Blue Nile Appraisal

[fire&ice]

Date: 12/31/2004 2:28:24 PM
Author: denverappraiser
F&I,

With paintings, would you consider it useful for a seller to supply a document accompanying a sale that describes it''s value as something other than the sales price using the same market and on the same date as the sale? Under what circumstances would this report be useful? Would you put more credibility on this type of report if it was supplied by someone other than the seller where all of their other qualifications are equal?

Neil

Umm...interesting question. Yes and no. The report would be useful for replacement cost in the future or here and now. BUT - my biz is different in that I can''t call up Johnny the diamond dealer and find something nearly the same in fairly short order. So, people have asked to provide a replacement cost estimate. For example - say someone was to have a loss of an object that isn''t being made today. The object is somewhat unique. It may take a long time & substantial expense in hunting another one down. I may know that another is for sale in a much higher priced arena. That person will have to pay more for the object than what I sold it for. Again, pricing in my biz is much more subjective.

That said, I would find value in an appraisal done by the jewelery store for more than the sales receipt. In fact, I discuss this with my insurance company anytime I submit a jewelry piece for scheduling. I have venues other than normal retail to find pieces. I discuss this fact that the price I pay for an object will not insure me that same object at the same price with my insurance agent. He accepts the appraisal for over the *actual* cost. For example, say X setting costs XXX retail. The jeweler gave preferred pricing. Say I loose the setting. The jeweler no longer carries the same designer setting. I have to go to another source to replace it. I may have to pay retail. Perhaps not; but, that possibility does exist. Wouldn''t it be prudent to insure it for the list price?

As far as putting more credibility on the "independent" appraisal, I definitely see the point. My biz can be different in that the person selling the item may have far more greater knowledge in their specialty than an independent. So, the "equal qualification" part would be very hard to define.

I agree that I find value in an independent appraisal; but, as I stated, I don''t think they have to be mutually exclusive of one another. I know that an indep. can be more straight forward; but, I don''t think the jewelry store can provide an appropriate appraisal.

 

[RockDoc]

Date: 12/31/2004 3

1

6 PM
Author: fire&ice

Date: 12/31/2004 2:28:24 PM
Author: denverappraiser
F&I,

With paintings, would you consider it useful for a seller to supply a document accompanying a sale that describes it''s value as something other than the sales price using the same market and on the same date as the sale? Under what circumstances would this report be useful? Would you put more credibility on this type of report if it was supplied by someone other than the seller where all of their other qualifications are equal?

Neil

Umm...interesting question. Yes and no. The report would be useful for replacement cost in the future or here and now. BUT - my biz is different in that I can''t call up Johnny the diamond dealer and find something nearly the same in fairly short order. So, people have asked to provide a replacement cost estimate. For example - say someone was to have a loss of an object that isn''t being made today. The object is somewhat unique. It may take a long time & substantial expense in hunting another one down. I may know that another is for sale in a much higher priced arena. That person will have to pay more for the object than what I sold it for. Again, pricing in my biz is much more subjective.

That said, I would find value in an appraisal done by the jewelery store for more than the sales receipt. In fact, I discuss this with my insurance company anytime I submit a jewelry piece for scheduling. I have venues other than normal retail to find pieces. I discuss this fact that the price I pay for an object will not insure me that same object at the same price with my insurance agent. He accepts the appraisal for over the *actual* cost. For example, say X setting costs XXX retail. The jeweler gave preferred pricing. Say I loose the setting. The jeweler no longer carries the same designer setting. I have to go to another source to replace it. I may have to pay retail. Perhaps not; but, that possibility does exist. Wouldn''t it be prudent to insure it for the list price?

As far as putting more credibility on the ''independent'' appraisal, I definitely see the point. My biz can be different in that the person selling the item may have far more greater knowledge in their specialty than an independent. So, the ''equal qualification'' part would be very hard to define.

I agree that I find value in an independent appraisal; but, as I stated, I don''t think they have to be mutually exclusive of one another. I know that an indep. can be more straight forward; but, I don''t think the jewelry store can provide an appropriate appraisal.

The issues you speak of have guidelines for ethical "conduct". There is a standardized question. " What would a reasonable person believe if they were not involved with the transaction?"

You can bet your bippy that if you asked 100 consumers if the seller of an item or an independent appraisal was better, you''d get a host of answers towards the independent appraiser.

If this weren''t so, then sellers of a home could do the appraisal for mortgages. As a purchaser I believe that not one consumer would go to a realtor involved with the sale nor would their lender approve it.

But those who sell who aren''t involved with the sale - still raise the suspicions of consumers. I had one the other day who bought a pair of earrings for about 7K. The seller wrote an appraisal for 8K. Then they took it to a well credentialed appraiser ( in fact a former AGS CGA and ISA grad) who valued the item at 4K. After he valued the item, he told the client that if they were going to return the item, he could get one better for less.

An appraisal must be DISINTERESTED, and very simply a seller as well intentioned as they may be hurts their credibility to issue an appraisal. If they do anything, in a sort of valuation document, as Cindy said - it needs to clearly explain that they are an INTERESTED party, disclose any material fact that affects the valiue and disclose in the document how any value written that is different from the selling price is determined and WHY!

Your opinion of how much experience an independent appraiser has with the market vs. a real appraier is hogwash. Most respected appraisers have years of selling experience usually previous to their becoming an appraiser. I did, I owned an AGS member store. I also know that Neil did. So it isn''t like we took a few courses, and profess ourselves to be the world''s experts. Dave Atlas also has a solid foundation in what happens with values, as do many others.

I don''t know if Cindy had a retail store, but I sense she may have. If she didn''t have that experience there are certainly professionals who help appraisers with their questions. No one can know everything, so professional share and help each other from time to time when there is a questions about something we are working on. This doesn''t mean there are any games going on....but the appraisers know who is cooperative and professional and will truthfully answer any questions we need as part of the valuation research methodolgy.

Credentials are important but so is experience and knowledge of the product ( or specialty ) that one performs appraisals for. Your position, of hands on buying and selling certainly has merit, but without knowing how to apply it use it, and express any situations for which the appraiser might be questioned, which is what the credentialed courses help with. Like gemology the appraisal course offered are overview, and the real experience of furthering knowledge in the professional is vital to doing the best you are able to.


Just to reiterate, I am not writing the above to criticize sellers, I write to inform so that why an appraiser acts the way he does is with legitimate reason, not to insult.


Hope this helps....


Rockdoc

 

[PhillipSchmidt]

From the start, where I am put under scrutiny by a customer who takes my work away to be assed independently, I want a say in their findings. As the person making the jewellery and sourcing the materials I think I am best able to appraise my own work. You can''t get more in-house then that!! Appraisals are more for the impersonal large chain stores and e-vendors that have an entirely different market. Specifically those that just buy and sell...

It comes down to trust and honesty. Appraising in-house allows an avenue for dishonest dealings, but not in the way you might suspect. As it is all about insurance anyway the value should merely reflect the costs in replacing the item. If it is way to high then you will pay for that on your premium. If it is too low, then you will save your money, but get less when you make a claim. There is not a huge area for dishonesty here. What you paid, is what your piece of jewellery is worth. Who would kid themselves otherwise?

The avenue of dishonesty is open to the big chain stores and big e-vendors where they use appraisals to establish the actual value of jewellery they sell. All too often I have looked diamonds in shop windows marked as VVS and noted inclusions, obviously the appraisal wasn''t independent, be it in-house or out-sourced. Another thing which smacks of dishonesty, and is misleading, is where something is advertised – ‘valued at$$, but we are selling it for $$’. This is common for those selling in bulk, but also true for small independent shops that are struggling to survive because they are plain shoddy.

....................

I can understand if you are in the business of supplying independent appraisals then it is in your interest not to align yourself with any store. This makes good sense. I think the occupation of valuing jewellery for insurance purposes is different to that of offering independent appraisals. My customer’s trust that they will get what we discuss (I hope) and they trust my knowledge as a jeweller that things far outside of any appraisal have been considered. Oftentimes, all they want in a valuation is a piece of paper for their insurance. The contents of the valuation are of little or no concern.

It is another story where a customer of mine goes independent to assess the specifics of a diamonds I am selling, the quality of my workmanship and what the cost should be. In this case I hope the appraiser they choose is independent and professional. Not withstanding, it is a worry in terms of custom made jewellery where I hope that apart from a knowledge of diamonds the appraiser also has a knowledge of jewellery making techniques for my customer to have a fair and unbiased view.

So for me, appraisals can be a service that a professional jeweller can supply for insurance purposes and independent appraisals are something that should be handled by the best-educated and professional independent appraisers.

I think this area of the trade is vastly different in Australia then the US, but these are my thoughts...

Phillip

 

[RockDoc]

Phillip...

Have you been contacted by an appraiser to get the finite details of the item you''ve made for them, whether the item is of limited manufacture - or whether you''d make it again in the event of a loss?

I call manufacturer''s of jewelry that are not run of the mill. I have a questionaire I send them asking them to fill out the pertinent details.

There are a lot more issues than what it is you''re describing, nothing wrong with you issuing a statement on how the piece was made, what special attention you gave and details about replacement.

