how to get your money’s worth from an appraisal.
An appraisal is a report, either written or oral, describing an object and a related marketplace. It usually involves describing a theoretical transaction wherein the object is sold in an arms length transaction between at least two unrelated parties. For example, it could be a statement that the estimated retail replacement price of a similar item at a jewelry store in Denver would be $xxx. An appraisal will always declare a value and an explanation of what market is being described.
An Appraiser is someone who prepares appraisals. They may do other things as well.
An authentication report is a statement of the important qualities of a particular object. This can be a GIA Diamond Quality Report or it can be a report demonstrating that the ring was once owned by Elvis or that it was made by Cartier. In both cases, this is an important piece of the value. These are also available on coins, fine art, sports memorabilia and most other kinds of items that people wish to have appraised. The appraiser may or may not be the same as the authenticator.
The first thing required in hiring an appraiser is that you must decide what it is that you want to know. “What is this worth?” is simply not a sufficient question. Professional appraisers work on many different kinds of projects that involve different kinds of requirements. Estate taxes and legal work have very different requirements than pre-loss insurance documentation. A tutorial of this nature is far to short to go into all of the different issues so, for the purposes of this tutorial, I’m going to make a few assumptions about what you will be wishing to learn:
Just from reading my list, you probably have a good idea who you’re looking for and what you expect them to do. You want someone who has the skills and the tools required to do the authentication. You want someone who is familiar with the market that’s of interest to you, you want someone who will tell you the truth, unfiltered by their own side interests, and you want someone that will prepare a report that will be useful to you in a timely fashion.
In the US, the most widely recognized gemological credential is the Graduate Gemologist Diploma issued by GIA. This is a college that teaches gemology. They have quite a few competitors who also do an excellent job but you should be careful to understand any credential that you are relying on. GIA also has several other programs that can result in claims like “member of the GIA alumni association” or “GIA Graduate”. Pay attention. A GG after their name is a good sign, as is FGA, FGAA, and FCGmA. If you don’t recognize it, ask about it before you hire them. They should be happy to explain.
Valuation and appraisal theory are taught by several different schools including the American Society of Appraisers, the International Society of Appraisers, the National Association of Jewelry Appraisers, the American Gem Society and several others. All of these have good programs. There are probably more that I don’t know about. The important thing here is to understand that what is being taught in these programs is not the same as what is taught in the GG or FGA programs. You want an appraiser that has both.
Independence is a mixed bag. Here’s the problem. If you want a highly trained professional who living off of the appraisal fees, you can expect to be charged for their work. Some actually charge quite a bit. If the appraisal is just a few sheets of additional paper that accompany the sale with a description and a made up number, they are usually free or at least very inexpensive. It goes back to deciding what you want to know. The same is true of authentication reports. If you require a report from an independent lab (like GIA) then the stone will cost a little bit more and their is a fee that is built into the price of your stone. If the word of the seller is sufficient, they will usually be happy to offer their opinion cheaply. For most people seeking appraisal services, independence is worth the extra cost. Just to be clear, what I mean by independence is an appraiser who is not in the business of buying or selling jewelry and is not otherwise involved in the transaction in any way (like they are employed by or are related to either the buyer or seller).
All of the major appraisal societies offer referral services for their graduates and members. Most are online. Many of the popular educational websites also offer indexes where they list appraisers in you area. Many are members of your local Better Business Bureau and many will advertise in the local yellow pages or similar venues.
After you’ve chosen an appraiser, you will set up an appointment with them to examine your item. Before you go in, again go over in your mind exactly what you are trying to learn. You are about to hire an expert to act on your behalf and you want to get the most for your money.
Take all of your documentation with you. This includes the original receipt, the boxes and warranty certificates that may have been included, any grading reports you were supplied, and any previous appraisals on the item. Clean every item thoroughly and make sure you have all parts and pieces of anything that’s broken.
When you sit down with the appraiser, explain to them what you have and what you would like them to do for you. Don’t show them your documents unless they ask but let them know that you have them with you. Before they start, discuss what fees you should expect for this session and be sure that you are comfortable with them. They should also give you an estimate of how long the project will take. Most single item appraisals can be done while the client waits but some large projects or very busy appraisers may take some more time.
