Appraisals for resale

[denverappraiser]

I am increasingly being asked by consumers for documentation that will be helpful to them in reselling their jewelry. As most of you know, this is an area of trouble for appraisers and it leads to big issues about independence but it addresses a real and valid problem for our clients who have jewelery that they intend to sell and who may be unfamiliar with the process. I would love to hear some opinions from the prosumers out there on how to best handle these requests that both provides our clients with accurate and useful information and that doesn’t contribute to deceiving the final buyer. Some specific concerns are:

1) The price. Most people want a document with a large number describing an ‘appraisal value’ that they can then discount to their final buyer as evidence that they are getting a good deal. In effect, they are looking for documentation that they can use as an advertisement. Buyers are rightfully warned about purchases with this sort of thing and appraisers are correct to be concerned that this is not an appraisal in any normal sense of the word as well as big potential liabilities associated with projects of this nature. An appraisal must be describing a particular market and an accurate assessment of the resale potential of a piece may be part of what the client is seeking but it’s almost always NOT what they want on a report that they intend to show to a potential buyer. Is there a way to help clients with their advertising that serves everyone’s objectives (the client, the appraiser and the eventual buyer)? Would it be useful to the seller to provide a report containing a description but not a price? Would buyers accept this or would it be seen as being even less useful than most seller supplied paperwork?

2) The description. The whole point of seeking out this kind of documentation is to gain some credibility from the appraiser/lab that the information presented in the advertising is factual. The appraiser is being pointed to as an expert opinion to bolster the credibility of the seller. This causes the seller to be interested in descriptions that highlight the desirable attributes and minimize the problems. They want photos that are attractive and complimentary. The report may all may be true, but it’s not necessarily the whole truth. Spend a few minutes browsing ebay advertising to find numerous examples of this. As a professional assisting a client in preparing advertising materials knowing full well that your name is going to be used as an important piece of the description, where’s the balance of this? GIA grading reports are a pretty good example. They describe certain attributes of a stone while omitting others. This omitted information can be terribly important and GIA knows it. Both sellers and buyers seem happy to accept GIA opinions for what they are, and occasionally for what they aren’t, but they don’t provide descriptions on jewelry, only on unmounted stones. We look at jewelry. Is there a way to provide this information that will be useful to our clients (the sellers) while being acceptable and useful to their customers without compromising the ethics of the appraiser?

3) Privacy. A well written appraisal includes the identity of the client, the identity of the owner and other information that is clearly sensitive in nature. Omitting this sort of information is a problem if the document is to accurately be described as an appraisal and if it contains a value conclusion. Including it makes it dangerous for the client to use as an advertisement without a fair amount of caution. The fact that it was prepared for a seller seems clearly important to buyers but what else should be included and what should be omitted?

4) The 3rd party. A buyer relying on the document to make a purchase is an unidentified intended user. This reliance has some important liability and ethical concerns for the appraiser. If the buyer calls the appraiser, it is unethical for us to discuss our client’s property with them without specific permission to do so, and even then with caution. Even after the sale, we have no way of knowing if the property has been altered without a new inspection. This is a new appraisal for a new client and there is now a conflict of interest with the first client. GIA solves this by offering a ‘free’ matching service but this kind of thing can be a real problem for appraisers. First, it’s not free, it’s prepaid. Look at GIA’s rates. Is it really appropriate to charge every client for this, even the ones who don’t use it? Second, wear on jewelry is a progressive thing. The GIA verification is a yes or no question but jewelry customers would rarely count it as satisfactory to provide a yes/no kind of answer when the difference is wear that some might count as important and others might describe as minor. Third, the buyer is likely to be interested in more information that is not contained on the original report, like a value. Is it ethical to do an appraisal for a seller, prepare a sales report (which will be a separate report from the appraisal) and then do an appraisal for the buyer? What about the client confidentiality with the seller?

My contemplated solution to this is some sort of document containing a description, photos, grading reports, etc. but no price, no market and no client specific data. Give the client a copy and provide an online version that makes it difficult for the client to alter it. Allow the client permission to use this for advertising purposes. This may or may not be in addition to an appraisal for that client. Get written permission from the client to offer appraisal services to buyers and potential buyers who may want them without releasing personal information about the seller. A new appraisal would be just that, a new appraisal.

Opinions?

