Large pear shaped diamond

[Cynthadia]

We will be getting a pear shaped diamond in a few weeks. The fair market value appraisal came in at $49,000+. I'll post pictures once the diamond arrives in a few weeks. In the meantime, as far as I remember from the appraisal, it is a 4.6 carat stone, SI1. Once we get the diamond, we'll be sending it off to GIA for grading and laser inscription. I have several questions.

First off, the diamond was appraised in its setting.

1. If GIA's evaluation of the diamond is either a grade or two higher or lower than the appraiser's evaluation, what difference (if any) will that reflect in the diamond's value?
2. If there is a difference in GIA's evaluation from the appraiser's evaluation, should we have the diamond re-appraised (once again at its FMV)?
3. Do you think it's safe to ship the diamond to GIA? If so, for what amount would you insure the diamond?
4. There is a small feather at the point. Do you think it's too risky to have the diamond recut into a round brilliant? If not, does anyone have an idea of how much carat weight we'd lose in the cutting process or what would be considered an acceptable loss of carat weight?
5. We plan to sell the diamond after all of the documentation is in place. Would you suggest we sell the diamond as a loose stone or leave it in its platinum setting?

Thanks much,

Cynthadia

 

[denverappraiser]

1. If GIA's evaluation of the diamond is either a grade or two higher or lower than the appraiser's evaluation, what difference (if any) will that reflect in the diamond's value?

Yes. Talk to your appraiser about this.

2. If there is a difference in GIA's evaluation from the appraiser's evaluation, should we have the diamond re-appraised (once again at its FMV)?

Yes. Again, talk to your appraiser about this.

3. Do you think it's safe to ship the diamond to GIA? If so, for what amount would you insure the diamond?

Yes. $49,000+. Are you shipping from a US address?

4. There is a small feather at the point. Do you think it's too risky to have the diamond recut into a round brilliant? If not, does anyone have an idea of how much carat weight we'd lose in the cutting process or what would be considered an acceptable loss of carat weight?

To evaluate setting risk, talk to your setter.
Recutting is a complicated business and it’s outside the scope of most appraisal assignments. That said, talk to your appraiser. They’ve seen the stone, they've taken the time to thoroughly inspect it, they are presumably an expert (or know someone who is) and are prepared to provide an educated opinion on this. If the goal is resale, it's almost never a good idea by the way.

5. We plan to sell the diamond after all of the documentation is in place. Would you suggest we sell the diamond as a loose stone or leave it in its platinum setting?

It depends on how you plan on marketing the stone/piece. Selling diamonds for 'fair market value' is not an easy task under the best of circumstances and big pears are not especially easy to sell at the moment. In general, people who buy big diamonds want to make their own setting plans unless it’s a REAALLY awesome piece but even then the deal is going to be about the diamond for most buyers. Did you buy this stone in the hopes of selling it? Where did you get it? Did you discuss the resale question with your appraiser?

You’ve used the phrase ‘fair market value’. Is that something your appraiser told you? What is their definition of this term (It should be in the body of the report)? This is a legal term but it is regularly used to mean very different things under different circumstances.

 

[Cynthadia]

1. If GIA's evaluation of the diamond is either a grade or two higher or lower than the appraiser's evaluation, what difference (if any) will that reflect in the diamond's value?

Yes. Talk to your appraiser about this.

2. If there is a difference in GIA's evaluation from the appraiser's evaluation, should we have the diamond re-appraised (once again at its FMV)?

Yes. Again, talk to your appraiser about this.

3. Do you think it's safe to ship the diamond to GIA? If so, for what amount would you insure the diamond?

Yes. $49,000+. Are you shipping from a US address?

4. There is a small feather at the point. Do you think it's too risky to have the diamond recut into a round brilliant? If not, does anyone have an idea of how much carat weight we'd lose in the cutting process or what would be considered an acceptable loss of carat weight?