This area of research needs to be made by an independent party if the document is titled APPRAISAL.

What''s wrong with providing ALL the factual information and letting the client and insurance company make the decision of the proper scenario and payment should there be a loss?

TO wit, what would happen if you for whatever reason couldn''t make another item like the one you sold? If you only limit the information, this potentially could screw things up in the event of a loss.

Not to insult you, but you''re not the only person making exceptional jewelry. THe appraiser needs to address all the possibilities, which an interested party cannot do.

It''s of course a little different if you are a manufacturer that has critical acclaim.... like a Jose Hess for instance.. No one else can really make a legitimate duplication of his designs. So a different methodology is required, A methodology that dealers that sell items cannot make an unbiased opinion.

Does this make sense?

Rockdoc

 

[fire&ice]

An appraisal must be DISINTERESTED, and very simply a seller as well intentioned as they may be hurts their credibility to issue an appraisal. If they do anything, in a sort of valuation document, as Cindy said - it needs to clearly explain that they are an INTERESTED party, disclose any material fact that affects the valiue and disclose in the document how any value written that is different from the selling price is determined and WHY!

Your opinion of how much experience an independent appraiser has with the market vs. a real appraier is hogwash. Most respected appraisers have years of selling experience usually previous to their becoming an appraiser. I did, I owned an AGS member store. I also know that Neil did. So it isn''t like we took a few courses, and profess ourselves to be the world''s experts. Dave Atlas also has a solid foundation in what happens with values, as do many others.

I don''t know if Cindy had a retail store, but I sense she may have. If she didn''t have that experience there are certainly professionals who help appraisers with their questions. No one can know everything, so professional share and help each other from time to time when there is a questions about something we are working on. This doesn''t mean there are any games going on....but the appraisers know who is cooperative and professional and will truthfully answer any questions we need as part of the valuation research methodolgy.

Credentials are important but so is experience and knowledge of the product ( or specialty ) that one performs appraisals for. Your position, of hands on buying and selling certainly has merit, but without knowing how to apply it use it, and express any situations for which the appraiser might be questioned, which is what the credentialed courses help with. Like gemology the appraisal course offered are overview, and the real experience of furthering knowledge in the professional is vital to doing the best you are able to.


Just to reiterate, I am not writing the above to criticize sellers, I write to inform so that why an appraiser acts the way he does is with legitimate reason, not to insult.


Hope this helps....


Rockdoc

I understand. But, I do think that one can be disinterested & sell the same type of item.

Hogwash? regarding experience - you should see what I have seen.

I can completely respect someone who enters the appraisal field after years of hands on experience. And, I completely respect someone who asks a noted specialist regarding an object. As you know, my field of expertise is *extremely* limited. I know nothing about much outside of my area & would never offer opinion on such. You would be shocked at how many "appraisers" do not consult someone in an area of expertise & willy nilly apply values from years ago. I know of which I speak. Often, I buy things pennies on the dollar *because* the appraiser *thinks* they know the market. When in fact, a seller and/or collector of such object is happy to offer a disinterested evaluation. Perhaps disinterested is a bad term to use & please understand I am not talking "legal" terminology - just practical - but I think you can sell & separate from that to offer an honest evaluation. In my microcosim area, I know of no one who is a TRUE independent appraiser. I have collaborated with appraisers who are general appraisers seeking to know if certain pieces have value *other* than intrinsic. In this senerio, the Independent Appraiser is seeking advice from someone who technically is an interested party. Said interested party can act disinterested.

Sure, I would want an opinion from someone who doesn''t have there own self-interests at heart. BUT, my whole point is that I don''t necessarily think that selling & appraising are mutually & completely exclusive. I think someone who is ethical can provide evaluations. At the core, if you are paying someone for an appraisal, the fiduciary responsibility is to the owner/payee.

I mean no disrespect to any of the appraisers on this board. Y''all seem to be a notch above. But, I''ve seen some horrendous appraisers/appraisals. As I stated before, diamond evaluation/pricing could be more static/standard than my subjective arena. I''ve seen some pricing evaluations that at best can be described as negligent. What I''m really talking about is an honest, ethical, knowledgable appraiser doesn''t necessarily have to be completely out the business of selling. I will certainly concede that someone without any self interest has much less temptation to evaluate an item in their favor. But, I don''t think just because someone may have that temptation, they will succumb to it. And, at least the jeweler/appraiser has hand on daily experience. And, yes, the best appraisers are constantly shopping the market, reading trade journals, honing up on trends, talking to specialists, etc. for current pricing/evaluations; but, that is not always the case.

I''m not making a claim that disses Independent Appraisers. Just that I''m not automatically dissing a Jeweler who also appraises. Maybe I have rose colored glasses - but I still believe many people hold ethics in high regard.

As far as the initial post, BN may be supplying an "I''m off on my merry way consumer" (still probably the majority) with something to take to the insurance company. And, to even further mucky up the talk, at one time BN & Chubb was in bed to insure their stones. Maybe their appraisal has dual purposes. So, this could certainly be a case where Indepenent Appraisal may be the prefered way to go.

Just for the record, if I was to buy another stone of merit via the internet, I would lean towards getting an independent appraisal. In the end, money well spent.

 

[PhillipSchmidt]

This post about appraisals is all a bit beyond me Roc Doc.

I have never knowingly had any piece of jewellery of mine independently appraised - except where I contracted the ''valuer'' (Australian name). It just doesn''t happen here. I would imagine a fair percentage of my work has been compared with shops and questions asked to a jeweller. I don''t worry too much about this, with the exception of the fact much of the jewellery I see in shop windows, doesn''t match its statistics and is probably under karat and my jewellery is compared with manufacture techniques full of unsound shortcuts; and not always, but often mass-produced product.

Having said that, I expect the vast majority of jewellers appraising my work would have put their own interests aside and given a fair appraisal – as they were trusted and most probably knowledgeable.

On this issue, I would far prefer my jewellery to be appraised by a professional and I would be impressed, were I was asked if the piece could be made again by another jeweller and whether it would take the average bench worker ‘x’ amount of time. I wouldn''t be so bold as to say nobody could make anything I have made, but I have an intimate knowledge of other jeweller’s skill areas and methods of manufacture and I know what my customers could expect.

Side note: There is very little ‘money’ in making custom-jewellery from the inexperienced. I am sure I can make ten times as much in the time it would take an assembler to create a custom piece, let alone a beginner (say x 50). To make a piece in keeping with an original design that only I know how to make, double that figure. It is all about the methods you choose to use, and the skills you have.

There is no easy answer.

I am grateful for your posting. It is a very real issue to me, and one so heavily biased it isn''t easy to interact within my market without useless compromises. Most of what I make, can be made again by another jeweller, but how long it takes is another question and I am mindful of the problems they will have if I make a tricky design (mores the point - one where I have invented the technique) and my customer needs to have it made again. Money is obviously an answer, but not necessarily equated by the valuation, (as you seem to suggest, and as you suggest this isn’t fair to the consumer). I know the costs of employing a high-class + capable shop of having pieces custom made to design and for this reason I wonder about the valuers I have dealt with opinions of replacement costs. They seem to think, an item can be made again at my costs by anyone. This isn’t true. Who is the victim?

To get bench worker ''a'' to go outside his skills base and to attempt to make something he isn''t accustomed to make will not be worth his while; because any competent bench worker already has his hands full with lucrative work and couldn’t be expected to embark on another learning curve and essentially waste his time, by neglecting his existing customers demands. He will have to charge for a weeks work in something that could have taken a day by a jeweller who knows the form, but where are these people? I don’t know.

That is the $66,000 question…

It is worth noting the insurance company will invariably contract the work, and we both know what this means. If there is any chance of a real replacement my customer has to come back to me to get the remake. Will I charge the same or be able to meet the insurance value, should the customer demand the job come back to me? I can’t be sure. It might be a weight on my back. Oftentimes, I embark on a design, purely because I want to make it and I heavily discount the design-time and craftsmanship.

The second time you make a piece is always easier, but what if I have spent the last 6 months setting, or working in another material. Personally, my skill areas vary as to what I have been making. There is jewellery I have made 10 years ago that came easy then, but would take weeks, if not months to get back into the swing of things (carving organic forms being the case in point). A one-off from ten years back could be equally a challenge for me today as another jeweller – some I would never expect a repeat from any other jeweller I know of.

I don’t have the answers, but I fully agree with your post and your criticism.

I wish there were more like you asking the same question and I think it is time US appraisers move to the happy, sunny climbs (well flats) of Australia and get the jewellery market here into spec’.

Cheers

Phillip

It looks like we have a new posting here as – ‘custom design and appraisals’. I would be happy to cut and paste (=edit) this into another post if you have the inclination.

Phillip

 

[denverappraiser]

An appraisal is defined first by the appraisal purpose. Not all appraisal assignments are asking the same questions and not all appraisal questions have the same answer, even when describing the same item.

Most jewelry appraisals are for the purpose of adequately describing an item so that an insurance company can design an appropriate policy. For this purpose, seller supplied documents can be entirely adequate. They may actually be better, because the seller may have had the opportunity to weigh and examine stones prior to setting, to be specifically familiar with the techniques used in the construction and similar intimate details that might not be available from an inspection. The quality and usefulness of their report will depend entirely on the skills of the author and their willingness to take the time to do a thorough job. This will vary from appraiser to appraiser.