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

 

[Guess]

Neil,

You have been so helpful answering many of my questions, it is a pleasure to be able give you an opinion in return.

I think that your proposed plan solves a lot of the issues raised, but especially as a seller or even as a buyer, I would want to see a price accompanying an appraisal. Would a solution where you gave the value in a number of markets be feasible (ie different values for: high end retail, jewelery outlet, internet sale, wholesale, estate sale, private sale all listed on the same appriasal). One thing that I struggle with in appraisals is that market the appraisal price reflects is often poorly described. In this case the seller could show the buyer that they were getting a very good price compared to retail and a fair price for a private sale.

Of course it would be the buyers responsibility to do their due dilegence and get it reappraised by their appraiser if neccesary, but the seller could point to your strong reputation as an honest individual to show that the appriasal was more than just a number. I don''t think you should ever omit a serious flaw at the sellers request (while of course including the legal mumbo jumbo that you are not responsible for anything you may have missed).

Ultimately, if someone is looking for an inflated and misleading appraisel, they will probably not have that much trouble paying someone to create it, but I doubt that you want that kind of business. By making your process as transparent as possible, it may make it easier for the seller to find a buyer by easing the buyers suspicions.

 

[widget]

Date: 7/29/2006 2:02:18 PM
Author: Guess
Would a solution where you gave the value in a number of markets be feasible (ie different values for: high end retail, jewelery outlet, internet sale, wholesale, estate sale, private sale all listed on the same appriasal).

I wish appraisers could do this! I found it so irritating when settling my mom''s estate that all her stuff had to be RE-appraised. It would have been so nice if the paperwork had reflected different values, depending one''s the needs: wholesale, retail, replacement, etc.

That said, as a buyer, I actually pay little attention to the $$$ value quoted on an appraisal. What I would like is having a detailed description of an item from an accredited appraiser accompanying it.

If I were a seller, I''d probably avoid having a monetary appraisal on an item...and let the potential buyer get one himself if he feels the need before finalizing the sale.

widget

 

[denverappraiser]

Guess,
Thanks for the nice words.

Obviously, omitting important information at the request of the seller is not what I’m talking about. It’s more a question of selective information. For example: GIA grading reports on non-round brilliant diamonds include very little information about cutting and this information can have a significant affect on the price in most marketplaces. If a value is provided then this information is clearly relevant. For a limited and very specific report, like what GIA provides, it’s not. This is part of the difference between an appraisal and an authentication report. I guess what I’m asking is whether authentication reports for jewelry would be useful as the apparently are for diamonds, comic books , beanie babies and many other items. If so, what’s a reasonable and ethical way to do them that benefits everyone involved? Is it even appropriate for an appraiser to offer this sort of service? Should this be a service that I and other appraisers offer?

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

 

[strmrdr]

Reality check here:

Almost all appraisals for resale values aren''t worth the paper they are written on and the ones that are realistic aren''t useful as sales tools.

1: The seller is the client not the buyer
2: values are assumed to be in the smokin dope range by anyone with a brain who does 10 min worth of research.
3: an appraiser who sets honest values wont get repeat business and there is no way for every buyer to know if the appraisal is a scam or not because of the narrow scope of the reputation of the appraiser and the wide range of buyers.
Therefore the seller will get low offers because anyone who is smart will cut the value by 6 to 10 for an offer.
4: bottom line there are 2 many rotten apples ruining the barrel.


Now the issue of reports with no value is interesting but I don''t see a seller going for it when bleep appraisals will put a value 3-5 times any real world value on a paper and sign it and now its easier to sell cuz everyone wants a bargain.

My 2c :}

 

[denverappraiser]

Reality check indeed.

Customers have a problem. They quite reasonably require documentation to feel confident making a jewelry purchase, especially when they are buying from unknown and perhaps unprofessional seller. Lack of credible documentation is a serious handicap for individual sellers as a result.

Many independent appraisers have decades of experience doing exactly what is required as a portion of their appraisal services while very few others have the training, the tools or the experience to do this well. Many appraisers, including several who are regular participants here, enjoy widespread national reputations for providing accurate information. By neither buying nor selling merchandise themselves, they increase the value of the opinion to buyers, potential buyers and consequently to sellers as a result.

