Appraisal Significantly Less Than Purchase... Advice!

[waity-katie]

That's right, Kenny! Thanks for stalking my diamond!

 

[arkieb1]

I take it the internal graining is not impacting the brilliance of the stone? That is another thing that would also make it worth less money to a valuer.

Also a great point - if your insurance value is way way less than what you paid and anything happens to the stone and you have to replace it (lost, stolen, broken) that would be a BIG issue for me personally.

 

[kenny]

That's right, Kenny! Thanks for stalking my diamond!

Piece of cake.
Just click on SOLD DIAMONDS and page down till you find the diamond you described.
All public info, and easily searchable by anyone.

Lebish's listing and the GIA report informs the discussion here, since people were speculating on it.
If they had this info they'd not have to guess and speculate about whether GIA put in the FCD pile or the D-Z pile.

 

[CharmyPoo]

Are you willing to share the price you paid? I am sure folks will chime in if they think you actually over paid.

 

[WinkHPD]

Are you willing to share the price you paid? I am sure folks will chime in if they think you actually over paid.

May I ask what will give them the knowledge that a supposedly trained appraiser did not have?

Folds may chime in, but without actual knowledge of what that stone should sell for
their chiming will be unlikely to provide accurate guidance.

Wink

 

[waity-katie]

Yeah, I agree. I'm not really comfortable specifying the exact price which is why I tried to share general indicators like % delta between the appraisal and the purchase price we paid. However, I do recognize that anyone with access to this month's Gem Guide could utilize some basic math skills to arrive at both the appraisal value that we were quoted and the amount we actually paid, given the information that I provided.

My goal here was mainly to understand how people felt about the uncertainty given the scarcity of data with which to arrive at the appraised value, and also the delta between that and what we paid at retail.

 

[kenny]

You do not have an appraised value.
That would be a retail value.
You have a guess at a wholesale value.
And didn't you say this 'appraiser' refused to put even that in writing?

An appraiser reporting a wholesale price was lazy, and a cop out.
You are paying for a professional opinion of the RETAIL value, in a specific sales venue.
Oh, but that would be more work, or perhaps impossible.

What if the appraiser told you what the mine charged the first middleman for the rough diamond?
How useful would that tiny number be?
Shall we endeavor to determine the "fair" markup at each step between the mine and a finger?

I agree that publishing the price would not help anything.
Over the years I always bow out of speculation on what these things should cost.
The hue and its attractiveness of many diamonds that fall within one GIA color grade varies a great deal, and so will the price.
Rarity means a lack of comps, so arriving at a price is nearly impossible.

Personally I just pay what Leibish charges.
I trust them.
I've never attempted to get an appraisal, which I would not put much weight in in this tiny specialized corner of the diamond market.
But again, people vary and that's okay.
I understand the OP's concern.

Perhaps Leibish will see this thread and reply when the Sabbath is over, during which they do not conduct business.

 

[kenny]

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.

So 43%-35% is 8%

So, you paid 8% higher than what this appraiser suggested for retail, not "nearly 50%" as you wrote in your OP.

 

[CharmyPoo]

I guess what I am sensing from this thread is that it doesn't really matter what us consumers think. I have never really gotten anything out of paying for an appraisal and I have done it a few times. Obviously, our appraisers here will think differently and I am sure they have their own opinions and serve their customers very well. It just hasn't really helped me. I got my AVC appraised and it came back much lower than what I paid for and then we just on paper bumped it up for insurance purposes. My other diamond appraisal was just the GIA report. I had a vintage platinum watch appraised and it was useless as well ... I got much more accurate numbers researching myself on the second hand market.

There are so many savvy buyers on here that I honestly feel their opinion is more valuable. We know what prices we are seeing when we are shopping around. I know what I am willing to pay and frankly when we try to sell something and want to sell it .. it's about what shoppers are willing to pay and not what a vendor wants to sell it for. I honestly feel we probably even spend more time researching, finding diamonds and giving advice for free than what people paid to do spend time on. Heck, even I have been pretty darn accurate when I graded my own stones and then sent it to GIA or EGL-USA. I have no training other than through looking at all my own diamonds and buying them. Anyways .. my two cents on why I feel posting here helps. A group of people no matter how we cut it has access to a lot more information than a single person (ex. case study around new generation lawyers versus old timers).

As far as I know, anything with a grade from D-Z is not considered fancy color. In fact, the sales pitch I usually get from the store is that I am getting great value because it is in the lower alpha scale range and I don't have to pay the premium for an official fancy grading. I am sure David could easily have priced this diamond as he has plenty diamonds in the lower range. I don't think he is allowed to do that on the forum but I certainly believe he can give an accurate picture of price.