If the policy is going to be a replacement type, the description is at least as important as the price. The description of the item in the submitted paperwork will become the description used in the purchase order for the replacement piece in the case of a loss. A replacement of one of Phillip’s or Dave’s masterpieces with a poorly made imitation that is superficially similar is simply not a proper replacement, even if the stones have similar grades and the metal is of the same weight and karatage. Additional information is important in order to protect the interests of both the customer and the insurance company. It’s important for the paperwork submitted to the insurance company to properly document the attributes of the piece that you consider important or that contribute to it’s value. Unfortunately, insurance companies tend to accept almost anything for documentation as long as it's accompanied by a premium check. In most cases, no claim is ever filed and there is never a problem. They should know better.

New sale comparison type appraisals are not for this same purpose. They are a 3rd party opinion to confirm or refute that the seller has supplied complete and accurate information and are prepared in order to allow the consumer to make an informed purchase decision. Seller supplied reports can provide useful data for this but they do not answer the customers basic requirement. They don’t fulfill the purpose and IMO, aren’t applicable, even in cases where the information presented is correct.

Neil Beaty
Independent Appraisals in Denver

 

[PhillipSchmidt]

Well said Neil,

There is an undefined (and undefiable) remaining issue however, that of inspiration.

If I were a contractor employed by an insurance company, I might never make an inspired piece. Money is not the issue.

You can never expect to recreate something that was designed to match a customers desires, which existed for a specific purpose.

Creativity comes from within and no personally crafted piece of jewellery can be born without thoughts of whom it pleases (at whatever level). In this case, unless you extend your vision past the respective insurance company, inspiration will not be forthcoming.


Hope this makes sense,

Phillip

 

[denverappraiser]

Phillip,

I understand and agree with your point but in the case of insurance it’s entirely about the money. For defined value policies it’s a matter of saying that in the event of a loss, the company will pay ‘x’ amount of money and, in exchange, you agree to pay ‘y’ amount in premiums. Even this becomes a problem when there is a partial loss, for example a single earring or one ring from a set. For replacement policies, the question becomes what will it cost the company to replace the lost item with another of like kind and quality. The client is not obligated to accept the offered replacement but the company liability is capped in the contract by their cost to secure the replacement. If the client refuses the replacement and a suitable arrangement can’t be made, they will be offered cash for the amount the company would reasonably be expected to pay for a comparable piece. This is the clause that causes so much grief on both sides because it’s so hard to define what is comparable to the satisfaction of all participants. This is why it’s desirable to have complete and accurate examinations periodically done on all of your insured property and why, on high value items like jewelry, the company will require it.

If a customer paid a premium price to get a Feydakin original design then the replacement should be made with a Feydakin piece unless the client agrees that some other designer’s work will be an acceptable substitute. If this isn’t possible (for example if the original designer is deceased and their work is unavailable on the secondary market) or if the current offerings from that designer are deemed unacceptable for whatever reason (like lack of inspiration), they will either offer a cash settlement based on the appraisal description or a completely different product that the client agrees fulfills the company''s contractual obligation. As a last resort, a court may be required to make this decision.

Neil Beaty
Independent Appraisals in Denver

 

[Richard Sherwood]

I'll never forget some of the custom designer's I lost as clients when I started grading manufacture and workmanship on a scale of:

Exceptional Very Good Good Fair Poor

Exceptional would be on the scale of Mark Morrell's workmanship, or the majority of Tiffany's, Cartier's, and some other major house's workmanship.

Very Good is top carriage trade work, found mostly in fine independent jewelers and custom design houses.

Good can be found in a lot of average independent and chain stores selling mass made work, and fair/poor abounds everywhere.

To give you an example, I had a client who was a self-taught custom desinger. He never had a class, never attended seminars, never mentored under a better craftsman. He bragged about this often.

Most of his work I graded as "fair"...

In his own mind and in his own world, he was a legend, charging big bucks for his work. My appraisals didn't reflect this, as the work (in my opinion) didn't warrant the price he was charging.

A typical case of a jeweler/designer isolated from the rest of the world, and clueless. Or, in his opinion, an appraiser who had no conception of what good work was...

He was furious with me that I graded his work only as "fair", and never gave me or sent me another stitch of business. Nor spoke to me, for that matter.

On the other hand, there was a designer who did "exceptional" work, on a master craftman's scale, and didn't charge near enough for it. I made it plain to him that his work was exceptional, and worth more than he was charging. He raised his prices, and still can't keep up with the demand.

Here's another example of how an individual craftsman or jeweler might be led into a false impression of his merchandise. I appraised a tanzanite for a client who had purchased it from a certain jeweler. I appraised it for less than she'd paid for it, and the jeweler was incensed.

In cases like this, I always tell the offended party that I am open to revising my opinion if they can show documentation such as invoices showing they'd paid more for particular stones, or reasons why the fabrication of the piece cost more than I estimated, or put me in touch with a specialist in a certain area who could explain why this or that cost more.

This jeweler showed me several memos for the tanzanites he'd received. They were dramatically more expensive than what was available on the market, yet he had no idea because he had no basis for comparison. He only bought (actually received on memo) from one supplier, and trusted him that the prices were good. I had to tell him that he was simply overpaying, and should (1) start canvassing other sources, or (2) leverage better purchase prices, or (3) charge less of a markup, on order to stay competitive.

An active appraiser will often see more examples of workmanship and different gemstones in a month than many jewelers will see in a year. Not always, but often. They are in a unique position to compare the level of workmanship of many different designers, and gemstone pricing from many different sources. This experience often gives them an "edge" in the evaluation of workmanship and pricing.

It might take a rookie goldsmith 10 hours to make a piece that a more experienced goldsmith could make in half the time, better. If they both charge the same hourly labor rate, whose piece is priced correctly? The rookie, or the pro?

An experienced independent appraiser is in a position to give the client a neutral and educated opinion regarding this that the goldsmiths could never do because of their inherent bias, which is impossible for them to escape from. Human beings never see themselves through their own eyes as outside parties do.

 

[Richard Sherwood]

Date: 12/31/2004 1:49:52 PM
Author: Feydakin

By stating that any appraiser should not accept an assignment because they are involved in some aspect of the process, you are implying that they are incapable of providing a fair and competant service..

And yes, we do disagree.. I like to think that qualified professionals at all levels are capable of behaving in a professional manner at all times and do not allow potential profit to cause them to be anything less than professional and ethical.. Sure, it may be a bit naive of me to think so, but I truly believe that there is far more good out there than bad..

I also believe there is "far more good out there than bad".

But the "good" does not negate the fact there is plenty of "bad" out there... Standards are usually set in place to protect people from the "bad", and in the long run are "good" for everyone.

 

[PhillipSchmidt]

These are great postings.

I understand your point about the ''average'' jeweller. I definitely understand your position. I still can’t see the facility in place to assess the value of extraordinary skilled manufacture.

I understand the relativity between what I might deem as high skill and what you as an appraiser, being more qualified would, but for this posting I will make some assumptions.

When I started out, I left my apprenticeship and went head-on into it. I spent 3 years striving behind a bench and I thought I was ready. You would have thought 3 years of any concentrated hands-on training should facilitate a young and intelligent man a career, but it doesn''t. I was custom making designs that were more often then not, compromised by my short skill set. I would take two days building a ring I could do now in a few hours. I spent most of my time fixing cock-ups or taking long-winded paths, my standards were incomparably lower then they are now. I was good for a rookie!, in fact I was probably above average for an experienced jobbing jeweller.

What does this suggest of the average jeweller? If we are talking about custom work, I can promise you from first hand accounts that 10 to 20 times is often the reality in how much faster a professional will complete a skilled application then a rookie and you can also be certain of a better result.

Granted there are many ways to make jewellery fast, as modern techniques and modern expectations don’t necessitate old-school manufacture or handcrafted prices. Most jewellery is merely assembled anyway. I believe assembled bought castings constitute 95% of what you (all of you) see as an appraiser – correct me if I am wrong. Any novice can do a good job with that, but the skilled areas are very skilled and no assembler can hope to make a wage in custom jewellery. I know of no examples to the contrary.

Where is the generality formed? For standard low skilled jewellery work, you can set a very low manufacturing cost for the skilled operator. However given the difference in pace for a rookie - in qualifying them for a meagre wage you would have to triple the others cost.

You would make many jewellers very rich if you could qualify a decent wage to an average jeweller, one who made good use of his 5 years in the trade was well taught, but was actually less then a third as quick as a well trained and highly skilled craftsman with the right experience etc. Should the later make 3 times as much?

They rarely do…

I will put Mark Morrel into the equation. I''ll wager he is extremely fast as workmanship like his demands a wide skill set and natural ability. Moreover, it is certain he has the right techniques and processes to get the job done without unnecessary delays. I am not saying his pieces don''t take time. I am saying that were a rookie to build a comparable piece, the same piece would take much longer. I am sure he doesn''t have the luxury of taking his sweet time. Now the question is, do you value his work for the time it would take the average jeweller to make a comparable piece, or for the fact that most jewellers flat-out can''t do some of his stuff to the standards he achieves? Do you add a cost for the rarity and brilliance of his skills or do you take that for granted.