I agree that the appraisal process has been, and continues to be, badly abused by both appraisers and consumers and that there are unreasonable expectations on both sides about what services are and are not valuable but it sure seems like there could be a service that combines the above observations to the benefit of everyone involved. I don’t think what I''m describing could be reasonably described an appraisal but the people who are marketing themselves as independent gemologist appraisers seem to be in a unique position to deliver it. Maybe not. It just an issue I''ve been contemplating lately. Even without a value attached there are quite a few issues to resolve.

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

 

[oldminer]

Neil, I sure appreciate what you posted here. The reality of the situation is far different than what one wold hope to see. It obviously is legal to create inflated appraisals and little will generally be done about it. It is unethical to misrepresent quality and/or value, but it is a difficult set of subjective rules to enforce. As head of the NAJA Ethics committee for many years, I have faced down several hard headed appraisers who needed to be warned, disciplined or removed as members. Fortunately we have had nearly a 100% success with these situations, but one must keep in mind how few appraisers are members of any association with a code of ethics.

I would be the last to promote licensing of appraisers as I support less, not more government, but I would be the first to encourage those who rely upon appraisals to seek out members of NAJA, ASA, ISA, or AGS Independent Appraisers. All of these folks subscribe to some level of ethical behavior.

There are many things that can legitimately be left off and appraisal, but a good appraiser will create a document that is complete for the job that is to be required.

Strmrdr''s warning is one people should pay attention to.

There is a huge market demand for high value appraisals to be used as sales tools. These are legitimized by some crazy high retail asking prices that are found at the upper extreme of the retail market. Those who are foolish or naive enough to believe in Santa Claus or the tooth fairy are always going to be victimized by misrepresentation. Becoming an informed consumer makes you a safe buyer. There is no substitute for education. One of the main reasons I participate on Pricescope is that I see consumers getting the word on how to be good buyers and smart consumers. It is very difficult to effect changes from the side of the sellers, but when consumers become informed, sellers immediately alter bad habits. That''s a very rewarding thing to see happen.

 

[gemmy1]

I believe the usefulness and credibility of jewelry appraisals is hampered by a lack of oversight and accountability. It is therefore difficult for any of these worthwhile ideas to have much impact on the industry as a whole because not everyone plays by the same rules. Now I am not pining for more bureaucracy but it does seem strange that anyone can do a jewelry appraisal, regardless of credentials, in any format, giving any level of detail, utililizing little or no instrumentation, for any purpose, legitimate or otherwise.

Until there is some sort of licensing in the industry, there will never be the kind of standardization of practices needed for the general public to rely on these documents for anything other than establishing an insurance premium. (Frankly, I am surprised by the quality of some of the "documentation" that many insurance companies accept). It is unfair that credentialed appraisers such as Neil have to compete for business with so many incompetent and/or unethical practisioners.

I find it odd that we can only get our cars inspected by shops licenced by the state, but anyone with a pen and paper can appraise our diamonds. Even more problematic is the high percentage of appraisals done by the very same individual or company making the sale. I can''t imagine a situation with more inherent conflict of interest. *It must be pointed out that several excellent trade organizations, to which real appraisers such as Neil belong, do have stringent requirements and enforce strict codes of conduct. The problem is with the other 90+ % doing jewelry appraisals.

If I were doing appraisals for a living I know I would vote for having at least one more layer of bureacracy added to the government! The industry would be alot better for it and consumers would benefit greatly.

 

[canuk-gal]

HI:

This thread could not be more timely. My Mother--widowed, who during her 25 year marriage to my Father, a jeweller--has asked my assistance in downsizing her considerable jewellery collection.

There are a couple of vendors in town who have large Estate collections as part of their regular retail business, and I have made appointments with them both. In speaking to them, neither "expected" me to provide appraisals of items, but one vendor did tell me "should you have appraisals, depending on the item, we pay 50-70% less the appraised value". As for determining "value" of non appraised items, I assume it is based on their knowledge of the market...or anyone''s guess.

My appointments/assessments should be interesting.

cheers--Sharon

 

[gemmy1]

Date: 7/29/2006 6:50:00 PM
Author: canuk-gal
HI:
This thread could not be more timely. My Mother--widowed, who during her 25 year marriage to my Father, a jeweller--has asked my assistance in downsizing her considerable jewellery collection.