They will probably ask you to fill out a form before they start working. This is sort of like filling out the paperwork at your doctors office before the visit. They will want to know your name and contact information, what the purpose of the appraisal is, and information that will help them to zero in on the assumptions that I made at the beginning of this tutorial. Changes in these assumptions can make a tremendous difference in the approach and conclusions for the appraisal assignment so it’s important to answer these things up front. This is also where you agree to pay the bill. If you will be leaving the items to be picked up later, this contract will become part of the receipt for your property, otherwise it will be simply a work order for the appraisal.
If you’ve ordered gemological services, this will usually come first. This means identification and grading of all gemstones, testing of the metal, examination of the hallmarks and similar physical tests. Assuming that you are waiting, they will tell you their results of the tests. If their results are different from what your paperwork says, you should discuss it at this time. This is especially true if they disagree about the nature of the material (are they really emeralds?) or the grading of stones (when compared to the report). Make sure that there isn’t a simple misunderstanding or mismeasurement that’s causing the discrepancy. This is the time to discuss your grading reports, authorship reports and the like. Everything but the money.
After the gemological work, the appraiser will take some time to measure, weigh and photograph the piece as well as write a description. They will probably want to scan or photograph some of your various reports as well so that these can be included in the final document. They will then do some research into the market. They will choose a market based on the answers you gave on the take-in form. You will get very different results depending on whether they are considering a forced sale to a pawn shop or layaway program at a tony jewelry store. This research can take anywhere from a few minutes to a few months depending on the nature of the piece, the market chosen, and the resources and time constraints of the appraiser. If it will take more than a few minutes, they should be able to give you back your piece and the remainder of the assignment can be done over the phone and by mail.
After you get your appraisal, now what? If you found important discrepancies in the description, these will be clearly spelled out in the description section. This is what will be required to return it to the vendor. If the appraiser thought that your diamond was misgraded, this will be clearly stated in the description. It may say something like XXX diamond accompanied by a report issued by XYZ lab identifying it as YYY with a copy of the lab report attached or it may just give the graders opinion. Your receipt from the seller will usually give their terms explaining what to do in this circumstance. Read them carefully and comply with every clause.
If you find the valuation is alarmingly low, read the description again. The appraiser may have missed an important detail, like the brand of the designer, manufacturer or diamond, or they may have a critical error, like calling platinum white gold. Feel free to call them and discuss the matter. Also check the market being discussed. It may be different from the market where you bought the piece. If they are discussing the resale value used on the secondary market and you bought it new directly from the designers boutique, it is almost certain that they will find a lower value than what you paid.
The opposite is also true. If the valuation is especially high, make sure you understand why. It may, indeed, be that you got a fabulous bargain. It may also be that what they are describing is not an accurate depiction of what you bought. Most often, this comes up because the client made their purchase at a discount or internet seller and the appraiser chose local retail as the comparable market. This kind of change in market can be quite significant.
One of the primary reasons for getting an appraisal is for purposes of securing insurance coverage. The insurance companies require it because it defines exactly what it is that they are insuring.
Most insurance companies will replace a lost piece of jewelry with ‘like kind and quality and of substantially similar age, authorship, and condition’. This means that they will buy you a new ring in the case of loss.
They generally will NOT cut you a check for the amount on the appraisal.
For this reason, it is in your best interest to be certain that the appraisal that you supply them contains all of the information that you feel is important about your stone. If you looked long and hard for a fluorescent stone and would feel cheated if the company replaced it with one that was not, make sure that’s in the description. Designer names, model numbers, h&a photographs and the like can all be important. If it’s important to you, their client, it is important to them.
Neil Beaty is a full time independent appraiser specializing in gems and jewelry based in Denver, Colorado USA. He is a Graduate Gemologist from GIA; is an accredited member of the International Society of Appraisers; and has 26 years of experience in the gem and jewelry industry. He is currently president of The American Gem Registry, Inc. in Denver. More information is available at www.gemlab.us.