How to Select a Competent Jewelry Appraiser
Tips on Choosing a Competent Appraiser
When choosing an appraiser, consider the following:
What qualifications should an appraiser have?
According to a 2008 notice by the United States Internal Revenue Service (20A 17), “Qualified Appraiser means an individual with verifiable education and experience in valuing the relevant type of property for which the appraisal is performed. An individual is treated as having education when they have successfully completed professional or college-level course work and has two or more years of experience in valuing the relevant type of property or has earned a recognized appraisal designation. Course work must be obtained from professional or college-level educational institution, appraisal organization or employer educational program.”
In other words, qualified jewelry appraisers must have experience and an educational background in valuation science, gemology and jewelry assessment. They must understand and follow the Uniform Standards of Professional Appraisers (USPAP). These are quality control standards generally accepted for all types of appraisers---personal property, real property, intangible assets, and business valuation and reports. Every two year they are updated.
Continuing education is essential because appraisal standards change, gem & precious metals prices fluctuate, and new treatments, imitations and lab-grown stones are introduced to the market. Being an appraiser is a lifelong learning process.
A gemologist diploma is mandatory for jewelry appraisers. The best-known diplomas (in alphabetical order) are:
AG (CIG), Accredited Gemmologist. Awarded by the Canadian Institute of Gemmology
FCGmA, Fellow of the Canadian Gemmological Association
FGA, Fellow of the Gemmological Association of Great Britain
FGAA, Fellow of the Gemmological Association of Australia
FGG, Fellow of the German Gemmological Association
GG, Graduate Gemologist. Awarded by the Gemological Institute of America
(The FGA and GG are the diplomas most commonly found in the USA)
As previously mentioned, education beyond gemology courses is also essential for appraisers. Various organizations offer training in valuation science, report writing standards and the legal issues involved in appraising. The three best-known ones are:
American Society of Appraisers (ASA) www.appraisers.org
International Society of Appraisers (ISA), www.isa-appraisers.org
National Association of Jewelry Appraisers. (NAJA), www.NAJAappraisers.com
Besides offering courses and testing, these associations also grant credentials to those who pass their exams and meet their requirements for experience, education and ethical standards. A list of appraisal credential acronyms and their meaning is available at www.diamondhandbook.com/gemandjewelryacronyms.htm
ASA and ISA grant credentials to all type of personal property appraisers whereas NAJA
specializes in providing training and credentials specifically for appraisers of jewelry and gems. NAJA has the most jewelry appraiser members of the three organizations listed above.
In Australia, the National Council of Jewellery Valuers (NCJV) requires that their members undergo training in all the key areas of gemological study, gemstone grading and the detection of treated and lab-grown gemstones. They must also commit to ongoing education and have high ethical standards and access to the latest testing equipment and procedures.
Types of appraisals
Insurance Appraisal: The most common type is a replacement policy which will replace a lost, stolen or damaged item by a similar item. An agreed value insurance policy is more expensive and will settle the claim with cash. For information on how appraisers determine the retail replacement value on insurance appraisals go to:
Estate appraisal: done for probate and tax purposes of a taxable estate. Instead of being based on the replacement value, it’s based on the fair market value—the value that the item would sell for in an open market in a reasonable time period between a willing buyer and a willing seller.
Donation appraisal: used to substantiate a donation to a charitable organization. It’s based on the fair market value and in the USA, it is required for any donation above $5,000.
Marketable cash value appraisal; used to settle divorces or estates for fair distribution of property. It is based on a somewhat different version of fair market value which allows for costs to be deducted and does not consider the buyer’s premium added on from auction results.
Liquidation appraisal: used for bankruptcy cases or collateral to provide a cash value for items of a seller who would be under extreme pressure to sell in a short time period.
What Should a Jewelry Insurance Appraisal Include?
An insurance appraisal should provide an accurate, detailed, word description of the item you’re having appraised. When choosing an appraiser, ask to see a sample appraisal. The structure of the report will indicate the quality of the appraiser’s work and will help you better compare appraisal fees. It’s understandable that a five-page report with a photo will cost more than one with only a two-sentence description and an appraised value, and you should avoid the latter type. Items that professional independent appraisers normally include with their reports are:
On rare occasions, a country of origin report may also be included for expensive gems, but this requires a high level of expertise and usually a report from a major gem laboratory.
Most insurance companies in the United States will only reimburse you the value of a replacement for your gem or piece in the event of loss, theft or damage. If the appraisal does not include information about the quality of a high-quality gemstone, the appraisal can legally replace it with one of low quality or offer a cash equivalent of a low value stone. Therefore, the more valuable your jewelry piece or gem, the more important it is for it to be accurately described on an appraisal.
How candid is the appraiser?
Candor is as important a consideration as credentials. Ethical appraisers will not withhold relevant information from you in order to avoid offending a seller. They will talk openly about gem quality and treatments. They will also acknowledge their limitations. Appraising an expensive ruby or colored diamond is not easy. If an appraiser tells you he or she doesn't feel qualified to appraise your gemstone and recommends someone else, this is not a sign of incompetence. It's a sign of honesty and integrity. It's the same as a general medical doctor referring you to a specialist. Reviews and referrals can help you find reputable appraisers.