There are a couple of vendors in town who have large Estate collections as part of their regular retail business, and I have made appointments with them both. In speaking to them, neither ''expected'' me to provide appraisals of items, but one vendor did tell me ''should you have appraisals, depending on the item, we pay 50-70% less the appraised value''. As for determining ''value'' of non appraised items, I assume it is based on their knowledge of the market...or anyone''s guess.

It''s a good bet that since your father was a jeweler, many of the items of of high quality. While you don''t need appraisals to sell, you definitely want to be well informed as to the kind and quality of items you have. It would be worth your while to consult a credentialed jewelry appraiser who is in no way involved in the transaction.

The vendors with the estate collections most likely will take your items on consignment and you will have the final say in pricing, but when you will get your money is dependent on a number of factors. A merchant who would buy your items outright would typically pay less, but you should get your money quickly. Both the quality of the item and the transaction terms are factors in determining a fair price. Getting solid advice could make a big difference on the success of your liquidation.

 

[canuk-gal]

Date: 7/29/2006 7:19:17 PM
Author: gemmy1

Date: 7/29/2006 6:50:00 PM
Author: canuk-gal
HI:
This thread could not be more timely.

It would be worth your while to consult a credentialed jewelry appraiser who is in no way involved in the transaction.

The vendors with the estate collections most likely will take your items on consignment and you will have the final say in pricing, but when you will get your money is dependent on a number of factors. A merchant who would buy your items outright would typically pay less, but you should get your money quickly. Both the quality of the item and the transaction terms are factors in determining a fair price. Getting solid advice could make a big difference on the success of your liquidation.

HI:

Thank you for your input--I do also have an appt. with an independant appraiser this week, to value some of the "more complicated/larger items". And I did not know that those who buy "outright" typically pay "less" than for those same items consigned: one vendor offers only the former option, while another vendor offers both/choice.

cheers--Sharon

 

[denverappraiser]

Widget,

This is approximately where I see value in this idea. Both the seller and the buyer must agree about what the item is to make a deal. What’s the karatage? Who’s hallmark is that? What are the stones? Are they natural? Treated? How is the craftsmanship? Is it damaged? For both sellers and buyers, it would be nice to be able to quantify these things in a more or less reasonable way. Setting a price is the last step of this process, not the first, and it is not up to the appraiser to say what you should charge or who you should try to sell it to anyway. The value of the appraisers participation is mostly in helping to define the product.

Canuck,

Your case is remarkably typical. You’ve got some jewelry that you don’t particularly want, it’s probably worth a fair amount of money so it’s an important question, and you’re not personally an expert on exactly what you have. Showing it to a potential buyer who claims expertise will get you a bid, but this still leaves you hanging when you need to make a decision of whether to accept the offer. The conflict of interest is huge and as everyone here knows by researching diamonds, ‘minor’ differences can make a huge difference. With other gems it’s even worse. How do you know a credible offer? It’s better if you collect a few bids from different buyers but the question still remains. What exactly is it? This is especially difficult if the potential buyer isn’t local to you. How will they know what it is? Nothing personal, but taking your word for it is foolish. This limits you to people that are either local to your or that you are willing to ship it to. This is a communications problem and there must be a better way. I’m reasonably confident that if I (or Dave, Rich, Jeff, Rock, Cindy, Nancy, etc.) were to prepare a document describing one of your items and you offered it for sale to someone who knows us, it would be afforded some credibility and that this would improve your salability, at least to that particular client. There’s a few details to work out, like how the buyer is to know that you are shipping the correct item, but the concept I think has validity. If Rich says it’s real and well made, both you and your buyer can be reasonably confident that this is the case. That benefits everyone, even if Rich is making a few bucks in the process.

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

 

[Richard Sherwood]

Date: 7/29/2006 8:42:54 PM
Author: denverappraiser

If Rich says it''s real and well made, both you and your buyer can be reasonably confident that this is the case. That benefits everyone, even if Rich is making a few bucks in the process.

And everybody knows I''m not averse to making a few bucks...

 

[RockDoc]

Well guess I''ll chime in here.....

For me this is more case by case specific as to what I''d do. As Guess pointed out my "all size fits one" type approach would be to report an opinion of each market available to the seller.

Not everyone selling wants to pay the cost for doing all the research that it takes to really report this properly. In many cases, I shy away from these type of assignments because at least many times consumers expect you to buy the item and appraise it too, which is very common here.

