- Joined
- Dec 12, 2000
- Messages
- 670
Bob’s Flashes - When a customer asks what your diamond will appraise for, how do you answer them?
Many jewelry stores sell diamonds like this: “The price of the diamond is $2000 but if you buy today, it is only $1000. And when we complete the sale we will give you an appraisal on the diamond that says $2000.” Wow, what a deal!
What that salesperson just said is the diamond is worth $1000 but we will lie and give you an appraisal for $2000. You would be surprised how many people bite that hook and think they got a deal.
In the first place it is unethical for a jeweler to sell jewelry and write an appraisal for a higher value. What they should be writing is a Diamond Sales Confirmation with the actual price paid.
I received a call from a lady yesterday and after we talked about a particular diamond, she wanted to know what it would appraise for? I no longer do appraising because I sell diamonds and feel that my appraising would be a conflict of interest. So I told her that I could not tell her what the diamond would appraise for even though I am a Master Gemologist Appraiser due to this potential conflict of interest.
If I sell an e-diamond for $4000, I know that if the appraiser is independent, grades the diamond correctly, and knows what they are doing, which some do not, then the diamond will have an appraised value higher than the $4000 paid. If the customer takes their diamond to five different appraisers, each one will give a different value of the stone. There is no industry standard for how the value is to be calculated.
While some appraisers start out with the Rapaport list price and then add a self-determined mark up, what an appraiser should be basing the appraised value on is what that diamond would sell for in a retail jewelry store in that area. If the diamond is a poorly cut I1 clarity diamond, it should be valued at the sales price given by stores that sell that type of diamond. If it is a fine ideal-cut diamond, it should be valued at the sales price a fine jewelry store would use to sell a comparable ideal-cut diamond.
Diamonds are not like homes. If a home appraises for $200,000, you can expect to be able to sell that home for about $200,000 or more depending on the growth of the housing market. If a diamond appraises for $6000 and you purchase it for $4000, you can expect to sell it for less than the $4000 you paid for it. In this way, a diamond is much like buying a new car. You may buy a new car for $25,000 and insure it for $25,000 but you could never sell it for $25,000 even if it is one day old with only 50 miles on it?
Bottom line: the appraised value of a diamond has no bearing on how much you should pay for it!
Many jewelry stores sell diamonds like this: “The price of the diamond is $2000 but if you buy today, it is only $1000. And when we complete the sale we will give you an appraisal on the diamond that says $2000.” Wow, what a deal!
What that salesperson just said is the diamond is worth $1000 but we will lie and give you an appraisal for $2000. You would be surprised how many people bite that hook and think they got a deal.
In the first place it is unethical for a jeweler to sell jewelry and write an appraisal for a higher value. What they should be writing is a Diamond Sales Confirmation with the actual price paid.
I received a call from a lady yesterday and after we talked about a particular diamond, she wanted to know what it would appraise for? I no longer do appraising because I sell diamonds and feel that my appraising would be a conflict of interest. So I told her that I could not tell her what the diamond would appraise for even though I am a Master Gemologist Appraiser due to this potential conflict of interest.
If I sell an e-diamond for $4000, I know that if the appraiser is independent, grades the diamond correctly, and knows what they are doing, which some do not, then the diamond will have an appraised value higher than the $4000 paid. If the customer takes their diamond to five different appraisers, each one will give a different value of the stone. There is no industry standard for how the value is to be calculated.
While some appraisers start out with the Rapaport list price and then add a self-determined mark up, what an appraiser should be basing the appraised value on is what that diamond would sell for in a retail jewelry store in that area. If the diamond is a poorly cut I1 clarity diamond, it should be valued at the sales price given by stores that sell that type of diamond. If it is a fine ideal-cut diamond, it should be valued at the sales price a fine jewelry store would use to sell a comparable ideal-cut diamond.
Diamonds are not like homes. If a home appraises for $200,000, you can expect to be able to sell that home for about $200,000 or more depending on the growth of the housing market. If a diamond appraises for $6000 and you purchase it for $4000, you can expect to sell it for less than the $4000 you paid for it. In this way, a diamond is much like buying a new car. You may buy a new car for $25,000 and insure it for $25,000 but you could never sell it for $25,000 even if it is one day old with only 50 miles on it?
Bottom line: the appraised value of a diamond has no bearing on how much you should pay for it!
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