Appraisal Significantly Less Than Purchase... Advice!

[waity-katie]

Hey guys, so I am trying to decide what I think about this. The BF and I just received our diamond last week from Leibish & Co. and we love it. It's a 5.05 ct. W-X Light Brown VVS2 with a Very Good cut grade (GIA report).

Link to my original post with a few pics: https://www.pricescope.com/communit...-brown-diamond-setting-ideas-thoughts.189986/

BUTTTTTT.... we took it to get appraised and checked out today to make sure there was no shipping damage, that the GIA laser inscription matches, etc. and the appraiser gave us their estimate of a wholesale price at nearly 50% under what he actually paid for the stone. Now I know there is a retail mark-up on things, but based on Leibish's reputation in the color diamond world I figured we would be paying a mark-up somewhere in the 10-20% range. Am I way off base here?

Also, I noticed a few things during the appraisal which I wanted to ask about. The first is that they were basically just going off a chart (I think Gem Trader... sound familiar?) which listed a range per carat wholesale price for light brown diamonds with our specs. I think it was the May/June addition. I'm unsure what the range should cover, as I know that colored diamonds can vary a lot in terms of how appealing the color is, and I would think this should cover more than just the typical 4C's. They also used a system called RapNet where they were searching for other diamonds with similar specs and seeing what price wholesalers were offering them for. However, there was only one result they could find even close to our diamond specs and it was a ~4 carat VS1 light brown but did not even have a price listed.

So here are my questions: (1) Those of you who have experience with Leibish, do you consider them reputable and reasonable in their pricing? I would think they know a lot more about pricing colored diamonds than your average appraiser does. (2) How much should we trust the appraisal given the scarcity of the data? The BF and I are both engineers, and therefore inherently skeptical of this sort of thing. (3) Considering we LOVE this stone, if the appraisal is correct should we return it to Leibish (we still have time) or ask for a discount?

Appreciate any help or insight that anyone has on the issue! What a bummer Friday...

 

[blackprophet]

Didn't Leibish include a appraisal with the ring? When I bought from them they did.

Was the appraiser also a seller? Might have affected the quote.

Why would they give you the wholesale price? Lebish price includes shipping from Israel so their markup would be a bit higher than say a whiteflash.

Also as you said, colour stones are so subjective, you would need to find an exact colour match to compare prices. Maybe go back and look at the rest of Leibish's inventory to figure out how comprable they are.

You said he didn't find anything comprable, so how could he give you a wholesale price?

I'm no expert though.

 

[kenny]

Tough call here.
Is the appraiser a GG?
Does he/she sell diamonds, if so there is a conflict of interest.

I think few appraisers know the colored diamond market since it's very low volume and very specialized, but if you are uncomfortable return it if you are still in the return period.
I'd also contact Leibish and just tell them what this appraiser told you.
See what they say.

BTW, I've bought 20 FCDs from Leibish and none came with an appraisal.
FWIW I think the 'appraisals' vendors mail you with a diamond are not worth the paper they are printed on.

 

[denverappraiser]

I’m sorry for your troubles.

Have you talked to your appraiser with these questions? What did he/she say?

Yes, Leibish is a credible outfit. That doesn’t mean that this particular deal was fabulous or bad, just that I think it’s unlikely they’re feeding you a line.

I don’t know who your appraiser is but the methodology isn’t completely crazy, at least at the start. Comps are good and Rapnet is a good place to look. The tricky part, as you point out, is what grade to use for this sort of thing. They vary a lot from one to the next. Add to this that they apparently couldn’t actually find a comp and were using one of the industry guides as a backup position. There are a few other places to look for comps (one of which is Liebish themselves by the way) but this is a pretty unusual item so I’m not all that surprised that it wasn’t easy. The guides as a ‘plan B’ is not out of the question.

Is the appraiser ‘right’? I couldn’t venture to guess. I haven’t seen the stone and I haven’t done the hunt for comps myself. The appraiser should be prepared to defend their value conclusion and I would start by calling them up and asking unless you’ve already been through it with them. In most cases, ‘wholesale’ is not a particularly useful concept in this business by the way. May I ask why that’s the value definition you’re using?

