Appraised value

[lumpkin]

Okay, we''ve discussed how some jewelers will inflate the value of your jewelry, which makes you have to pay more for your insurance, but will seldom get you the stated value in a cash settlement from your insurance company. So it''s a given that it''s not good to have an inflated appraisal.

What happens if the appraisal comes back valued at less than you paid for your item? I just picked up my appraisal and it came back $1000 (not including shipping and taxes) less than what we actually paid for my jewelry and, of course, we bought the diamond on line for much less than we would have paid at a B&M. I''ve been on PS long enough to know that we did not over pay for my diamond -- it''s well within the average price for carat, color and clarity with the GIA report and the cut quality.

I know that my insurance company would work within the industry and maybe they could replace my ring for $1000 less than I paid for it, but what if they can''t? How concerned should I be about this? I''m sure we could have gotten the setting for less, but definitely not the diamond, and I doubt we could have gotten the setting for more than a few hundred less than we paid for it.

When my setting got its first appraisal over three years ago with a center stone that was 23 points smaller, same color and up one clarity grade (withOUT any certification or reports) it appraised $3000 higher than this appraisal. That appraisal came from the jeweler who sold us the setting; the current appraisal came from my current jeweler who did not sell us the setting. However, I have looked at his settings and they are similar in price to what we paid for mine. All of the info on the current appraisal is correct in regards to carat weight, clarity and color, as well as correct alloy of metal. It just seems really off to me, and I''m trying to figure out why this would be.

Could the previous appraisal have been that inflated? I''m still puzzled about getting back an estimated replacement value that is less than what was actually paid when I didn''t over pay.

Thanks in advance for any comments.

 

[Regular Guy]

It seems like your first task is to, with an open hand, raise your questions with your appraiser. You may or may not find it helpful to share with them the link to Pricescope, and the opportunity to compare your option to other comparables on this board, that -- if anything -- should be priced under "retail market" that appraisals typically refer to.

Sure, since you do want the insurance company to reliably get you at least "like kind," seems like your concerns are reasonable.

Ultimately, your appraiser might do one of several things:

a) realize they just looked at a wrong chart of some kind, and fix the error
b) reveal to you some flaw you''d like to know about
c) lay plain to you their incompetence, and give you whatever number you want, based on a reasonable, evidence based, request for same.

If "c" is the case, you''d have cause to determine if you''d like a different appraisal altogether. But, if you have confidence in your information sources, it may just get the job done you''re seeking to have done.

I wonder...didn''t you think to query the disconnect right away?

Regards,

 

[jhn]

I got a diamondring appraised one year ago. The appraisal came back with the same value that I bought it for online in USA - That price is 2/3 of what the same ring costs here.

The appraiser sells diamonds and rings himself so I simply asked him:

"Could you please show me your rings with similar diamonds in that price range."

He couldn''t... He tried something like "I took for granted you bought everything online and appraisals for online bought jewelry are much lower..." Anyhow since I asked him for an appraisal to give my insurancecompany to get a similar ring+stone, if lost, at a local jewlry the appraiser had to do a new appraisal stating a more relevant sum

 

[diamondseeker2006]

I''d simply go back and show him your sales receipts and say that you paid more than he appraised them for, so you don''t see how the retail reaplcement value could be less than you paid. I really think it is a good idea to discuss the pricing issue before the appraisal is done.

 

[lumpkin]

Date: 11/3/2006 4:15:40 AM
Author: Regular Guy

I wonder...didn't you think to query the disconnect right away?

Actually, it's my jeweler who did the appraisal rather than an independent appraiser because I'm not deciding whether or not I want what I have, but rather simply for insurance purposes. I picked up the appraisal on my way with several other errands and didn't even look at it because I had an appointment to get to. It wasn't until later last evening that I looked at it and went, "Hmmm."

Thank you all, I appreciate your responses. I'll give them a call today and ask them about it. Maybe it's a type-O.

 

[denverappraiser]

I agree with Ira, the first thing to do is discuss it with your appraiser. It may be something as simple as a typing or arithmetic error. Another possibility is that they are using a different value definition than what you expected.

Any statement of value must contain an explanation of what it’s worth to whom, when and under what conditions or it’s not going to be very useful information. In the case of pre-loss insurance type appraisals, it’s usually something like: “The expected funding to allow an insurance company to replace the piece with another of like kind and quality in the customary marketplace and in a reasonable time frame.” There are other choices, like the amount you could expect to realize in a forced sale and that will generate considerably different values for the same item. The decision of what value definition to use is one of the first steps in the appraisal process and is generally starts by asking you your purpose in seeking the appraisal. The value definition chosen should be included in the body of the report.