Not everybody wants to strive. Many jewellers are more disposed to business or to sales, to designing etc. Working by hand is a peculiar discipline suited only to some. What about the people with 10, 20 years experience that just do their 5 pieces and chat away having another nice day, not trying too hard, who might know a lot but can’t make anything tricky and just don’t care, nor need to care. They are just like the 90% of people who might view this post who don’t put their life into their work, but make a fair living.

In my experience as I become more proficient in any area of manufacture I charge less per-item. My first concern is making enough to live on. I have to be mindful of undercutting the competition, or lowering my standards trying to work towards and price that is unrealistic for me. I have concerns for people starting out. I have worked in so many other occupations - from fence building to Para legal to sports and I have not found another route where having a little experience and using a little enthusiasm doesn''t allow you a fair wage. In custom jewellery it just isn''t so. You need to be an expert.

I am saying this because I know that the trade is dieing. Jewellery manufacture is poor and designs are compromised by skill shortfalls. It isn’t fair to ask somebody to train 10 years to maintain the average wage. They aren’t doing it, and there is no incentive. I am not talking about the world-wide-web or the Mark Morrels and Tiffany set. I am talking about the person starting up. I speak from my own experience in the early days, from the many times I cocked something up and lost two days work, two days pay! I am talking about ‘designer-makers’ who look down upon skilled jewellery manufacture because they spend their time branding themselves and not enhancing their art. I speak for the educated and entirely fussy members of pricescope and to anybody who hasn’t worked behind the bench.

In the end nothing is worth more then people are willing to pay, but in thinking that hand crafted jewellery is with the same as mass-produced jewellery as many do. Making good hand made jewellery is no longer viable for those who haven’t been lucky enough or forceful enough to gain the 10 years experience it takes to operate at the standards needed to make a decent living.

I just don’t rightly know how an appraiser can account for that. If I spend 10 hours working on something it should take 2 hours to do with the appropriate technique, do I take home 20% as much money? How can you decide? If the technique I used was above average should I get 10% more because I did what most (who is most?) can’t do? It is a very real issue to me, as I get paid for finished jobs. I can give the same job to 100 jewellers and pay a half days wage each time, yet one of them that did it in an hour because he has the right method. Well he is in the right and we should all adopt his technique and get paid for one hour shouldn’t we?

Phillip

 

[fire&ice]

Date: 1/2/2005 4:33:43 PM
Author: Richard Sherwood

But the ''good'' does not negate the fact there is plenty of ''bad'' out there... Standards are usually set in place to protect people from the ''bad'', and in the long run are ''good'' for everyone.

But conversely, just because one is an "Independent" appraiser does not make them a good one.

Case in point that I personally have witnessed - all by independent appraisers:

Pottery - valued at 3k - sold in the appropriate market with appropriate attribution - 39K (this was a case of laziness)

Painting - valued at 5k - sold in the open marketplace 30k - sold in the appropriate market - 150k (a clear case of not keeping up with market trends with this genre)

Jewelry - 14k gold necklace w/ faceted amethysts (no mention of date, significance or possible attribution) $250.00 (clearly had no idea what they were looking at). Sold for $75.00 because no information was provided about this *estate* piece. Value in the proper market place for Period Arts & Crafts jewelry handwrought by a mastercraftsman from the time period - minimum of 2k.

Honestly, I could go on and on and on even with appraiser''s overvaluing items.

In each instance, I, who is not an independent as I handle these types of things, knew the value. My pulse was more on the market because I am an interested party. But then, maybe diamond/stone grading is much more cut & dry.

It''s not that I don''t see the value in third party eyes. And, I''m not addressing any of the independents on PS. But, I do see value in someone who regularly deals with pricing. And, shame on that jeweler who was paying too much for his Tansinites. He should have researched the stones - laziness in my eyes.

I''m talking out loud here - but - even if a craftsman is crummy - wouldn''t the design & name brand recognition enter into the picture? Sort of like these dopey Burberry scarves that are selling for $250.00. It''s O.K. quality; but, everyone thinks it''s the bees knees - so they are willing to pay around $175 more. I view Yurman pieces in the same light.

My point - a good appraiser is a good appraiser - regardless of their orientation.

BTW, aside from the occassional museum donation back up, I do not do formal appraisals. My feelings come from experience.

 

[claimsjeff]

Neil:

(First, I won''t weigh in on the issue of independent appraisals) In regard to insurance however, I agree. A policy is a contract, legally binding on both parties. No matter if it''s a cash policy, stated value, fair market policy, replacement policy, inflation guard endorsement....or any other bells and whistles.....there are some well defined terms. Whatever the device an insurer accepts as a valuation and from whom(and each insurer has underwriting guidelines on what they will and will not accept) this sets the value and accordingly the premium. As mentioned on another board a true "one of a kind piece" is just that.... No matter what value is placed on the item, the uniqueness or sentimental value cannot be placed (assuming it is indeed one of a kind). Thus the consumer who elects to buy insurance is buying protection against this investment(economics). Thus, if it is lost can they be compensated in some way(replacement/cash/etc...) to buy another similiar type of investment(piece).

Should insurers have the knowledge and in-house expertise to question and challenge values if necessary? Absolutely or they will not be providing any service to their policyholder when it comes to the settlement of their claim. However, it is truly a conflict of interest for them(us) to establish the values. Thus, it falls back to the consumer to do their homework on what they are buying and the value they are receiving and the commercial industry to treat them fair. Thanks

Jeff Mills
Vice President Claims
Jewelers Mutual Insurance Co.

 

[Richard Sherwood]

Hi Philip. You have good input from the other side of the bench. I'll try and comment to the best of my ability from an appraiser's point-of-view:

Date: 1/2/2005 8:47:51 PM
Author: Platinumsmith
These are great postings.

I understand your point about the 'average' jeweller. I definitely understand your position. I still can’t see the facility in place to assess the value of extraordinary skilled manufacture.

Extraordinary skilled manufacture is valued every day by those who recognize it, both appraisers and consumers.

I understand the relativity between what I might deem as high skill and what you as an appraiser, being more qualified would, but for this posting I will make some assumptions.

My instincts are that you would make a great appraiser of workmanship.

When I started out, I left my apprenticeship and went head-on into it. I spent 3 years striving behind a bench and I thought I was ready. You would have thought 3 years of any concentrated hands-on training should facilitate a young and intelligent man a career, but it doesn't. I was custom making designs that were more often then not, compromised by my short skill set. I would take two days building a ring I could do now in a few hours. I spent most of my time fixing cock-ups or taking long-winded paths, my standards were incomparably lower then they are now. I was good for a rookie!, in fact I was probably above average for an experienced jobbing jeweller.

What does this suggest of the average jeweller? If we are talking about custom work, I can promise you from first hand accounts that 10 to 20 times is often the reality in how much faster a professional will complete a skilled application then a rookie and you can also be certain of a better result.

Everybody is average on their way to excellence. Some make it, many don't. Those who do are usually rewarded with pride of work, recognition, and greater pay.

There is no shame in being average. Many "average" workers excell in other areas that are more important to them. They just have different priorities, that's all. There's nothing wrong with it, and indeed, rhe majority of consumers aren't willing to pay the price for excellence. So average workmanship allows them to enjoy the beauty of jewelry while allowing them to spend their money on other things they value more.

Granted there are many ways to make jewellery fast, as modern techniques and modern expectations don’t necessitate old-school manufacture or handcrafted prices. Most jewellery is merely assembled anyway. I believe assembled bought castings constitute 95% of what you (all of you) see as an appraiser – correct me if I am wrong. Any novice can do a good job with that, but the skilled areas are very skilled and no assembler can hope to make a wage in custom jewellery. I know of no examples to the contrary.

Where is the generality formed? For standard low skilled jewellery work, you can set a very low manufacturing cost for the skilled operator. However given the difference in pace for a rookie - in qualifying them for a meagre wage you would have to triple the others cost.

You would make many jewellers very rich if you could qualify a decent wage to an average jeweller, one who made good use of his 5 years in the trade was well taught, but was actually less then a third as quick as a well trained and highly skilled craftsman with the right experience etc. Should the later make 3 times as much?

They rarely do…

A skilled operator who produces product at three times the speed of a rookie will usually make considerably more than the rookie. If he doesn't, he will often move on to a firm that recognizes his ability or go in business for himself.

I will put Mark Morrel into the equation. I'll wager he is extremely fast as workmanship like his demands a wide skill set and natural ability. Moreover, it is certain he has the right techniques and processes to get the job done without unnecessary delays. I am not saying his pieces don't take time. I am saying that were a rookie to build a comparable piece, the same piece would take much longer. I am sure he doesn't have the luxury of taking his sweet time.

Mark told me that he averages two custom design pieces a week, sometimes three.

Now the question is, do you value his work for the time it would take the average jeweller to make a comparable piece, or for the fact that most jewellers flat-out can't do some of his stuff to the standards he achieves?