 

[maccers]

As others have stated, call your appraiser and ask for an explanation. I'm not sure why the wholesale price would be given (or what that really means), you paid retail, wholesale doesn't help you if something happens to your stone (lost, stolen), you won't be able to replace it at wholesale pricing. Wholesale pricing would help keep the insurance costs down, I guess.

 

[waity-katie]

I'm not sure what a "GG" is... but it was an independent appraiser here in Houston where I live. I found him on PS before we made an appointment, and I don't think that he is associated with a jewelry store. Don't misunderstand me, he seemed very experienced and knowledgeable. I was expecting a vast over-estimate, since that seems to be the business most appraisers are in. He seemed a little surprised that the RapNet system didn't return anything even in the ballpark of our specs and he said he would do a little research on the side and let us know, but he still quoted us 43% under what my BF paid from Leibish (and Leibish was running a 15% off sale
for Memorial Day at the time as well). Again, that was a wholesale price, and I don't expect that value to equal what we paid at retail, but a 43% delta seems super high, especially since Leibish is not my local jeweler with a high premium. He also quoted us a retail price, but that was just the wholesale price x 1.35, for a 35% mark-up. When he asked what we paid for it, obviously he made the mark-up 43% to equal the purchase price. I'm not concerned about this method for insurance, I'm concerned that my BF just paid 43% over the going value for our particular stone. The price per carat that came for The Gem Trader guide has a spread of $2k, the HS value would put the wholesale price just under what my BF paid. All I'm trying to understand is if we WAY overpaid for this stone or if
people think that there is enough uncertainty in the appraised value to still allow that the purchase price was reasonable.

 

[WinkHPD]

I have bought and sold colored diamonds in the past, and kept a few too.

Color is quite subjective. Maybe your appraiser did not like the color, or think it was as valuable as Leibish did.

The fact that there are no comparables on the market should tell you that this is not exactly a go buy a different one from a different seller kind of a stone. Leibish had it, may have owned it for years or may have just found it for you, I do not know. What they paid for it is really not the question here, but what is the gem "worth".

You saw it, loved it, and it was "worth" the price to you until the appraiser enters the picture. He did not have, could not find one, and has absolutely no idea what it cost or frankly, what it is worth. Take it to ten more appraisers, get at least eight different answers. Unless you are lucky enough to be working with an appraiser like Neil who will know enough to ask the right questions and will, if necessary, talk to the person who had the only stone of its kind on the market today, you will not get the right answer. You will probably find some of them to give you the answer you are looking for, some who will give you more, and some who will give you less, but being lucky is not the same as being good.

As a jeweler, I always get cranky when some "appraiser" who has no idea what it took to create an unusual piece places a value on it that is below my cost to make. A one of a kind piece can not be priced per gram or penny weight as a piece from Stuller might be. Then their are the appraisers who know what they are doing and actually come quite close to the actual value of the ring. Appraising is MUCH more difficult than most people think as to do it properly the appraiser must know the market, must know the techniques of making different kinds of pieces, and most importantly, the appraiser must know when he or she does not know and do the work to know it before he or she writes it up as perfect knowledge handed down from on high.

I try to avoid doing appraisals when ever possible, but when I do I make sure it is something that I know about. If you brought me a 5ct fancy brown diamond to appraise, the first words out of my mouth would be, "I am so sorry, there is no way I am qualified to appraise this piece." Sounds like you maybe have an appraiser who should have said the same thing.

Just guessing of course. He could be dead bang on, but since there aren't any similar stones on the market, at any price, it is hard for me to accept that as gospel.

Wink

 

[Rockdiamond]

I can make some general comments- nothing specific about the stone or seller

We are very lucky to have Neil posting here.
I'm sorry Neil, but you're heads and shoulders above the "average" person calling themselves an appraiser.
For example, on rare and unusual stones, assigning a value is incredibly difficult.
I feel it should be incumbent on an appraiser, when faced with a stone that's very unusual to follow a far greater due diligence.
When looking at Rapnet- or in fact, any consumer website populated by a database ( so called virtual diamonds), you can see a massive variance for two ostensibly similar diamonds. How much is a 1.00G/SI1? $4000? $8000? You'll probably find both prices, and everything in between on VD databases.
So if it's a 1.00 G/SI1, there's 1000 comps, and drawing an average makes sense.
What if there's only two comps?
Or none?