To evaluate setting risk, talk to your setter.
Recutting is a complicated business and it’s outside the scope of most appraisal assignments. That said, talk to your appraiser. They’ve seen the stone, they are presumably an expert (or know someone who is) and are prepared to provide an educated opinion on this. If the goal is resale, it's almost never a good idea.

5. We plan to sell the diamond after all of the documentation is in place. Would you suggest we sell the diamond as a loose stone or leave it in its platinum setting?

Major issue here. It depends on how you plan on marketing the stone/piece. Big pears are not especially easy to sell at the moment. In general, people who buy big diamonds want to make their own setting plans unless it’s a REAALLY awesome piece but even then it’s going to be about the diamond for most buyers. Did you buy this stone in the hopes of selling it? Where did you get it?

You’ve used the phrase ‘fair market value’. Is that something your appraiser told you? What is their definition of this term (It should be in the body of the report)? This is a legal term but it is regularly used to mean very different things under different circumstances.

The ring is the last piece of an estate that we inherited.

Insofar as selling the diamond as a loose stone, the setting is quite lovely. There are 6 tapered baguettes that the appraiser has graded as VS1.

As I understand recutting, if we can "safely" recut the stone to a round brilliant, then the value of the stone will increase as well. The issue is can we recut and still keep the carat weight at 4+.

Our intent in having the jewelry appraised was so that we could have some realistic idea of its value when it comes time to sell the ring. Selling the ring to a private party in a transaction where the seller is under no duress fits the description of FMV, whereas an appraisal for insurance purposes is worthless under the above-described conditions.

I've been told by more than one jewelry person that pear shaped diamonds aren't "in" right now. I've also been told that because the diamond is so large, most prospective buyers would be looking at at making the ring into a pendant.

 

[denverappraiser]

'Fair market value', as it is generally used in estate appraisals is NOT the price you can expect to sell the piece for and I would again recommend talking to the appraiser about this if you haven't already done so. If this was a taxable estate, the definition of FMV comes directly from the IRS. If it was done for purposes of estate distribution it comes from whoever was managing the estate and they may or may not be using the same rules as the IRS. Assuming you were the client, they should have discussed this issue with you and whatever they chose to use sould be included in the report.

Recuts form pear to round will usually show a huge weight loss and that's the reason it was cut to a pear in the first place but way more information is called for in order to make this decision. It's not that this is never the right route but it's a complicated decision and usually the answer is no. It's outside the scope of most appraisals and it's WAY outside the scope of what can be reasonably done for free on the Internet.

Nearly every reasonable marketing path for an item like this starts with an appraisal, which you did, and then leads to a GIA inspection on the loose stone, which you're planning on doing. You're on the right path. From that point forward there are seeral choices. Again, assuming this wasn't a tax issue, the bigest reason for getting the appraisal was to get expert advice on exactly the sorts of things your asking here. Were you the client? Was it a tax appraisal? Did you discuss these topics? What did they tell you?

 

[Cynthadia]

'Fair market value', as it is generally used in estate appraisals is NOT the price you can expect to sell the piece for and I would again recommend talking to the appraiser about this if you haven't already done so. If this was a taxable estate, the definition of FMV comes directly from the IRS. If it was done for purposes of estate distribution it comes from whoever was managing the estate and they may or may not be using the same rules as the IRS. Assuming you were the client, they should have discussed this issue with you and whatever they chose to use sould be included in the report.

Recuts form pear to round will usually show a huge weight loss and that's the reason it was cut to a pear in the first place but way more information is called for in order to make this decision. It's not that this is never the right route but it's a complicated decision and usually the answer is no. It's outside the scope of most appraisals and it's WAY outside the scope of what can be reasonably done for free on the Internet.

Nearly every reasonable marketing path for an item like this starts with an appraisal, which you did, and then leads to a GIA inspection on the loose stone, which you're planning on doing. You're on the right path. From that point forward there are seeral choices. Again, assuming this wasn't a tax issue, the bigest reason for getting the appraisal was to get expert advice on exactly the sorts of things your asking here. Were you the client? Was it a tax appraisal? Did you discuss these topics? What did they tell you?

