August 23, 2016

Appraisals

Hiring an appraiser

Hiring an appraiser

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 from 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:

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The subject matter

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 from 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:

The item in question is jewelry, it’s new, and that you are looking for information that will be useful in either returning it to the seller or for purposes of insurance coverage if you decide to keep it.
The item is in your possession and it will be possible for the appraiser to physically examine it.
You want both valuation and gemological authentication services.
There are no important attributes that are not immediately obvious by an examination or that are not supported by documentation that you will provide (for example, a claim of celebrity ownership may affect value but it can’t be identified from an inspection).

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.

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 your area. Many are members of your local Better Business Bureau and many will advertise in the local yellow pages or similar venues.

 

Credentials

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. But it’s not enough, and it’s not even an appraisal credential.

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). It’s not a second opinion if it comes from the same source as the first.

 

Before we start

Expert advice, decades of experience

After you’ve chosen an appraiser, hopefully me, you will set up an appointment to examine your item(s). 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.

Bring 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.

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 doctor’s 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.

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The appraisal session

What we do

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.

Interpreting your appraisal

Interpreting your appraisal

After you get your appraisal, now what? It’s going to depend on what your objectives were in the first place. If this was a new purchase, the seller probably made some representations at the time. Your appraiser may or may not have agreed with them.

If you found important discrepancies in the description, these should be clearly spelled out in the description section of the report. 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.

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