At that point, I would say that using industry contacts is the only responsible method. If they have Rapnet, they have access to cutters.
I honestly feel that it's irresponsible to shoot a "wholesale" value without taking the time to really find out.
By using an "unsure" value, consumers may be needlessly alarmed.

I agree with Kenny's statement about dealer supplied appraisals as a general rule, but not as a blanket statement. While there are countless sellers using inflated appraisal values to try and bolster their asking price, if a seller is honest, they can be a reliable source for an appraisal.

 

[WinkHPD]

Tough call here.
Is the appraiser a GG?
Does he/she sell diamonds, if so there is a conflict of interest.

I think few appraisers know the colored diamond market since it's very low volume and very specialized, but if you are uncomfortable return it if you are still in the return period.
I'd also contact Leibish and just tell them what this appraiser told you.
See what they say.

BTW, I've bought 20 FCDs from Leibish and none came with an appraisal.
FWIW I think the 'appraisals' vendors mail you with a diamond are not worth the paper they are printed on.

Kenny,

I would like to politely disagree with your last comment. If asked, I will do an appraisal for a client who buys a diamond from me, especially if they had me make the mounting for it.

The appraisal will be what I sold it for in most cases, and I call it, "an evaluation for insurance purposes". If it is higher there will be an explanatory comment in either the body of the appraisal or in the limiting conditions as to why the value is more than the purchase price, such as the diamond was on consignment from an estate and can not be replaced readily for the price at which it was sold. Thus I believe that the evaluations I provide are indeed worth the paper that they are printed on and over the years thousands of them have been accepted by insurance companies, who admittedly are poor judges as to the value of an appraisal.

I seriously agree with you that the crap IGI appraisals that you get with your diamond at Costco are so inflated that their very issuance should be grounds for prosecution. These are unfortunately worth way more than the paper they are printed on as they are used to defraud unknowing civilians.

Wink

 

[denverappraiser]

There’s a publication called the Gemguide that I’m guessing is what you saw and that’s quite popular with appraisers, especially for slightly unusual things, but grading is a huge topic. The difference between ‘fancy light brown’ and ‘fancy light yellow’ is on the order of 50% for example. They don’t list 5 carat W-X colors specifically as a category but maybe your guy has something else. I"ve never heard of the publication you listed although that certainly doesn't mean it doesn't exist.

FWIW, in 5-7 carat, S-Z color GIA stones I see 4 comps currently listed on Rapnet. That’s still a little statistically light and there are some problems with using this sort of list for comps that gets into valuation theory but it’s a place to start. Again, talk to your appraiser. This may be something as simple as a math error by the way.

You bought a unique item for which there was only one in the market. Yes, that leads for a HUGE margin of error in the appraisal process. Again, I haven't a clue how they cam to the conclusion they did but they should be prepared to tell you if you ask.

GG stands for 'Graduate Gemologist' by the way. That's a credential issued by GIA. It's quite common amongst US appraisers but not all have it.

 

[kenny]

I should have been more clear ...

I've bought about 10 white diamonds in my life from highly respected PS vendors.
All came with these bogus 'appraisals'.

How can you sell me a diamond for x but tell me it's worth 1.4x?
AFAIC, the only true appraisal is the price on the invoice.

Clearly vendors do it because their competition do it and they must work on naive customers ...
"HEY HONEY! LOOK! I just bought a $14,000 diamond for ONLY $10,000 ... Gee I'm such a smart shopper!!! and Vendor X is so generous to give away $4,000.
Let's buy more diamonds from them and tell all our friends."

Oye Vey!
GMAB!
What do you take me for?

 

[WinkHPD]

LOL, I said I was POLITELY disagreeing with you.

I do agree with most of this last post and got a good laugh from it though...

Wink

 

[kenny]

I'm polite.
I put smilies in. ... plus I edited to change the word stupid to naive.

