Jewelry Appraisals

Kathryn Barcham writes:

Jewelry appraisers are often asked to explain the service they offer and why this is necessary. An appraisal service is usually established for the purpose of:

1. Supplying estimates of replacement costs that will suffice for insurance purposes.

2. Estate appraising for tax purposes.

3. Advice on private sales between two or more persons.

4. Personal interest.

A jewelry appraisal may be offered by the jeweler when the item is purchased and is insured for the retail value. Appraisals may also be done by a gemologist or other person familiar with current prices. Appraisal of merchandise purchased elsewhere should not be attempted unless the appraiser has the training and equipment necessary to identify and classify according to quality all the materials and jewelry brought to this attention. Naturally any jeweler can appraise merchandise sold by his firm, since he knows its quality and retail price but appraising jewelry sold by another firm or brought in another country can cause problems since there is a rather wide variation in markup used by different types of firms for smaller merchandise. Their valuations must relay on fair market value which can best be described as the estimated cost of replacing each item through the firms own suppliers as of that date.

Estate appraisals or similar appraisals are usually considered on the basis of immediate or so called distress values i.e value of an article is determined by what it could be sold for immediately. Most appraisers determine this price by considering what they would be willing to pay for the item at that time or what they estimate it would bring at auction.

Accepting jewelry for appraisal
1. Ask the customer to state the reason for appraisal as it may influence the valuation, e.g. estate duty, personal insurance, personal interest etc.

2. Considerable caution should be exercised when accepting jewelry for appraisal particularly when it is to be retained for a considerable length of time. Most people are unfamiliar with the quality of their jewelry and are frequently under the impression that it is more valuable than it actually is. In such instances, if the jewelry is returned with an appraisal that lists the damages or imperfections that the customer was not aware of, the appraiser may be accused of substitution. The piece should also be examined closely under a lens, or preferable with a microscope, and the customer’s attention called to any serious imperfections or blemishes in the stones and any serious damage or wear to mounting. Many people assume that all antique pieces are genuine and are not aware that man-made rubies have been on the market since 1904, synthetic sapphires since 1910, synthetic spinel (primarily imitating aquamarine, sapphire and zircon) since 1920’s and synthetic emeralds have been commercially available since 1950’s. Although synthetic gem quality diamonds of cuttable size, have been manufactured, they are not something to worry about at this time since they cost more to produce synthetically than to mine the best quality natural material. On other hand, the market abounds with diamond simulants probably the best known being cubic zirconium (CZ, Gemeron, Blunco Counterfeit Diamonds, etc). A quick test with a Presidium thermal reaction tester or similar instrument will tell whether the stone is a diamond or a stimulant and prevent any embarrassment to customer and jeweler alike.

3. The customer should be issued with a receipt that lists:

a) A brief description of the piece.

b) The number and measurements of important stones and a general description of their quality. (Actual identity should not be listed unless they have been tested.)

c) A statement to the effect that ‘Acceptance of jewelry for appraisals or repair does not constitute an acknowledgment or confirmation of identity or quality of pieces claimed by the owner.” Often jewelers will photograph the piece and this allows for a more accurate reproduction of the item in the event of loss. Customers are often more satisfied with an appraisal that includes a photograph of their jewelry.

Appraisal form
If the customer, as well as the insurance company, is to be given maximum protection, an appraisal must include a complete description of the merchandise. Many jewelers do not abide by this precaution and continue to issued indefinite appraisals that are worded, e.g “One diamond ring retail value of which $ xxx. Insurance companies rarely reject such an appraisal. Should a claim be made on a lost stone, a much less expensive diamond may be substituted for such an imprecisely described ring. On the other hand, should the piece contain an imitation stone, they are liable for replacement with a genuine stone. Therefore the appraisal must include a complete description of the mounting (type of metal and style) together with exact measurements, imperfections, color grades, proportions and finish classifications of diamonds and other gems. A complete appraisal helps to assure the procurement of an exact duplicate of the item or another one of equal value. The appraisal form may be imprinted with the name of the appraising firm with space for the customers address and the date of appraisal. It should be signed by the appraiser.

Appraisal update
Sending annual reminders regarding cleaning, checking and reappraising can be helpful to the customer. Many tend to forget to check the items for damage to stones, worn prongs and shanks, which are the result of normal wear and tear, and to update their policies against inflation. Sometimes when examining jewelry that has been submitted for the purpose of bringing insurance coverage up to current market prices, incorrect grading or identification of stones have been discovered. The reappraisal should contain the correct identification, grading and valuation of the stones at the current market value; even if the value is less than the original appraisal. After checking the stones carefully, merely state what you believe the items would cost to replace in your store. You may find however that the appraisal value will not require change for several years.