A recent client of mine, who is the executor of the estate, I met with, looked at the items, and discussed with him the various alternatives he had and what would be required of him to market the items. Initally, he told me he wanted to get the most from each item, and time was not of the essence in selling them. He conferred with some of those who were to receive the proceeds from the sale, and was told to get the money quickly, regardless of the price. So the "complexion" of these types of assignments can change at a moment''s notice.

I think the appraiser has a responsibility to report all of the potential ways of selling to the client, so that is sort of what I''d suggest. If they really want me to do a "half type" job, I''d just rather shy away from it.

I like either doing it very completely, or not doing it at all.


Rockdoc

 

[denverappraiser]

Rockdoc,

The service you are offering is an appraisal. What I’m proposing is not. What you and Guess are recommending is very similar to what I currently do in cases where it seems appropriate but it often doesn’t address what the client is looking or, in many cases, what is needed. A report with 10 different markets and prices and a restriction that it not be disassembled or republished will either result in a potential buyer choosing the smallest available number (thereby possibly screwing the client), the client lying and simply extracting the pages that they like (thereby violating your contract and possibly using your name to deceive the buyer by taking your words out of context) or approaching their marketing problems in a way that’s unrelated to your service (which means your service wasn’t useful, at least for this purpose). Declining the job is a perfectly sensible decision, and possibly the most prudent approach but your counteroffer doesn’t really address the need.

What should a person who wants to sell a ring from a failed marriage that has a realistic resale value to the trade of, say, $1000 do? If they go locally from buyer to buyer collecting bids, they will get offers ranging from $100 - $1000 and huge fraction of the difference will be based on arguing over the grading. It’s going to vary wildly depending on where they live, how skilled a negotiator they are and how lucky they are at choosing the right buyers. The lucky ones will find that $1000 bidder early but even they have no context and struggle to decide if they should accept it. If they look at supposedly similar items on ebay or craigslist they will see and even bigger range because the seller written descriptions are so unreliable. They probably paid quite a bit more than that and if they look in the store they’ll see price tags at $2,000 -$4,000. The dealer who sold it almost certainly doesn’t want it back. If they read their ‘appraisal’ it probably lists a number that’s even higher than what they paid or what the stores are currently asking for new ones. It’s all very confusing and disappointing. Paying you (or me) to sort it out and explain the various scenarios to them doesn’t really address the problem although it gives them an understanding of exactly what the problem is. I agree, that''s helpful, but they still have the ring, they still don’t have a customer, and they still don’t have a strategy for finding one. I’m certainly not one to say that appraisal services aren’t valuable, even for resale clients but there seems to be a huge gap here where we aren’t addressing the real client need. Maybe we can’t.

Finding someone to write an inflated appraisal that they can quote on ebay or the newspaper is an easy, inexpensive and popular way out, it generates appraisal fees and it produces what the client thinks they want but even that doesn’t address the real need (I’m ignoring the fact that ethical appraisers won''t do this, there''s plenty out there who will). In the end, they’re even more confused, they still have the ring because no one bought it at their trumped up description and price, and they still don’t have a strategy to sell it. Out of frustration they go sell it to that $100 bidder because that’s who they happened to find first. Not surprisingly, they feel screwed. How can they do better without cheating some buyer? How can we help, without compromising our ethics?

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

 

[RockDoc]

Hi Neil

Interesting comment. I''ve previously guided people in the right direction ( or what I think it is ) that are selling. Most just don''t want to pay the costs involved in "doing it right". In those cases, I''ll suggest a broad range of possibly what they MIGHT get which is sort of the "rock bottom" type offer to a price for the item that is new, and tell them that based on that information, they should fall in that range depending on speed of payment, and the amount of expense and effort they want to invest marketing their item.

As such this is a consultation, without the research, and without a written report.

I suggest that in the event they find a buy who wants the item checked for their use, then send the customer they find, and then I do an appraisal for the buyer. This way I keep things less expensive for the seller and within reason for the buyer.

As you pointed out Neil, there are tons of "appraisers" that will provide "crap" for cheap. If that is what a seller wants, then they can go to one of those guys. Here, most of the people offering appraisals do it free in order to buy the piece for cheap. Many of the consumers go to these guys rather than me.