 

[WinkHPD]

I got a good laugh, with or without the smiles, and actually, you are smarter than the average shopper. I am amazed at how often I am told that the evaluation for insurance purposes was not sufficient;y high enough and that they expected a better appraisal as they had heard I was a good jeweler and PriceScope vendor.

Wink

 

[kenny]

I am amazed at how often I am told that the evaluation for insurance purposes was not sufficient;y high enough and that they expected a better appraisal as they had heard I was a good jeweler and PriceScope vendor.

LIke they say, you can't fix stupid.

 

[WinkHPD]

Yeah, I saw that, I got about three notifications on that post, I wondered why you kept posting it.

Wink

 

[WinkHPD]

Yeah, I saw that, I got about three notifications on that post, I wondered why you kept posting it.

Wink

LOL, are you going to have to "edit" that post too?

 

[kenny]

Yeah, I saw that, I got about three notifications on that post, I wondered why you kept posting it.

Wink

I don't understand.

 

[WinkHPD]

I am amazed at how often I am told that the evaluation for insurance purposes was not sufficient;y high enough and that they expected a better appraisal as they had heard I was a good jeweler and PriceScope vendor.

LIke they say, you can't fix stupid.

Oops. quoted the wrong post.

Sigh

Wink

 

[kenny]

I am amazed at how often I am told that the evaluation for insurance purposes was not sufficient;y high enough and that they expected a better appraisal as they had heard I was a good jeweler and PriceScope vendor.

LIke they say, you can't fix stupid.

Oops. quoted the wrong post.

Sigh

Wink

Don't wink while posting.

 

[waity-katie]

Okay this has been really helpful! Since the BF and I spend all day estimating for clients how much oil and natural gas they have 15,000 ft underground, we can appreciate the nuances of this sort of complex assessment. The impression that I am getting is that it seems like accurately evaluating this sort of stone takes a little bit more than perhaps the standard technique, and might require some more time. Even with due diligence, it may be difficult to place a "true" value on the stone, and there may be a significant range of error.

You guys are correct, I believe it was Gem Guide that he showed us. There was no price information for diamonds outside the "fancy" range, so he gave us the range for 5+ carat, IF-VVS, Fancy Light Brown. He essentially just took the low value of that range (which I won't post specifically, but I'm sure you all can figure it out...) and multiplied it by 5 and there was our wholesale price. It struck me as a slightly underwhelming process, considering we paid ~$200 for a "consultation." I mean, theoretically, I could subscribe to this Gem Guide and price the diamond myself and skip this whole process! To be fair, we did only ask for what they called a consultation which meant they merely reported their findings on the 4C's, measurements, fluorescence, and $$ value, and didn't actually give us a documented report. The idea is that once we have it set we would go back and they would credit us the value of our consultation towards the written appraisal for the stone and setting. Now perhaps that part of the appraisal will involve a little more actual appraising... I'm not sure.

Based on all this, I'm curious if you guys think we should look for a different appraiser or if we should just voice our concerns to this one. As was pointed out before, it's not particularly helpful just to say, "Hey this didn't match what I paid for it... Try again!" Do insurance companies typically just accept a receipt from a purchase as the documentation for insurance? Seems like that's the most accurate picture of what it would cost to replace it anyways.

Once again, thanks for all the insightful comments! We are clearly new to the world of diamonds, but I think we might have been okay in the colorless world because there are just so many data points out there. With the FCD's we are just crossing our fingers that the seller represents it reasonably!

 

[CharmyPoo]

I am a bit confused. Is "W-X, Light Brown" considered a fancy color? I thought the fancies on a GIA report usually are just words "fancy light brown" and wouldn't have a grade associated with it. Isn't this just a low color scale diamond with a brown modifier?

 

[smitcompton]

Hi

Oh, good Charmypoo, I was wondering the same thing. What happened to the C1-C9 for brown diamonds.
Perhaps this is where the problem lies. I don't know enough to continue discussing, but I never heard of fancy wx/

I'll wait for answer.