Both.

Do you add a cost for the rarity and brilliance of his skills or do you take that for granted.

No, excellence is never taken for granted among those who can recognize it.

Not everybody wants to strive. Many jewellers are more disposed to business or to sales, to designing etc.

Exactly. They are catering to their market, while a fine designer - master craftsman caters to his.

Working by hand is a peculiar discipline suited only to some. What about the people with 10, 20 years experience that just do their 5 pieces and chat away having another nice day, not trying too hard, who might know a lot but can’t make anything tricky and just don’t care, nor need to care. They are just like the 90% of people who might view this post who don’t put their life into their work, but make a fair living.

Yes, God bless them. They put their energies in what is important to them, and receive their rewards in those area. In jewelry making, they will be those who make a "fair" product and earn a "fair" living.

In my experience as I become more proficient in any area of manufacture I charge less per-item. My first concern is making enough to live on. I have to be mindful of undercutting the competition, or lowering my standards trying to work towards and price that is unrealistic for me. I have concerns for people starting out. I have worked in so many other occupations - from fence building to Para legal to sports and I have not found another route where having a little experience and using a little enthusiasm doesn't allow you a fair wage. In custom jewellery it just isn't so. You need to be an expert.

Yes. Anybody can build fences. Only an expert can build fine custom jewelry.

I am saying this because I know that the trade is dieing. Jewellery manufacture is poor and designs are compromised by skill shortfalls. It isn’t fair to ask somebody to train 10 years to maintain the average wage. They aren’t doing it, and there is no incentive. I am not talking about the world-wide-web or the Mark Morrels and Tiffany set. I am talking about the person starting up. I speak from my own experience in the early days, from the many times I cocked something up and lost two days work, two days pay! I am talking about ‘designer-makers’ who look down upon skilled jewellery manufacture because they spend their time branding themselves and not enhancing their art. I speak for the educated and entirely fussy members of pricescope and to anybody who hasn’t worked behind the bench.

In the end nothing is worth more then people are willing to pay, but in thinking that hand crafted jewellery is with the same as mass-produced jewellery as many do. Making good hand made jewellery is no longer viable for those who haven’t been lucky enough or forceful enough to gain the 10 years experience it takes to operate at the standards needed to make a decent living.

I just don’t rightly know how an appraiser can account for that. If I spend 10 hours working on something it should take 2 hours to do with the appropriate technique, do I take home 20% as much money?

If you spend 10 hours doing something which should take 2 hours to do then you are spending 8 hours in research and education on how to do that properly. The customer should not have to pay for this, because they are expecting you to already have adequate skills for the job which you take on. Otherwise you should pass the job on to someone who does.

How can you decide? If the technique I used was above average should I get 10% more because I did what most (who is most?) can’t do?

Yes, definitely. Perhaps quite a bit more than 10%.

It is a very real issue to me, as I get paid for finished jobs. I can give the same job to 100 jewellers and pay a half days wage each time, yet one of them that did it in an hour because he has the right method. Well he is in the right and we should all adopt his technique and get paid for one hour shouldn’t we?

If you pay all a half day's wages for the same finished product, then the one who finishes it in an hour should receive the same wage as all the others. He should not be penalized for his excellence, but rewarded.

Rich

Phillip

 

[Richard Sherwood]

Date: 1/3/2005 10:35:36 AM
Author: fire&ice

Date: 1/2/2005 4:33:43 PM
Author: Richard Sherwood



But the 'good' does not negate the fact there is plenty of 'bad' out there... Standards are usually set in place to protect people from the 'bad', and in the long run are 'good' for everyone.

But conversely, just because one is an 'Independent' appraiser does not make them a good one.

I agree completely. Your examples below illustrate this. My comments are of course based on an appraiser who knows what he is doing.

I have seen gross incompetence on both sides of the fence, and indeed much more among dealers than among appraisers. There are probably a thousand or more dealers to every one appraiser out there.

Case in point that I personally have witnessed - all by independent appraisers:

Pottery - valued at 3k - sold in the appropriate market with appropriate attribution - 39K (this was a case of laziness)

Painting - valued at 5k - sold in the open marketplace 30k - sold in the appropriate market - 150k (a clear case of not keeping up with market trends with this genre)

Jewelry - 14k gold necklace w/ faceted amethysts (no mention of date, significance or possible attribution) $250.00 (clearly had no idea what they were looking at). Sold for $75.00 because no information was provided about this *estate* piece. Value in the proper market place for Period Arts & Crafts jewelry handwrought by a mastercraftsman from the time period - minimum of 2k.

Honestly, I could go on and on and on even with appraiser's overvaluing items.

In each instance, I, who is not an independent as I handle these types of things, knew the value. My pulse was more on the market because I am an interested party.

And I would expect no less from you, F&I.

But then, maybe diamond/stone grading is much more cut & dry.

The fine arts market is definitely more nebulous than the gemstone market. The diamond market especially is much more cut and dried, with the possible exception of fancy colored diamonds. The colored stone market has a nebulousness that begins to approach that of the fine arts market, but doesn't come close, really.

It's not that I don't see the value in third party eyes. And, I'm not addressing any of the independents on PS. But, I do see value in someone who regularly deals with pricing.

Yes, definitely. That's why the best appraisers are usually those with decades of practical experience.

And, shame on that jeweler who was paying too much for his Tansinites. He should have researched the stones - laziness in my eyes.

I agree. A customer shouldn't have to pay for his ineptness.

I'm talking out loud here - but - even if a craftsman is crummy - wouldn't the design & name brand recognition enter into the picture? Sort of like these dopey Burberry scarves that are selling for $250.00. It's O.K. quality; but, everyone thinks it's the bees knees - so they are willing to pay around $175 more. I view Yurman pieces in the same light.

Yes. If a certain designer consistently commands a certain price level on the market, then that is the level at which his merchandise should be appraised.

I still, however, appraise the piece as I see it in terms of quality and workmanship.

If a designer falls behind in either of those areas, consumers will recognize it in the long run and the value of his pieces will usually decline.

My point - a good appraiser is a good appraiser - regardless of their orientation.

Agreed. I refer business all the time to those I call "objective appraisers", those who are in the business of buying and selling, yet still issue objective appraisals.

BTW, aside from the occassional museum donation back up, I do not do formal appraisals. My feelings come from experience.

Yes, experience is the key. I often get inquiries from lay people who want to learn gemology and go straight into appraising. I always tell them that they should get AT LEAST five years practical experience in addition to a GG before attempting appraising.

Rich

 

[Richard Sherwood]

Date: 1/4/2005 9:56:32 AM
Author: crankydave
Richard,

Some comments about your tanzanite scenerio. Based upon your example as written, it appears that all like tanzanites (I''ll use tanzanites) should be priced, by every retailer, the same or they will be underpriced or overpriced whatever the case may be.

No, pricing will differ according to the type of operation, its overhead and ability to command higher prices for one reason or another.

If there is a legitimate reason for a higher price, then an appraiser will take this into account. The Tiffany factor is a good example. Usually most Tiffany pieces cost more than average retail replacement. It is a recognized, established market, therefore appraisers add a premium for the Tiffany name.

This is simply not practical or reasonable. How many markups along the line, how many people are ''allowed'' to make money on the tanzanite, and how much, before a stone becomes ''not worth'' what a consumer pays?

This is the dilemna an appraiser faces every day. You want to recognize the range of the market, yet give your client an estimate of "reasonableness" to protect them from overpaying.

Merchants, and hence consumers consumers, will usually pay more for memo goods, sometimes exceptionally more.

It''s common in the trade for vendors to ask less of a markup on memo goods than cash purchase goods because they realize the price disparity between the two.

Does this make the stone ''not worth'' what was paid? Each hand the stone passes through, and the terms dictated by those hands, as well as factors involving quantity, affect the merchants cost. At what point does the line get drawn?

The line gets drawn at an "average value" for that size and quality of stone. If a jeweler is paying and charging more than average, then it will be reflected in how his merchandise appraises out. If he is paying and charging less, then it will be reflected as well.

As I pointed out with the jeweler selling the tanzanite, he was unaware that he was paying more than the market''s norm. His isolation affected his perception, as well as his charging the same markup for memo goods as for cash goods.

If another merchant happened to be selling the tanzanite for a similar price, does the purchase now become ''worth'' what was paid?

If more jewelers than not are selling stones for a similar price, then that establishes the market level.

It seems to me, on the surface, this could be seen as setting ''worth'' rather than determining or assessing it.

The appraiser merely reports value. The market sets it.

I find your grading of manufacture and workmanship most interesting. Out of curiosity, two similar pieces. Both manufactured/made equally well. One cast the other hand fabricated. Do you grade the workmanship as equal or not?
Why?

I report the method of manufacture, and then the level of workmanship. Both a hand fabricated piece and a cast piece can receive an "exceptional workmanship" grade, but (other factors being equal) the hand fabricated piece will command a greater value.

Rich

Dave

 

[Iceman]

I think the biggest problem is what Insurance Companies except. If they would tighten up their end we would see less of this misunderstanding.

Yes, they want to see the market mode and not what you sold the product for.

But they should look at markets that they (ins co.) would buy to replace the product also.