I don''t know if you get this sort of customer, but locally, I get a lot of people that expect you to value the item by a phone call. Sight unseen, and they genuinely believe you can do this.

I tell those people my hourly rate, and usually they say .... "It doesn''t take an hour does it, you should be able to do it in 15 minutes". (Of course they are thinking I will only charge them 25% of my hourly rate). I do courteously and professionally explain what is really involved, but few here consider it. Probably the most common question from unknowledgable consumers here starts out with " Do you charge to do appraisals?'' When you say YES, they hang up, which is perfectly all right with me.

I do understand this, because previously, they went to someone who writes them two sentences of a "form" appraisal, spends 10 minutes with them, and they either do it for free, or charge $ 35.00 or something close to that. Many think that is the world of diamond or gem evaluation bolstered by what they have seen via Hollywood and the movies. I''ve seen movies where the typical jeweler on film looks for two seconds with just a loupe, and BINGO they report what quality the stone is.

Guess I just prefer to always "do it right" and serve consumers that do want it done right, avoid legal liability issues, get paid as reasonably as I can while still providing the best I can do.

Overpromise and OverDeliver is the stance I take. I believe it is the best way to be.

Rockdoc

 

[strmrdr]

Iv been thinking about this and its a good idea but the question is if its practical outside a local area or someplace like PS.

For example if I was buying something from another PS member and we couldn''t figure out the right price I wouldn''t be against hiring one of the pricescope appraisers to set a value.
Likely Internet retail or a little less is as high as Id go on a like new item I really wanted so that value would be useful.
But for most items I just do my own comps and offer 50%-75% Internet retail.

With the cheap availability of inflated appraisals I don''t see it working where both parties don''t know the appraiser well.

 

[denverappraiser]

I agree that this sort of thing relies entirely on the credibility of the appraiser but that’s the whole point of expert advice anyway. It’s the reason that a stone accompanied by GIA paperwork is worth more than that exact same stone with different documentation. It’s the reason why customers care if the appraiser is, or at least claims to be, ‘independent’. It’s the reason customers should patronize members of the organizations Dave mentioned and the reason that qualified appraisers should join them. As appraisers, our credibility is a large part of what we have to sell. The participants here are not the cheapest appraisers in our respective markets. I suspect that most of us are actually among the most expensive. We get customers because our opinions are considered to be more reliable than our competition. This is not a coincidence. We work at it.

Here’s an example. People here often ask if a particular stone is ‘stormworthy’ because they value your opinion. In part this may be because your thoughts are available for free but I think a bigger piece is because your opinions are valuable. The price is just a bonus. If a supplier were to be able to somehow pre-certify asschers as being stormworthy, I suspect there would be customers here who would bias their purchases towards that particular attribute because it will make their shopping process easier and because they are gaining a depth of experience that is difficult to personally develop. A storm report would be valuable. If it were possible to do this on stones where the supplier isn’t one of the vendors who already supplies a ton of information, it would be even more so. Probably enough to make or break a deal. No, I don’t think it’s a new career, but I think it’s an example of the kind of service I’m suggesting. It’s not an appraisal, but it might be useful.

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

 

[canuk-gal]

HI:

Date: 7/30/2006 4:08:47 PM
Author: denverappraiser

It’s not an appraisal, but it might be useful.

HI:

Any professional appraising service whose purpose is to ally sellers and buyers of previously owned jewellery, thru honest assessment thereby mediating expectation, I am all for it.

cheers--Sharon

 

[Modified Brilliant]

Great topic and info Neil. I''ll be adding my thoughts later today as well.

www.metrojewelryappraisers.com

 

[Modified Brilliant]

Date: 7/30/2006 1:01:40 PM
Author: RockDoc
Hi Neil

Interesting comment. I''ve previously guided people in the right direction ( or what I think it is ) that are selling. Most just don''t want to pay the costs involved in ''doing it right''. In those cases, I''ll suggest a broad range of possibly what they MIGHT get which is sort of the ''rock bottom'' type offer to a price for the item that is new, and tell them that based on that information, they should fall in that range depending on speed of payment, and the amount of expense and effort they want to invest marketing their item.

As such this is a consultation, without the research, and without a written report.