Assuming that they use a definition like the above, it’s also necessary to explain the ‘customary marketplace’. For most, but not all, jewelry items, this means a non-discounted offering from stand alone jewelry stores in the local community but again, they may be using something else and this difference can be pretty important. Whatever they’re using should be discussed in the report.

If the appraiser can defend their position then the next person to discuss it with is your dealer.

Neil Beaty
GG(GIA) ICGA(AGS) NAJA
Professional Appraisals in Denver

 

[tdiggity]

I think from what I''ve heard is to go to an independant appraiser...not a jeweler. They have a LOT of animosity toward the internet and how its affecting their business.

I would def. confront him though and find out a basis for his report. Tell him you know its worth more than that and it has been appraised at considerably more in the past.

 

[lumpkin]

I pulled the previous appraisal from my file and I plan to take it to him.

I''ve never had this happen before. Every time I''ve had my jewelry appraised the value was inflated. Since my jewelry is not worth huge sums of money, it didn''t really matter because the insurance premium was not that high on them and it did add some room for rising prices. I''m somewhat annoyed, but maybe there is some logic behind this. It certainly would replace the diamond in a local store, but not the setting. However, maybe that is what HE would replace it for if the insurance company went through him, in which case I would be fine with it because I like them and they do have a very nice selection of settings.

Anyway, Denver and Ira, I have learned my lesson! I will go to an independent appraiser in the future. Denver, I''ve never seen an appraisal like what you described, but it makes very much sense and would make matters much clearer should anything happen and I would need to use my insurance. I''ve never had to use my insurance for jewelry so it, thankfully, has never been an issue.

Thanks again.

 

[RockDoc]

Lumpkin....

Did the appraiser ask what kind of insurance you have, or are going to get?

Did he ask in which market they replace the items, or how they settle claims for loss?

Does the insurance company require the valuation to be Retail Replacement Cost?

If the appraiser didn''t ask for this information, it appears difficult to me how the correct value could be ascertained.


Some insurance companies have a replacement price, made by a percentage over the jeweler''s cost that they pay out. Did the appraiser bother to check this? How he made the value conclusion should be explained IF it is a properly done report.

It amazes me how an appraiser can make a report without knowing the details of the above.


Rockdoc

 

[Regular Guy]

Date: 11/3/2006 10:11:24 AM
Author: RockDoc
Lumpkin....

Did the appraiser ask what kind of insurance you have, or are going to get?

Did he ask in which market they replace the items, or how they settle claims for loss?

Does the insurance company require the valuation to be Retail Replacement Cost?

If the appraiser didn't ask for this information, it appears difficult to me how the correct value could be ascertained.


Some insurance companies have a replacement price, made by a percentage over the jeweler's cost that they pay out. Did the appraiser bother to check this? How he made the value conclusion should be explained IF it is a properly done report.

It amazes me how an appraiser can make a report without knowing the details of the above.


Rockdoc

The aesthetics of all of this are not pleasing to me.

Rock, your approach, while utilitarian, is distasteful. It makes implicit collusion with the insurance companies. That is...I suppose, unless you get the type of insurance which you advocate, not done in the main, with Chubb and similar, where you're investing in a payout. Otherwise...and even though the details may not be differentiated from the definition of retail vs wholesale, there is definitely something about the business of paying consistent with getting a replacement of like kind, having it understood the insurance company will pay less than this to secure it, but still, allowing the elasticity of going up to the stated amount anyway, but no farther, to get same, that is...not aesthetically pleasing.

If alternately, you - as an appraiser - just give a number, without respect to the type of insurance, I find this less displeasing this way. Assumptions are made, but no collusion is laid plain. But, maybe it's not functional.

The idea of stating different market levels, as is advocated with some frequency, is descriptive and attractive, but seemingly dysfunctional for the stated purpose. Alternately, maybe it's just perfect, but confusing, at least. How are the insurers and diamond buyers supposed to use this document? Recent conversations between Sue Fritz and prosumers on how to determine what document to submit, the appraisal or the receipt, for sub $5K purchases point to this.

There ought to be a law. Maybe everything's working perfectly, of course. But, I think if a simple document were created, describing really what was happening, I don't think people reading it would like it.

Just 3 mostly non-functional cents on this topic.

Are there written standards from appraising societies that make explicit recommendations about this topic? Something tells me appraisers are safer to follow established practices, and not put it in writing, lest they get in trouble.

(Edited to add)...re-reading above, I see Neil says much of the same as Rock, but gets the tonge in groove precisely. Sorry, I'm crabby about this appraising/insuring industry. Theres a tinge of the Werner Herzog movie where the banker comes around, smiling nicely, saying yes, you signed the contract, here, don't you see, and we're evicting you, and the guy is asking why he is smiling? The appraisers are not the big money in this, but they do act as agents for them in the process.