Best thing to do is take the apprasial and the receipt in to your insurance company and figure out what you need to insure the diamond for.


Best Regards

 

[Richard Sherwood]

Date: 1/5/2005 9:37

7 AM
Author: crankydave

Yet, the merchants above the average, such as the tanzantite merchant, is being ''told'' to lower prices or face reprisal from their customers because of appraisal values, and the craftsman below the average was told, or will be based upon appraisal values, to charge more. Any move away from the ''average'' will be reported as such and the merchant over such average will be forced to lower prices and the merchants under such average will be shown the can and/or should raise theirs, effectively, always moving ''market price'' towards the average. Only if a particular market moves in unison will the ''average'' be affected. How is this not setting ''worth'' and/or ''market value'' or at the very least influencing what it should be?

What value would you suggest an appraiser use?

A couple notes- I make it clear on the cover sheet of the appraisal that the value arrived at is SGL''s opinion of average retail replacement value for this major metropolitan area. In the actual appraisal is a paragraph which states that "valuations may vary according to differing market levels and individual pricing structures of different jewelers or dealers." In the info sheets of the appraisal is a sheet entitled "Retail Replacement Value- What Is It?" in which I explain what we''re talking about here.

In addition, at customer request I will prepare a multi-tiered market level analysis which shows them the different values in the half dozen different market levels which exist in the market today.

I think most clients are aware that there are retailers who sell above and below the average. Whether or not the presence or absence of "add on values" justifies the increase or decrease in price is up to the consumer to decide. My job is to give them a benchmark to help in their decision making process.

''I find your grading of manufacture and workmanship most interesting. Out of curiosity, two similar pieces. Both manufactured/made equally well. One cast the other hand fabricated. Do you grade the workmanship as equal or not?
Why?

I report the method of manufacture, and then the level of workmanship. Both a hand fabricated piece and a cast piece can receive an ''exceptional workmanship'' grade, but (other factors being equal) the hand fabricated piece will command a greater value.''

Specifically, would you grade two similar pieces, one cast one hand fabricated, both manufactured equally well, regardless of level, the same? Assigning value is a separate and different question.

In that particular grading category, I am grading the excellence of the workmanship for that method of manufacture. If the piece is a top casting, it would receive an "exceptional" grade for that level of casting. If the piece is a top hand fabricated piece, it would receive an "exceptional" grade for that level of hand fabrication.

In other words, in that category we are talking about the excellence of the method of manufacture, not whether one manufacturing technique is better than another. That I describe seperately if the technique used plays a noticeable part in influencing the price of the piece.

Rich


Dave

 

[RockDoc]

Nice posts Richard, Phillip, Dave and Iceman.


Maybe all insurance companies would be better off if they significantly raise their standards.....One of the major problems is the interest by the person authoring the report. If the item is sold by the person issuing the appraisal, then the insurance company should DEMAND they know this fact, how much the consumer actually paid for the item, and if the item is to be insured for a greater amount WHY. Any material facts concerning the item MUST be disclosed so the insurance company and the consumer can make proper decisions.

Appraisers should definately report how they arrived at the value(s) that they put in the report. The use of the term "retail replacement" is misleading when someone elses prices are used. This is a common practice by sellers.

Differences in sale prices, happen all the time. Research by appraisers is crucial in this situation. As Fire and Ice points out she has seen items sell for significantly more than the appraised values. Yes, in those circumstances I agree that the appraiser didn''t do their work correctly... More explanation as to why this happened is needed as well. The major auction houses, do appraisals, generally using a "seat of the pants" methodolgy which is designed at getting the consumer to consign these item. Often their pre-auction estimates are less than the actual hammer prices. Why? the lower the estimate the more buyers it attracts.

But how many appraisals are for more than what the items are sold for? This is the far more occuring scenario than the item undervalue because of appraiser''s negligence is researching the values correctly.

Actually the fine arts world isn''t as nebulous as was written about in this thread. There are lots of supporting research for these items. To avoid this appraisers need to list the comparables they used to make their determination of value.

Richard''s listing of jewelry manufacturer qualities is quite good.... at least their is some information about the quality of the item stated in advance of insuring the item.

One of the problems is what percentage of appraisers provide the information to insurance companies and their clients?
Research and proper report writing takes time, and most consumers want to take the "cheap" road. A common thing I hear is " It''s just for insurance - so I don''t need all that information". The resolution of courseis for the insurance companies to not be as loose accepting appraisals that really aren''t appraisals ( because its done by the seller without disclosing that fact).

This is where appraisal courses should be required of those providing these reports. Even many courses are lacking in nature.


Jeff (at JM) .... doesn''t JM require that a RETAIL price be used to insure the item, when in the event of a loss, JM pays a particular percentage of the seller''s cost for that item to the selling jeweler?

Rockdoc

 

[claimsjeff]

Iceman: If you go to each specific company (SFI, Chubb, USAA, JM) they each will clearly indicate what they are looking for in values/evaluations/etc...or they should. The true issue is that we are never going to be consistent or ask for the same thing. Primarily because the Underwriting Rules that each company creates provides them a competitive advantage in some areas over their competitors. Thus do to anti-trust laws(price fixing, etc....) you will never get all of the companies to agree on the same thing. Thus, this creates havoc for the appraisers and everyone else that are creating documents for customers for insurance purposes. At some level of detail and professionalism of the document that is created and the indivdual(s) creating it...all companies will accept. Wish I had a better answer for you.

Jeff Mills
Vice President Claims
Jewelers Mutual Insurance Co.

 

[claimsjeff]

Rockdoc- Yes we look for the retail price(and I would like to see sales tax added for those states that require sales tax- even if it''s a sub line). We pay a retailer his wholesale cost plus a certain percentage mark-up for the replacement item. We do have some people schedule their items on a cash basis versus replacement (especially unique items), and we pay the current market value at the time of the loss up to the policy limit.

Thanks
Jeff Mills
Vice President Claims
Jewelers Mutual Insurance Co.

 

[fire&ice]

Date: 1/5/2005 11:13:49 AM
Author: RockDoc
Differences in sale prices, happen all the time. Research by appraisers is crucial in this situation. As Fire and Ice points out she has seen items sell for significantly more than the appraised values. Yes, in those circumstances I agree that the appraiser didn''t do their work correctly... More explanation as to why this happened is needed as well. The major auction houses, do appraisals, generally using a ''seat of the pants'' methodolgy which is designed at getting the consumer to consign these item. Often their pre-auction estimates are less than the actual hammer prices. Why? the lower the estimate the more buyers it attracts.

But how many appraisals are for more than what the items are sold for? This is the far more occuring scenario than the item undervalue because of appraiser''s negligence is researching the values correctly.

Actually the fine arts world isn''t as nebulous as was written about in this thread. There are lots of supporting research for these items. To avoid this appraisers need to list the comparables they used to make their determination of value.

Yes, I have noted that. But, the problem with those is that the "appraiser" doesn''t understand the subtle nuances that one with their pulse to the market ihas. Some of the appraisers in question use comps from various places. But, their comps are tied to a time & place - and most don''t take into consideration subtlties in the market place.

I have to disagree. The art world in general is far more subjective. Maybe the disconnect is that I deal in a very *new* market that changes from month to month. And, from my perpective - I''m looking at the appraisals as a proper value for the selling arena. So, more is at stake. I''m not looking at this as a fair replacement value in case something lets lost/stolen.

In the end, Iceman''s senario is exactly the way I handle our insurance company. I produce the sales receipt, the appraisal & from there we decide how much should cover me in the event of a loss. I''m not looking to make money on the deal or change what I have. I just want what I had before w/ enough money to cover it.

 

[RockDoc]

Date: 1/5/2005 11:18:47 AM
Author: claimsjeff
Rockdoc- Yes we look for the retail price(and I would like to see sales tax added for those states that require sales tax- even if it''s a sub line). We pay a retailer his wholesale cost plus a certain percentage mark-up for the replacement item. We do have some people schedule their items on a cash basis versus replacement (especially unique items), and we pay the current market value at the time of the loss up to the policy limit.

Thanks
Jeff Mills
Vice President Claims
Jewelers Mutual Insurance Co.

Thanks for your reply Jeff....

This is the one area that I really take exception to.... JM is accepting and issuing a policy where in advance of a loss the company knows and acknoledges that they are practicing over insuring the item based on the terms of the contract (policy) will pay in the event of a loss. This of course results in the insurance company getting higher premiums The relative ratio of losses is small next to the people that do experience claims. The extra amount of the premium for most people goes on for often many years before they find out they insured for "X" amount, but don''t get that amount if there is a loss. Since most insureds don''t have claims, they never find this out. This is why I prefer a policy that is Valued At or As Agreed basis.

I wish JM would offer that type of policy. That would certainly makes things much easier and desireable for everyone concerned.