I suggest that in the event they find a buy who wants the item checked for their use, then send the customer they find, and then I do an appraisal for the buyer. This way I keep things less expensive for the seller and within reason for the buyer.

As you pointed out Neil, there are tons of ''appraisers'' that will provide ''crap'' for cheap. If that is what a seller wants, then they can go to one of those guys. Here, most of the people offering appraisals do it free in order to buy the piece for cheap. Many of the consumers go to these guys rather than me.

I don''t know if you get this sort of customer, but locally, I get a lot of people that expect you to value the item by a phone call. Sight unseen, and they genuinely believe you can do this.

I tell those people my hourly rate, and usually they say .... ''It doesn''t take an hour does it, you should be able to do it in 15 minutes''. (Of course they are thinking I will only charge them 25% of my hourly rate). I do courteously and professionally explain what is really involved, but few here consider it. Probably the most common question from unknowledgable consumers here starts out with '' Do you charge to do appraisals?'' When you say YES, they hang up, which is perfectly all right with me.

I do understand this, because previously, they went to someone who writes them two sentences of a ''form'' appraisal, spends 10 minutes with them, and they either do it for free, or charge $ 35.00 or something close to that. Many think that is the world of diamond or gem evaluation bolstered by what they have seen via Hollywood and the movies. I''ve seen movies where the typical jeweler on film looks for two seconds with just a loupe, and BINGO they report what quality the stone is.

Guess I just prefer to always ''do it right'' and serve consumers that do want it done right, avoid legal liability issues, get paid as reasonably as I can while still providing the best I can do.

Overpromise and OverDeliver is the stance I take. I believe it is the best way to be.

Rockdoc

Rockdoc,

Your points are well taken. Free appraisals ( as you know because we''ve been in the trade a long time) were performed by local jewelers who had little gemological training and would hand write a "one liner" with a value (always inflated). It wasn''t that long ago (late 70''s) that I recall seeing many diamond appraisals with the description "excellent color" "excellent cut" "white color" "eye clean." etc. etc.
Those were the "free appraisals" handwritten on standardized carbon forms.
It might be fun for Pricescopers to look at their parent''s appraisal.
We''ve come a long way but we''re still a long way from where the industry needs to be.
A professional appraiser spends countless hours of research, education, and keeping up with the latest in synthetics and detection methods.

We try our hardest to keep the industry honest and some assignments along with the stories we hear are down right depressing.

Many consumers confuse a "free appraisal that is actually an offer to purchase" with a "free insurance appraisal."

Pricescope has done a great job of educating the consumer on the actual role of a professional jewelry appraiser.

Threads and threads of stuff to read.

www.metrojewelryappraisers.com

 

[Cehrabehra]

Date: 7/29/2006 1:31:13 PM
Author:denverappraiser

I am increasingly being asked by consumers for documentation that will be helpful to them in reselling their jewelry. As most of you know, this is an area of trouble for appraisers and it leads to big issues about independence but it addresses a real and valid problem for our clients who have jewelery that they intend to sell and who may be unfamiliar with the process. I would love to hear some opinions from the prosumers out there on how to best handle these requests that both provides our clients with accurate and useful information and that doesn’t contribute to deceiving the final buyer. Some specific concerns are:

1) The price. Most people want a document with a large number describing an ‘appraisal value’ that they can then discount to their final buyer as evidence that they are getting a good deal. In effect, they are looking for documentation that they can use as an advertisement. Buyers are rightfully warned about purchases with this sort of thing and appraisers are correct to be concerned that this is not an appraisal in any normal sense of the word as well as big potential liabilities associated with projects of this nature. An appraisal must be describing a particular market and an accurate assessment of the resale potential of a piece may be part of what the client is seeking but it’s almost always NOT what they want on a report that they intend to show to a potential buyer. Is there a way to help clients with their advertising that serves everyone’s objectives (the client, the appraiser and the eventual buyer)? Would it be useful to the seller to provide a report containing a description but not a price? Would buyers accept this or would it be seen as being even less useful than most seller supplied paperwork?