 

[CharmyPoo]

No matter what words we chose to use ... bottom line is that you want to know if you over paid for the diamond. You are trying to arrive at the answer by determining how much you can trust the appraisal given their limited access to data.

We know your diamond is not common and standardized pricing doesn't exist. This was also confirmed by the trade here that it isn't a diamond you can find anywhere. As such, vendors will price these diamonds as they choose fit. I guess what I am saying that if you really want to know if you over paid ... ask the educated consumers here what they think and what they would be willing to pay for the diamond. That is how you really determine worth in my opinion.

 

[WinkHPD]

<Snip> I got my AVC appraised and it came back much lower than what I paid <Snip>

My guess is you used an appraiser who did not have a clue what an AVC was and who did not know the questions to ask to find out. Very hard for him to give a price on something he does not know. These are the times when I believe it is advantageous to use the vendor who actually knows what he is selling to write the "evaluation for insurance purposes", since appraisers will say that him writing an appraisal is a conflict of interest.

In the case of a vendor selling something fairly unique, he is probably the best source of information about it.

Wink

 

[kenny]

Charmypoo, you paid a premium on a brand that, unlike Hearts on Fire, the appraiser was not familiar with.
I happily pay a brand premium on an Octavia.

You and I know that we are getting more bling for the buck with these super-ideal cuts.

 

[CharmyPoo]

Wholesale pricing per unit
http://www.ajediam.com/fancy_color_diamond_prices_5-00_to_5-99_carat.html

 

[waity-katie]

Charmypoo - Not sure what that site is based on but I will say that it is SUBSTANTIALLY more than the Gem Guide ranges. It also seems much higher than prices I have seen on Leibish's website even for other colors. It also far exceeds what we paid for this stone. Maybe someone else could comment on their impression of the reasonableness of those values, but they seem out of whack just based on my limited (very limited!) experience.

 

[CharmyPoo]

For my AVC, all I am going to say is that I used a PS appraiser who was familiar with the AVC. I also asked specifically for August Vintage Cushion to be called out as I was getting the appraisal for insurance purposes and wanted a like for like returned.

This thread is not about me and I have no issues with my appraisal for years ago. I was very pleased with the appraiser and the report provided to me.

 

[Rockdiamond]

A lot of interesting aspects raised in this discussion.
Charmy has raised some very good points. Fortunately, or unfortunately, many of the readers and regular participants of this forum have a broader based knowledge than many people calling themselves appraisers.
This does not mean they can appraise a diamond without looking at it – no one really can. But it does mean that a consumer posting a price on here, in general, can get some pretty decent feedback.
I write appraisals pretty much every day. I think it's very important to discuss the basis of valuation with client.
For example, there is no such thing as an "retail price" anymore than there is a wholesale price.... If there is no context given to that price.
Just like there are different levels of wholesale pricing… For example directly from a cutter, or from a dealer, or resale price, there are different levels of retail pricing.
A similar item purchased in the Highline Fifth Avenue store, or at a pawnshop, will have drastically different prices.
My feeling is that it is incumbent on the appraiser to discuss this when assigning a value to any item.

Another thing I think Charmy raises: it's not always a "no-brainer" to take an item to be appraised after you've purchased it.
Sometimes it's a great idea, but sometimes it is a needless expense.
As this thread has so poignantly pointed out, not all appraisers are created equal.

 

[VRBeauty]

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.

So 43%-35% is 8%

So, you paid 8% higher than what this appraiser suggested for retail, not "nearly 50%" as you wrote in your OP.

If buyer purchased the stone for 85% of Leibish's stated retail value, and the appraiser's estimated wholesale cost came in at 57% of what the purchaser paid, then the estimated wholesale cost came in at ~48.5% of Leibish's stated retail cost.

If the appraiser gave an estimated retail cost 35% higher than his estimated wholesale cost, then the appraiser's estimated retail cost is ~65.5% of Leibish's stated retail cost, which is still 20% below what the purchaser paid.

All of which would be concerning if you're getting the appraisal for the purpose of insuring the stone so you can replace it should the need arise.

 

[waity-katie]

I think this discussion is helpful, but is getting a little bit convoluted. This is my attempt to clarify things.

I recognize that the terms "wholesale" and "retail" are slightly arbitrary. I view the term "wholesale" meaning what Leibish reasonably pays for a stone, and then they have their own mark-up to make a profit, which in this case would be the "retail" value for me. However, "retail" value could be even higher: for example I could go to my jeweler down the street and say, find me a 5.05 carat, VVS2, Light Brown W-X, and he may have gone and found the exact stone that I purchased from Leibish. If he purchased it instead, and then passed it along to me, I would expect the "retail" mark-up to be even higher.