Rockdoc

 

[claimsjeff]

We do offer a cash policy however the premium is different then the replacement policy. To be honest(and keep in mind I''m the claims guy) there is a lot of fraud on cash policies. I would never commit fraud...but it''s the easiest way to make money today versus workers'' comp or auto claims. We catch a lot of these and prosecute them when we can prove it, but I''m sure some still gets through. Guess where the increased cost of claims goes(premium). The way prices keep going up in platinum, gold, and princess cuts it''s getting more difficult to actually replace an item at the policy limit once we get past 1-2 years from the appraisal. By replacing the items for lower then the limits in some cases, these savings get past back to the insured''s in lower premiums. I have met many of the claims executives with the other insurers mentioned and with the replacement services that they use on the cash pay out they run into the same headaches in lieu of simply replacing the items. Obviously cash policies do not help the jewelry commercial community...My best guess from working at another well known insurer that does pay out cash...less then 50% of the people actually ever go back to buying anything related to jewelry. They have bills to pay...a new T.V., etc...

Thanks!

Jeff Mills
Vice President Claims
Jewelers Mutual Insurance Co.

 

[PhillipSchmidt]

This is all very intriguing. What a tuff job you have. Dave your right.

I refer to non mass-produced jewellery.

Commissioning a replacment for an item is a seperate buisness that insurance companies undertake. I don''t know how much control the average claimant has as to commissioning their own replacement. ??. My experience with insurance companies is that most tradesment don''t want the work with them. They demand trade prices, which is ok, but amongst trade outlets insurance companies are the hardest to make a profit from and I for one would prefer to choose my own jeweller and give him the insured value and allow him his retail profit.

I suppose this is the other edge to the sword where insurance companies are forced to raise premiums on cash claims because of fraud. The balance is not even, as the insurance company furnishing a $6k ring but paying wholesale of $4k, will have essentially made a profit on the claim where the insured payed a premium on $6k

What concernes me also, and something that swings the balance away from the insurance company, and something which an appraiser would have to take into account, is that jewellery does not last. Some pieces might last 50 years and others only 2. One person might wear their ring away in a year another may take 20.

Therefore: how much is a custom made ring worth after it is worn?, How long is a piece of string?, What are the perameters?

Phillip

 

[Richard Sherwood]

Date: 1/5/2005 3

8:21 PM
Author: crankydave

Appraising an item for less than what was paid, precludes the customer from replacing it from the place whence it came.

I understand where you're coming from on this, but how do you handle the jeweler who is still living in the "old days" and sells a 2 carat diamond for keystone? Unbelievably, this happened to me just a couple months ago. I appraised the item for 65% over wholesale when he had sold it for 100% over wholesale. And we're talking a substantial amount of money here. When he called me to complain, I said "My God, nobody sells a 2 carat diamond for keystone anymore", to which he replied, "Yeah, I'm living in the past, but that's what I charge".

I could not bring myself to appraise this high dollar purchase at a 100% markup when there was no add-on value offered by this jeweler or overhead factors to justify it. I told the client I felt the diamond was overpriced, and they returned it. The jeweler lost a sale because he was out of touch with the market.

Value (price) paid should always be shown.

In a perfect world this would be my preference as well, but the truth is the majority of clients do not want to tell you what they paid. They want to see what you appraise it for. Additionally, clients will sometimes not be truthful about what they paid for an item, and reluctant to show any documentation.

In addition, market average prices, one could expect to find within a particular geographic region at the particular place and time of the appraisal etc., should be included. If any particular vendor happens to be within an area and happens to be selling their product for considerably more than their competitors then they become the high point on which the average is deterimined.

This is the method I use, although I usually will toss out the highest and lowest "red herrings" in order to make the average realistic. For example, tossing out Keystone 2 Carat Guy and Bottomfeeder Pawnshop Guy.

They and their customers should not be told their product/purchase was not worth it based upon market average. Afterall, their price would have had to be used to figure the average. Someone has to be the highest and someone the lowest. This should be dictated by the market and the consumers and not the assignment of value by an appraiser. Please, this is meant as no offense to any of the appraisers here.

No offense taken, and I am basically in agreement with you.

For insurance purposes, the consumer now has the price they paid as well as the market price/range to discuss with their insurance agent/company.

This should be the same on a new purchase appraisals. The verification of fact as it has been presented by the seller, and the presentation of price or worth based upon selling price and market average or range. Allow the consumer to decide if the got what they paid for based upon all the factors the individual consumer takes into consideration.

This is the scenario which RockDoc advocates, and I agree it is the best. Many times however, it is not the purpose for which a client hires an appraiser. They often hire the appraiser with the mandate, "I want to know the quality of this piece, and what a reasonable price would be to pay for it." The appraiser works from that starting point to produce the analysis the client is requesting.

In this case the appraiser has to answer the question such as I answered in regards to the keystoned 2 carat solitaire. "Is this a reasonable price to pay for this diamond?".............."No, not in my opinion."

I've heard the house appraisal/purchase mentioned a few times. Interestingly enough, in many, many cases the appraiser, hired by the bank, simply verifies that the house is 'worth' the purchase price and places a 'value' that is exactly the same as the purchase price.

If it is not "worth" the purchase price, the appraiser will be the first one to tell the bank.

Rich


Dave

 

[RockDoc]

Date: 1/5/2005 7:53:11 PM
Author: Richard Sherwood

Date: 1/5/2005 3

8:21 PM
Author: crankydave

Appraising an item for less than what was paid, precludes the customer from replacing it from the place whence it came.

I understand where you''re coming from on this, but how do you handle the jeweler who is still living in the ''old days'' and sells a 2 carat diamond for keystone? Unbelievably, this happened to me just a couple months ago. I appraised the item for 65% over wholesale when he had sold it for 100% over wholesale. And we''re talking a substantial amount of money here. When he called me to complain, I said ''My God, nobody sells a 2 carat diamond for keystone anymore'', to which he replied, ''Yeah, I''m living in the past, but that''s what I charge''.

I could not bring myself to appraise this high dollar purchase at a 100% markup when there was no add-on value offered by this jeweler or overhead factors to justify it. I told the client I felt the diamond was overpriced, and they returned it. The jeweler lost a sale because he was out of touch with the market.

Value (price) paid should always be shown.

In a perfect world this would be my preference as well, but the truth is the majority of clients do not want to tell you what they paid. They want to see what you appraise it for. Additionally, clients will sometimes not be truthful about what they paid for an item, and reluctant to show any documentation.

In addition, market average prices, one could expect to find within a particular geographic region at the particular place and time of the appraisal etc., should be included. If any particular vendor happens to be within an area and happens to be selling their product for considerably more than their competitors then they become the high point on which the average is deterimined.

This is the method I use, although I usually will toss out the highest and lowest ''red herrings'' in order to make the average realistic. For example, tossing out Keystone 2 Carat Guy and Bottomfeeder Pawnshop Guy.

They and their customers should not be told their product/purchase was not worth it based upon market average. Afterall, their price would have had to be used to figure the average. Someone has to be the highest and someone the lowest. This should be dictated by the market and the consumers and not the assignment of value by an appraiser. Please, this is meant as no offense to any of the appraisers here.

No offense taken, and I am basically in agreement with you.

For insurance purposes, the consumer now has the price they paid as well as the market price/range to discuss with their insurance agent/company.

This should be the same on a new purchase appraisals. The verification of fact as it has been presented by the seller, and the presentation of price or worth based upon selling price and market average or range. Allow the consumer to decide if the got what they paid for based upon all the factors the individual consumer takes into consideration.

This is the scenario which RockDoc advocates, and I agree it is the best. Many times however, it is not the purpose for which a client hires an appraiser. They often hire the appraiser with the mandate, ''I want to know the quality of this piece, and what a reasonable price would be to pay for it.'' The appraiser works from that starting point to produce the analysis the client is requesting.

In this case the appraiser has to answer the question such as I answered in regards to the keystoned 2 carat solitaire. ''Is this a reasonable price to pay for this diamond?''..............''No, not in my opinion.''

I''ve heard the house appraisal/purchase mentioned a few times. Interestingly enough, in many, many cases the appraiser, hired by the bank, simply verifies that the house is ''worth'' the purchase price and places a ''value'' that is exactly the same as the purchase price.

If it is not ''worth'' the purchase price, the appraiser will be the first one to tell the bank.

Rich


Dave

Interesting, this scenario with the keystone (100%) markup. In my opinion the value concusion wasn''t done correctly, even though the same results MIGHT have occurred.

Using percentage markups is hypothetical at best. In valuation we do need to pay some attention in how a house is valued.
The 100 percent markup sale is in fact a comparable. As such it should be listed in your comps as a factual happening. However, you need to find other comps. You need to explain in the report why a most commonly occuring comparable is less. It isn''t our job to pick one value in this case. It is to report all the relevant information. In this case, you might be "on the money" by experience, but the reporting of the inate details on an expensive stone is needed. Not every similar house sells for the same price. Based on the conditions of sale, type of payment, time of sale relevant to settlement date, all have bearing on the comps. For most items the comps vary, I believe it''s "tighte" since most commonly the sales are between a consumer seller and a consumer buyer. So unlike jewelry where there are many market levels, it is a tad easier to do a real estate residential assignment.

So my point here is that carefully research for comps in this assignment is called for. This is important if you are called "on the carpet" to substanciate how your value conclusion was made. An appraisal valuation for insurance is a totally different animal than confirmation of purchase priice. For little diamonds, it isn''t practical to put in this amount of time, as most consumers don''t want to pay the appraiser for the time it takes to really do this right and professinally. Some assignments you need to carefully think if you want to do them if you sense its problematic.