2) The description. The whole point of seeking out this kind of documentation is to gain some credibility from the appraiser/lab that the information presented in the advertising is factual. The appraiser is being pointed to as an expert opinion to bolster the credibility of the seller. This causes the seller to be interested in descriptions that highlight the desirable attributes and minimize the problems. They want photos that are attractive and complimentary. The report may all may be true, but it’s not necessarily the whole truth. Spend a few minutes browsing ebay advertising to find numerous examples of this. As a professional assisting a client in preparing advertising materials knowing full well that your name is going to be used as an important piece of the description, where’s the balance of this? GIA grading reports are a pretty good example. They describe certain attributes of a stone while omitting others. This omitted information can be terribly important and GIA knows it. Both sellers and buyers seem happy to accept GIA opinions for what they are, and occasionally for what they aren’t, but they don’t provide descriptions on jewelry, only on unmounted stones. We look at jewelry. Is there a way to provide this information that will be useful to our clients (the sellers) while being acceptable and useful to their customers without compromising the ethics of the appraiser?

3) Privacy. A well written appraisal includes the identity of the client, the identity of the owner and other information that is clearly sensitive in nature. Omitting this sort of information is a problem if the document is to accurately be described as an appraisal and if it contains a value conclusion. Including it makes it dangerous for the client to use as an advertisement without a fair amount of caution. The fact that it was prepared for a seller seems clearly important to buyers but what else should be included and what should be omitted?

4) The 3rd party. A buyer relying on the document to make a purchase is an unidentified intended user. This reliance has some important liability and ethical concerns for the appraiser. If the buyer calls the appraiser, it is unethical for us to discuss our client’s property with them without specific permission to do so, and even then with caution. Even after the sale, we have no way of knowing if the property has been altered without a new inspection. This is a new appraisal for a new client and there is now a conflict of interest with the first client. GIA solves this by offering a ‘free’ matching service but this kind of thing can be a real problem for appraisers. First, it’s not free, it’s prepaid. Look at GIA’s rates. Is it really appropriate to charge every client for this, even the ones who don’t use it? Second, wear on jewelry is a progressive thing. The GIA verification is a yes or no question but jewelry customers would rarely count it as satisfactory to provide a yes/no kind of answer when the difference is wear that some might count as important and others might describe as minor. Third, the buyer is likely to be interested in more information that is not contained on the original report, like a value. Is it ethical to do an appraisal for a seller, prepare a sales report (which will be a separate report from the appraisal) and then do an appraisal for the buyer? What about the client confidentiality with the seller?

My contemplated solution to this is some sort of document containing a description, photos, grading reports, etc. but no price, no market and no client specific data. Give the client a copy and provide an online version that makes it difficult for the client to alter it. Allow the client permission to use this for advertising purposes. This may or may not be in addition to an appraisal for that client. Get written permission from the client to offer appraisal services to buyers and potential buyers who may want them without releasing personal information about the seller. A new appraisal would be just that, a new appraisal.

Opinions?

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

What about adding two prices - replacement and resale? I agree about leaving off client info - it''s about the piece, not the person.

 

[denverappraiser]

A well considered resale value into a particular marketplace may be helpful for sellers to assist in realistically setting their prices but I don’t think it’s often very useful for advertising purposes. Importantly, a resale value into a marketplace other than where it will eventually be sold is likely to be deceptive to the buyer. The price that you can reasonably expect from a pawn shop or salvage dealer will not be the same as the price you can expect from a private party consumer after all and these will be different in different communities and for different items. For example: What if the piece is ugly? In insurance appraising this is easy, the question is what is appropriate funding to replace it with a similarly ugly piece. If anything, it makes the replacement difficult because ugly things must be custom made since few stores specialize in this sort of good and it’s difficult to match a specific form of ugliness from inventory. For resale it’s different. Ugly stuff is a lot harder to sell and usually goes for a steep discount, even if the customer originally paid a lot to have it custom made. For the salvage dealers it doesn’t make much difference since they’re generally just paying for the materials but for the private parties it’s the whole substance of the issue. My idea of what is ugly is not likely to be the same as yours, or your customers’. Someone made it, and someone else bought it, presumably because they liked it after all. So what’s the value? It’s straightforward enough to be specific about what’s being discussed and thereby lead to a value conclusion but this is almost certainly not what’s wanted for advertising purposes. The seller wants to have a number they can point to and say that this is what it’s ‘worth’. Does this mean the local salvage value? The average or median value on ebay resales? The maximum price that anyone has ever paid a consumer for a thing like that? For the seller this would be an easy question. They want whatever produces the biggest number, but what about the buyer?

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