Annette

 

[waity-katie]

Someone else may be able to speak to this better, but you're correct that is the case with fancy color diamonds with the exception of brown and yellow. Since these colors are part of the D-Z color scale they do not take on the "fancy" designation from GIA until they exhibit a color darker than Z on the typical color scale. My stone is a Light Brown W-X, but you could also have a GIA graded Light Brown Y-Z. If it had more brown than that it would then be graded a Fancy Light Brown then Fancy Brown then Fancy Dark Brown. It is the same for yellow diamonds. I believe that Argyle also has their own scale for light brown diamonds which they, more attractively, term "champagne" diamonds that ranges from C1-C6. I think a GIA W-X Light Brown is about a C3 on this scale. My GIA cert actually states "Light Brown W-X" as the color designation.

 

[diamond-enthusiast]

Any diamond color grade after K will have the color of diamond stated on a GIA report. For example, light yellow or light brown to show the tint of the stone. This doesn't make it a fancy colored stone technically. It's the jewelry stores that make makes shoppers confused with their marketing.

 

[CharmyPoo]

So my understanding is correct. In this case, we are just talking about a W-X diamond. From what I have seen, anything that is still graded with a alpha grade would generally cost less than when it hits the fancy range.

diamond-enthusiast: I don't believe you are correct. See this link for a GIA report example.
http://www.ebay.ca/itm/2-01ct-W-X-VS1-Cushion-Cut-GIA-Diamond-Three-Stone-Ring-R4764-Diamonds-Lauren-/230991713273?pt=Loose_Diamonds&hash=item35c82dd3f9

Personally, I would probably go to David (Diamonds by Lauren) and get his opinion on how he would price such a diamond. It's right up his alley and he has plenty of colored diamonds.

 

[waity-katie]

Right, but I don't believe that colors other than yellow and brown are given letter grades if they fall between D-Z. Here's a PS post about it:

https://www.pricescope.com/wiki/fancy-color-diamonds

 

[arkieb1]

Hi,

I own a yellow stone down in the bottom of the letter grade. Typically these stones come in yellow tints, brown tints, champagne tints, grey tints, green tints, even orangey brown tints. There are many shades of yellow and many shades of brown. Some are pleasing to the eye others are not.

It's actually quite difficult to get a really nice coloured stone down in that lower letter range. Normally the nicer stones are graded fancies and then command much more money. Most of the stones down the bottom colours are pretty yuk to look at as a result of this they are generally worth far far less than a whiter facing stone or a fancy coloured stone. They only way you can judge them is with your own eyes.

As a result of its lower letter grading W, X, Y, Z range your stone is worth less. Having said that the vendor might charge much more for one of those literal one in a thousand stone that either faces like a fancy coloured stone or is very pleasing to the eye. The reason for this I would suggest is because they had to wade through a lot of yucky looking diamonds to find a good looking one, its not like comparing apples to apples, because you can get one say X coloured stone that is a complete disaster and another X coloured stone that faces like a fancy coloured diamond worth 3 times the price.

A stone's value is only worth what someone will pay for it. If you love it then its worth that amount to you, if not then hopefully you can return it. The fact you said there is nothing comparable suggests that it is one of those rare lowered coloured stones that is something special.

Asking other vendors that deal in coloured diamonds is a great idea to see what they think about it too, they might also be able to offer you other better valued options.

 

[maccers]

Waits-kaity, some insurance companies do accept your receipt as the value to be insured, that's something you should check out. Of course, sometimes people want their stone to be appraised at a slightly higher value than what their receipt says. Another important point to know is how your company will reimburse you should you make a claim. Some companies cut a cheque for the amount you paid (or the appraised amount) and other companies will find you a similar stone. The latter option can be disastrous for people like yourself, very informed and with knowledge beyond the 4Cs. The replacement stone that insurance picks out as a replacement may not be acceptable to you.

I'm not sure i posted in your original thread with the stone so in case I didn't, I think it's gorgeous!

 

[kenny]

To clear things up, I believe this is the listing.
It was rated on GIA's D-Z scale but it did also mention brown.

http://www.fancydiamonds.net/view_diamonds/9863.htm#.UbvKKRbA4qY