Appraisal value less than price paid

[mehdi76]

So as I wait for my appraisal to come back, a question come''s to mind. What would you do if the appraisal value is less than what you paid for your diamond?




Mehdi

 

[wonka27]

Yikes...that would be bad! You would certainly need to figure out why it played out that way. In the end, unless there was something intrinsically special about it, I'd be returning!

 

[mehdi76]

Well, I bought the stone from GOG. I'm having it appraised by a local B&M (Lux Bond & Green). The appraiser, from what I am told, is a Certified Gemologist Appraiser, American Gem Society (not sure what this means to be honest!!). That said, I have faith in GOG, so I'm not too worried. While waiting for the report to come in, this thought popped in my head that what if the appraisal value is less than what I paid?

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On 9/4/2004 11:42:18 PM wonka27 wrote:





Yikes...that would be bad! You would certainly need to figure out why it played out that way. In the end, unless there was something intrinsically special about it, I'd be returning!
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[wonka27]

If you worked with good old gold you have nothing to be worried about!

 

[yowahking]

There are many reasons for that happening if it does. Your CGA is probably very qualified. That test is not so easy to pass, although that person should not rest on that certification alone and keep up with the times. A CGA from 20 years ago may be very out of touch, most likely in an AGS store, he has kept up. Once in a while an appraiser does not know that a piece is made from a famous designer. The piece may carry a higher price tag and should have a notation that the replacement price from XYZ designer is $$$ which would be higher than the same amount of diamonds and gold made by a joe average goldsmith who did a fine job. We see many more that paid $5000 for a piece or diamond, and was told that it would appraise for $15,000 and it only appraises for $7000. The price paid was fair but it was represented as an unmatchable deal when in reality could have been matched by 1/3 of jewelers in any city. Most times that an item does not appraise for the price paid, it is because the grading was not accurate. Today we saw a diamond that was laser drilled, fracture filled, sold as a D color (more H) and even though it was sold as treated, customer paid too much. Our appraiser told them to return it. Most times the problem is not the appraised value, it is that something about the item was not disclosed or flowered a bit to make the sale.

 

[denverappraiser]

Good Advise Scott.

Firstly, CGA from AGS is a good credential. Credentials are not the end of the question but it’s a pretty good start. Think of it a someone who has graduated from a good college. It doesn’t really mean that they know what they’re doing, but it’s a handy clue.

Appraisal value is a difficult concept for many people to understand. There simply isn’t a straight answer to the question ‘What is this worth?’ The problem is that it’s necessary to first define the property and second to define the market. No estimation of value is useful if it doesn’t contain a component explaining how much is this worth to whom, when and where. These things can make an enormous difference. A good appraiser will start the appraisal process by an interview with you the client. In this interview, they will ask you a variety of questions that help to address these and other issues. Are you asking how much your item should be expected to cost at a retail store in your area? This is a perfectly valid definition of ‘value’. On the other hand, you could be asking how much to expect to recieve from the salvage of the materials. This is an equally valid, and very different, description of value. The appraisal you receive will be quite different depending on how you answer these questions.

If you get an appraisal that is importantly different from what you paid (in either direction) read it over carefully and see what they have said that varies from the actual transaction that is occurring. Grading of the stones and other materials, authorship of the piece, ownership history, location of the market, condition, and many other things can come into play. The appraisal itself will usually have a section that explains what assumptions they have made and how they based their conclusions.

It’s always possible that your appraiser simply made a mistake. If you see a statement that you feel is contrary to fact, for example incorrect identification of the designer, mention your concerns. It’s important to know if they feel your item is not what was described to you, if they simply overlooked an important detail, or if they feel that you were overcharged. The difference is important. They should be happy to discuss this with you.

Neil Beaty, GG ISA
Independent Appraisals in Denver

 

[valeria101]

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On 9/4/2004 11:42:18 PM wonka27 wrote:

Yikes...that would be bad!
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Couldn't refrain from some simple aritmetics:

Since appraisals are usually done for up to twice the estimated current replacement value, it would be really, really bad news to receive an appraisal for less than the actual cost. That would simply mean that you can buy something close for half what you paid

This could be some real case of missrepresentation rather than not so competitive pricing, I would think.

 

[denverappraiser]

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On 9/5/2004 9:59:01 AM valeria101 wrote:

Since appraisals are usually done for up to twice the estimated current replacement value,

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Valeria101,

Sensible appraisals are not done with this procedure. I'll conceed that there are people in the market who issue documents that they call appraisals where they will quote sky high prices as a 'replacement value'.

I recommend against using such appraisers because there is usually little information of value contained in these reports.

Neil Beaty, GG ISAA
Independent Appraisals in Denver