I am NOT concerned about the appraisal value at this point for insurance purposes. Rather, I am concerned that I paid 43% more for something than the vendor actually paid for it, because that seems like a hefty mark-up to me. If I wanted to purchase a 5 carat, VVS2, excellent cut, J color diamond, I could easily make a spreadsheet of everything currently being offered and determine a reasonable "retail" value. I could even get several different "retail" values: one for if I purchased from an online vendor (presumably cheaper) and one for local jewelry stores in my area. These stones then have some wholesale price (again, defined as whatever JA, BN, Jo Shmo Jeweler paid for them) and a mark-up for retail. I can then assess and determine what the diamond is "worth" at retail and what my best option would be to purchase a specific stone. However, I can not do this with the diamond I purchased because based on my research, there is nothing out there right now that falls in these same specs.

What I would like to understand is how consumers or jewelers or appraisers value colored or scarce diamonds before they purchase them and how they ascertain that they are paying a reasonable price. OR, are these items scarce enough that you just don't get the luxury of doing such an evaluation and therefore must decide personally whether you want it for a given price or not? How do I, as a consumer, do my due diligence at making a well-informed purchase when there is little data to substantiate a specific price or value?

Hopefully that makes sense...!

 

[kenny]

What I would like to understand is how consumers or jewelers or appraisers value colored or scarce diamonds before they purchase them and how they ascertain that they are paying a reasonable price. OR, are these items scarce enough that you just don't get the luxury of doing such an evaluation and therefore must decide personally whether you want it for a given price or not? How do I, as a consumer, do my due diligence at making a well-informed purchase when there is little data to substantiate a specific price or value?

Hopefully that makes sense...!

I can only speak for myself ...
Maybe I'm a fool but I do what you mentioned ...
"... these items scarce enough that you just don't get the luxury of doing such an evaluation and therefore must decide personally whether you want it for a given price or not ..."

I'd never buy a well-cut modern 1 carat round G VS2 diamond this way because there plenty of supply, competition, and data points.

 

[denverappraiser]

Your stone is NOT a 'fancy light brown'. What the guide thinks those cost is irrelevant, even it turns out to be correct, which is debatable by the way.

Gemguide provides AT BEST a guideline on what they list, which does not include N-Z GIA goods. Their numbers come from some averaging of polling data of dealers asking prices for similar things. It lists a very broad range even when what it lists is applicable. As has been pointed out, even if we were talking about a fancy light brown, the range of variables within that are HUGE. You surely knew this or you wouldn't have ended up with that particular stone. Killer cut low colors are NOT an easy thing to find and, not surprisingly, they command a premium. That premium is exactly what you're asking about because you didn't buy the cheapest brown stone available and are worried that yours is 'worth' the extra price.

'Wholesale', even if you were to successfully define what that is, is almost certainly not the appropriate value definition. It's certainly not what you've been asking about here. We have no way of knowing what Liebish paid, nor would they tell us for anything short of a court order. They pay whatever they must and they charge whatever they can. If they spotted what they counted as a 'deal', they are under no expectation to pass this on, nor would I expect them to. Similarly, if they overpaid for something and have to sell at a loss, this is their problem not yours.

The expectation that Gemguide, or any other price guide, is a way to determine what a jewelers cost on a particular stone is is flatly false. Diamonds are simply not priced that way, especially unusual ones. Some seller has a stone, they offer it for sale, and customers/dealers may or may not buy it. If it doesn't sell they can wait it out until a better buyer comes along or lower their price, as they wish. The same happens in reverse. The usual way customers shop for this sort of thing is to look at the selection of offerings available to them and choose one from a fairly short list based on price, color, cutting or whatever their specs turn out to be. That is NOT the way that typical PS shoppers look for mainstream goods. They search the database for a particular set of specs that results in a rather narrow list of very similar offerings from which they choose one based on price, dealer preference or whatever. If they don't like the prices they see they change the specs until the selection is one they can live with.

You haven't answered the questions about whether you've had this discussion with your appraiser and, if so, what they had to say. A value conclusion simply does not stand in isolation. Understanding the question is at least as important as the answer. Understanding the underlying assumptions being made is also critical. By your statements, the appraiser assumed this to be the bottom end of fancy light brown. This is clearly not the case and everything downstream of that assumption is now suspect.

In most cases, the question is how much it could be reasonably expected to replace the item, at retail and in a reasonable amount of time, in the case of a loss. It's unknown whether this is the question asked or even if it's what he/she answered but it's obviously not what you wanted to know. The same question at 'wholesale' is equally inapplicable. Rather few traditional jewelers sell items like this so the 'average' markup at some hypothetical jewelry store that's bringing in stones on spec is irrelevant to the question at hand.