There are some instances where appraisers cannot be candid. If, for example, you were considering buying a branded diamond with a thick girdle that looks small for its weight face up, credentialed appraisers cannot give their opinion of this diamond and/or indicate its value if it were an unbranded diamond. They must only quote the branded price of the manufacturer. If you want their opinion, you must hire them as a consultant, not as an appraiser. Incidentally, diamonds with thick girdles can get very good cut grades.
Be aware that the brand or designer name can account for a significant portion of the price. A $100 opaque sapphire, for example, can be mounted in a branded ring costing thousands of dollars.
Experience in valuing the types of items you want appraised is also an important consideration when selecting an appraiser. If you have period jewelry (Retro, Art Deco, Art Nouveau, Victorian, etc.) and the appraiser doesn’t know the market for it, you may not get an accurate value. The same is true for colored stones. It's fairly straightforward to appraise contemporary jewelry with colorless diamonds, but other types of jewelry may require specific expertise.
It’s not possible for jewelry appraisers to have experience in buying and selling all of the types of items they appraise. Therefore, they should have good connections with trade members who do sell them. Most appraisers do not have experience buying and selling expensive colored diamonds and most colored diamond dealers do not have appraisal credentials. As a result, appraisers must consult with dealers and auction houses who can help them value colored diamonds.
SEQ CHAPTER \h \r 1Most consumers get their jewelry appraised in jewelry stores because it’s convenient, it’s a logical place to find a jewelry appraiser and the appraisal may be included with the purchase. If you trust the jeweler and you don’t need a second opinion about the price or quality, this could be good option for you, provided that the store appraiser is well qualified.
The number of independent appraisers is growing because there is increased demand for unbiased jewelry evaluation, especially with the rise in television shopping and Internet sales. Sellers and courts are more likely to honor the opinions of an independent appraiser because conflict of interest is not an issue.
It’s easier for independent appraisers to be objective about their valuations because they won’t lose a sale if they indicate a piece is over-priced. In addition, full-time independents get more experience appraising than store appraisers who have to also wait on clients.
Jewelry store appraisers respond by saying they have more experience buying and selling, so they understand the market better and have more contacts for price information. In addition, they may be able to charge less for appraisals since they are profiting from the sale of the appraised merchandise.
Even though it’s true that some appraisers are deficient in their knowledge of market valuation, many others have years of prior trade experience and an excellent knowledge of the market. Some have owned jewelry stores, some have been in charge of jewelry auctions, and others have worked as bench jewelers, buyers, sales reps and/or sales associates. Independent appraisers also attend the major gem and jewelry shows and conventions to keep up with prices and to network with buyers and sellers.
The fact is, jewelry store appraisers and independent appraisers can be equally competent in their appraisal skills and knowledge of market values. Choose the type of appraiser that best fits your needs and make sure he or she has high qualifications and that there will be no conflict of interest for the appraisal. For a list of independent jewelry appraisers go to www.reneenewman.com/appraisers.htm or www.DiamondHandbook.com/appraisers.htm
As a consumer, you have the right to know in advance the approximate cost of an appraisal. Occasionally, an appraiser will tell a caller that it’s unethical or unprofessional to quote prices over the phone. This isn’t true. Professional appraisers should at least be able to tell you their hourly fee and/or their minimum charge if they have one.
Some will tell you a flat or approximate appraisal charge for a piece when you describe it to them over the phone. However, in fairness to the appraiser, they are entitled to change their estimate upon seeing the piece if you have played down certain areas of difficulty or have not described it fully.
SEQ CHAPTER \h \r 1Some people will offer to appraise your jewelry free of charge, even if you haven’t bought it from them. This is generally a sign that either they want to buy the jewelry from you or else they want to lure you into their store to sell you some of their merchandise. Professionals charge for their services, whether they be lawyers, doctors, accountants or appraisers.
Appraisal fees are charged in a variety of ways. Some are listed below:
Appraising Jewelry While You Wait
Not all appraisers have a policy of appraising jewelry while you wait. However, it may be inconvenient for you to make two separate trips for an appraisal—one to drop off the jewelry and one to pick it up. Most appraisers will try to accommodate your needs. Some appraisers will only appraise it in front of you. However, they often send you the final written appraisal afterwards. No matter what their policy, you usually need to make an appointment.
Even if it doesn’t matter to you whether you leave the jewelry with them or not, it’s not a bad idea to ask appraisers if they do on-the-spot appraisals. Their answers will give you added information about them. For example, look at the four responses below. These are actual answers that were given to the question, “Can you do the appraisal on the spot?”
Those answers provide good clues as to which appraisers would be best qualified to provide an unbiased accurate valuation for an item such as a large high-quality ruby or an intricately designed gold necklace.
Jewelry appraising is an art. There’s a lot more to it than simply placing a dollar value on a stone or jewelry piece. If your jewelry has a great deal of monetary value, it’s important that you have a detailed, accurate appraisal of it. Take as much care in selecting your appraiser as you did with your jewelry.
2020 by Renée Newman
© Copyright 2020 by Renée Newman
By Renee Newman GG
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