An interesting question to ponder would be does anyone else in your area working on keystone? I agree that for most markets that MIGHT be high. But it also depends on whether the jewelry or not made a "good buy himself". This is one reason that percentage by markup can be very misleading. ie the wholesale price might vary a lot. For instance suppose a jewelry bought the stone from a private or estate and paid only 40% of RAP, then a high markup might be deserving. In Florida so many diamonds are bought in the secondary market, and this has to be considered too. It would be far better if jewlers would communicate with appraisers more. In the last 7 or 8 years this has improved a lot. But a lot of sellers ( retail, wholesale and manufacturers) are not cooperating with appraisers in our research.This hold particularly true with custom pieces. Mark Morrel is a prime example... Ask him... he''ll tell you that I''ve called him to get the relevant details about an item he made. Same hold true when I see an item that is of superior or unusal manufacture.

As far as customers who want to play games and not disclose the purchase price, I understand, but if what they paid is relevant to the function and purpose you need to know the truthful, complete and accurate facts. If the client doesn''t want to tell you this in an insurance type valuation, they could be trying to set up the insurance company intending to get more than they paid without explanation. This certainly violates most insurance policies requirement that they have all the material facts concerning the item, and could vacate the claim. Then who they gonna go after? It''s better to explain this to them, then they understand why you need to know. Certainly you can discuss how much they paid after you come up with your value conclusion and if there is a large difference interview the client more to find out why such a difference occured.

I do take exception in the real estate world valuation with the coziness between banks and their "approved" appraisers. The appraiser looks out for the banks ( or lender''s interest) and all the client gets is the bill. That to me is a highly unethical practice, especially when the lender''s appraiser is on staff with the lender. Another substandard practice is the "drive by" examination of the property. In this case, the appraiser doesn''t even get to see the inside of a home to see if it is in a salable condition. I saw one of these where the people were losing their home due to lapse of them making the payments. When the bank threatened to take the house, the gutted the inside. Took out al the applicances, and many parts of the plumbing and built in "extras". The house outside looked great ... on the inside a disaster..

It''s like offering advice here as to proper price without seeing the diamond. Highly risky. Just using the prices listed on a database does not qualify without seeing the stones, and if such is the basis for value conclusion, it should be noted in a professional written report, or at least brought to the attention of the purchaser that seeing a stone is paramount to estimating its value.

Sorry to be so long... there is so much to this, that I could write unendlessly about the subject.

Regards...

Hope you all had a good new year.

Rockdoc

 

[Richard Sherwood]

Date: 1/5/2005 8:50:50 PM
Author: RockDoc

Interesting, this scenario with the keystone (100%) markup. In my opinion the value concusion wasn't done correctly, even though the same results MIGHT have occurred.

The wholesale value I arrived at was $200 dollars different from the $14,000 price the jeweler paid for the stone.

Using percentage markups is hypothetical at best.

Percentage markups are commonly used to determine purchase and selling prices in the diamond business. The monitoring of these percentages is highly documented throughout the industry, based on thousands of "comps".

In valuation we do need to pay some attention in how a house is valued. The 100 percent markup sale is in fact a comparable. As such it should be listed in your comps as a factual happening. However, you need to find other comps. You need to explain in the report why a most commonly occuring comparable is less. It isn't our job to pick one value in this case. It is to report all the relevant information. In this case, you might be 'on the money' by experience, but the reporting of the inate details on an expensive stone is needed. Not every similar house sells for the same price. Based on the conditions of sale, type of payment, time of sale relevant to settlement date, all have bearing on the comps. For most items the comps vary, I believe it's 'tighte' since most commonly the sales are between a consumer seller and a consumer buyer. So unlike jewelry where there are many market levels, it is a tad easier to do a real estate residential assignment.

So my point here is that carefully research for comps in this assignment is called for. This is important if you are called 'on the carpet' to substanciate how your value conclusion was made.

Doc, what source(s) do you use to get your retail comps? I have no trouble finding wholesale comps, and indeed used several sources in coming up with the comps for the 2 carat appraisal.

But retail comps are a different matter. Do you call retail stores and ask them what they sold a particular 2 carat diamond for? Or keep detailed records of retail sales somehow?

How do you know these comps are comparable if you don't see them with your own eyes? How much time do you spend doing this on the average appraisal? How many comps do you list? Do you ever once look at a Rap sheet and figure out a quick percentage to see if you're in the right ballpark?

In my opinion the information supplied by such organizations as Rapaport, Market Monitor, The Guide, Polygon, DiamondFloor.com, etc usually furnish all the comps you need to determine fair market wholesale, in a much more efficient manner than an appraiser could do on his own. The key is having the experience to know how much of a discount or premium make commands. From there the pricing structures for retail transactions are well known and publicized.

An interesting question to ponder would be does anyone else in your area working on keystone?

Not on $14,000 cost 2 carat diamonds.

I agree that for most markets that MIGHT be high. But it also depends on whether the jewelry or not made a 'good buy himself'. This is one reason that percentage by markup can be very misleading. ie the wholesale price might vary a lot. For instance suppose a jewelry bought the stone from a private or estate and paid only 40% of RAP, then a high markup might be deserving.

When I speak of markup, I'm speaking of markup over fair market wholesale, the price a jeweler usually pays a wholesaler. If a dealer buys a diamond at half this price, then of course he could make a keystone profit and still sell the stone extremely competitively. But that's a differnet animal than the usual wholesaler>jeweler / jeweler>consumer transaction.

In Florida so many diamonds are bought in the secondary market, and this has to be considered too. It would be far better if jewlers would communicate with appraisers more. In the last 7 or 8 years this has improved a lot. But a lot of sellers ( retail, wholesale and manufacturers) are not cooperating with appraisers in our research.

I find mostly retailers to be reluctant on furnishing information. Wholesalers and manufacturers I have no problem with.

This hold particularly true with custom pieces. Mark Morrel is a prime example... Ask him... he'll tell you that I've called him to get the relevant details about an item he made. Same hold true when I see an item that is of superior or unusal manufacture.

As far as customers who want to play games and not disclose the purchase price, I understand, but if what they paid is relevant to the function and purpose you need to know the truthful, complete and accurate facts. If the client doesn't want to tell you this in an insurance type valuation, they could be trying to set up the insurance company intending to get more than they paid without explanation. This certainly violates most insurance policies requirement that they have all the material facts concerning the item, and could vacate the claim. Then who they gonna go after? It's better to explain this to them, then they understand why you need to know. Certainly you can discuss how much they paid after you come up with your value conclusion and if there is a large difference interview the client more to find out why such a difference occured.

Yes, agreed. But the "function and purpose" that a client is commonly after is to see if he paid a fair price. After that point, they are then often more forthcoming with the information needing to make sure they are adequately protected for insurance purposes.

I do take exception in the real estate world valuation with the coziness between banks and their 'approved' appraisers. The appraiser looks out for the banks ( or lender's interest) and all the client gets is the bill. That to me is a highly unethical practice, especially when the lender's appraiser is on staff with the lender. Another substandard practice is the 'drive by' examination of the property. In this case, the appraiser doesn't even get to see the inside of a home to see if it is in a salable condition. I saw one of these where the people were losing their home due to lapse of them making the payments. When the bank threatened to take the house, the gutted the inside. Took out al the applicances, and many parts of the plumbing and built in 'extras'. The house outside looked great ... on the inside a disaster..

It's like offering advice here as to proper price without seeing the diamond. Highly risky. Just using the prices listed on a database does not qualify without seeing the stones, and if such is the basis for value conclusion, it should be noted in a professional written report, or at least brought to the attention of the purchaser that seeing a stone is paramount to estimating its value.

So again, do you personally see all the comps you use in your appraisals?

Rich

Sorry to be so long... there is so much to this, that I could write unendlessly about the subject.

Regards...

Hope you all had a good new year.

Rockdoc

 

[Richard Sherwood]

Date: 1/5/2005 11:18:54 PM
Author: crankydave


I truly applaud you, and others, for this type dedication to their trade. In all sincerity, I do.

I go back to my original premise however, of setting worth or value.

A vendor sold, and a consumer paid a particular price for a large stone. This is the 'market' and the 'consumer' setting value. Your intervention, although done in the best interest of your client as you see it, clearly was setting value and worth. The jeweler lost the sale because an outside party, a respected party, told their customer that what they paid, or were to pay, was overpriced.

Dave, I love you, but you're dead wrong. The jeweler lost the sale because his price was way out of the market. I did not set the value or worth. I merely reported what the market level norm was. That norm is set by thousands of consumer purchases, not me.

If we followed your line of thinking to it's end, you would be justifying sales made by unscrupulous dealers selling stones to naive and uneducated consumers for exponentially more they they're worth. Just because a sale takes place does not make it a valid transaction.

When the 2 carat consumer gained enough knowledge to make an intelligent decision, he returned the diamond. Hence, he did not "set the value" with a purchase. Rather he "set the value" with his non-purchase.

Rich

Dave