The question you seem to really want to know is if you paid a reasonable price and that issue boils down to either what it would cost to get something similar elsewhere or what else you could get for your money that might be more satisfactory to your requirements. Apparently this wasn't asked and it clearly wasn't answered if it was. Once again, a conversation with the appraiser is what is required if you want to add clarity to their opinions.

 

[Modified Brilliant]

My humble opinion....there are appraisers who do not ask the right questions or neglect to ask any questions at all from their clients.
This just contributes to misinformation and misunderstanding.
It's like getting a diagnosis from a doctor without the doctor explaining how the diagnosis was determined.
A little common sense goes a long way.

One of my pet peeves as an appraiser is that some of the "branded" manufacturers do not share retail pricing with appraisers.
They will simply not give out information...so it is often left to the purchaser to provide pricing information to the appraiser.
After all, proper and adequate coverage is one of the key reasons for obtaining an insurance appraisal.
If a brand is so special and extra labor is required and built into the price...why wouldn't a seller share that information?
If there are no comps because of the uniqueness of the item, why not tell us the logic or reason why one wouldn't share info?


I'm not saying that this was the case with this incident.
I'm just revealing to the consumer one of the many difficult obstacles that appraisers face every day.
We sometimes don't get the cooperation and respect that is necessary from within our own industry.

 

[kenny]

What is sad about this thread is a customer may feel worse about his/her diamond.
They loved the heck out of it before meeting this 'appraiser', who should have just told the customer, "I'm sorry but I'm not qualified to appraise this rare diamond."

Next, the seed has been planted that Leibish, of which I am a big fan, has "unfairly" high prices.
Expert professionals, including vendors, here have discredited this 'appraiser', but the damage is done.

 

[heididdl]

yes Kenny I agree (and Neil made me feel better) when I bought my studs two appraisers bashed my EGL certified stones which I love and it took me months to get over it.)



and I as a traveling gold/silver/diamond buyer I get these diamonds in front of me with these appraisals for J/K/L stones sI3 /II (not certified ) appraised for 1.00 ctw $10,000 and the customer thinks that's what I am going to buy it for.....................................................................................................................................

 

[AprilBaby]

It sure is a gorgeous stone!

 

[kenny]

yes Kenny I agree (and Neil made me feel better) when I bought my studs two appraisers bashed my EGL certified stones which I love and it took me months to get over it.)

There is nothing wrong with stones that EGL graded.

It's the softness and the uncertainty of EGL's color and clarity grades that is the problem.
This uncertainty is often exploited by sellers to make more money while fooling customers into thinking they got some great deal compared to GIA or AGS-graded diamonds.
They can use EGL's soft and unpredictable grades as a smoke screen to overcharge, sometimes more than if the stone went to GIA and got lower grades.

The stones themselves are innocent.

 

[waity-katie]

I want to post a follow-up so we can put this thread to rest.

As I mentioned in my original post, our appraiser was going to do some additional research due to the limited amount of data available for the initial assessment. We received a call from him yesterday informing us that his original estimate was low, and his revised number makes a lot more sense to both of us (we really appreciate the extra lengths he took to make sure his answer was accurate).

Leibish & Co. has been phenomenal throughout the entire buying process, and I can't recommend them highly enough for unique diamonds such as ours.

For those considering colored diamonds, keep in mind that these are very unique stones when compared to colorless diamonds, so it's very possible that your first appraisal (or even your first ring setting) may be different than your expectations. Now that this is behind us, I can certainly say that we would work with Leibish & Co. in the future.

 

[partgypsy]

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!

Really? I would think that the price per carat would be higher for a 5 carat stone than a .20 carat stone. Any comments?

 

[kenny]

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!

Really? I would think that the price per carat would be higher for a 5 carat stone than a .20 carat stone. Any comments?

You are correct the price per carat is higher for larger stones.
Example, a 20 point Fancy Red diamond will cost much more than double what a 10 point one costs.

 

[kenny]

I want to post a follow-up so we can put this thread to rest.

As I mentioned in my original post, our appraiser was going to do some additional research due to the limited amount of data available for the initial assessment. We received a call from him yesterday informing us that his original estimate was low, and his revised number makes a lot more sense to both of us (we really appreciate the extra lengths he took to make sure his answer was accurate).

Leibish & Co. has been phenomenal throughout the entire buying process, and I can't recommend them highly enough for unique diamonds such as ours.

For those considering colored diamonds, keep in mind that these are very unique stones when compared to colorless diamonds, so it's very possible that your first appraisal (or even your first ring setting) may be different than your expectations. Now that this is behind us, I can certainly say that we would work with Leibish & Co. in the future.

I'm glad to hear this, and that you must feel better about your diamond and the transaction.