The purpose of the appraisal was to ascertain what we could expect to sell (not under duress) the diamond for in a sale to a private party, taking into account that the sale price would be significantly less should we sell to a re-seller. The appraiser came with outstanding credentials, including the following: Graduate Gemologist (GIA), International Society of Appraisers, certified member ISA CAPP, President of major city's ISA, Accredited Senior Gemologist Accredited Gemologists Association, Senior Member of the National Association of Jewelry Appraisers, Previewer for Auction Market Resources, consultant to US Security & Exchange Commission, gemology instructor at major museum, Chairman of Gems and Jewelry Committee ISA, along with dozens of post-grad courses in various fields of gem appraisal.

Yes, we were the client.

No, it wasn't a tax appraisal.

Yes, we discussed our purpose for the appraisal with the appraiser.

The bottom line here is that we needed to know at least the ballpark value of the jewelry before we set a selling price. In other words, how could we offer for sale a diamond for which we had no idea of its resale value? For people like us, who have no experience selling diamonds, we found that asking that question most oftentimes got the answer "A diamond is worth only what a buyer will pay" to be an unsatisfactory answer.

Just to test the waters, we took the diamond to a couple of jewelry brokers. One broker offered $38K, and the other one offered somewhere in the low $40s. When I asked each broker if they wanted us to get a GIA cert, both of them said "Don't bother, I'll get my own cert from GIA." That didn't make sense to me. Why would a broker not take us up on our offer to pay for a full GIA cert, including laser inscription? I still don't understand that.

There is some risk in getting the diamond GIA graded. If the grading comes back lower than the appraiser's grading, that will downgrade the diamond's value. However, if GIA grades the diamond higher than the appraiser, that will increase the diamond's value. Either way, it seems to be a necessary risk.

 

[denverappraiser]

There is no significant risk associated with GIA grading.

If you're unhappy with the results, don't get the girdle inscription and don't show the report to prospective buyers. The stone is what it is, no matter what the appraiser and/or GIA have to say but GIA paperwork DOES make a useful selling aid in nearly every case but especially if you're going to try and sell to an end consumer.

The reason they would rather do it themselves is that they think there's a significant possibility that it'll come back HIGHER than what the appraiser called it. I have no clue what your odds of this are but it sounds like you've chosen a fine appraiser so this too is a question for them. You'll have to take it out of the setting, which comes with some costs and risk to the mounting, you'll have to pay GIA, you'll probably need to pay some more to the appraser, and it's going ot take at least a few weeks but I don't see any of these things as terribly severe given the budgets involved.

 

[Cynthadia]

There is no significant risk associated with GIA grading.

If you're unhappy with the results, don't get the girdle inscription and don't show the report to prospective buyers. The stone is what it is, no matter what the appraiser and/or GIA have to say but GIA paperwork DOES make a useful selling aid in nearly every case but especially if you're going to try and sell to an end consumer.

The reason they would rather do it themselves is that they think there's a significant possibility that it'll come back HIGHER than what the appraiser called it. I have no clue what your odds of this are but it sounds like you've chosen a fine appraiser so this too is a question for them. You'll have to take it out of the setting, which comes with some costs and risk to the mounting, you'll have to pay GIA, you'll probably need to pay some more to the appraser, and it's going ot take at least a few weeks but I don't see any of these things as terribly severe given the budgets involved.

Yep, that was exactly my thinking - the brokers suspected that GIA's grading would come back higher than the appraiser's grading.

What's amazing to me is how QUICKLY these diamond dealers can separate the wheat from the chaff. I'm slowly learning to read broker body language, and that in itself is worth the trip.

It's anxiety producing enough to think about the possible shipping issues sending the diamond to GIA for grading. I just can't wrap my mind around having to send it twice - once for grading and possibly again for laser inscription. I think we'll just bite the bullet and have GIA grade and inscribe. Yes, I also agree that the diamond is what it is. However, I think I'll sleep better knowing that I've done my due diligence, which means presenting the diamond honestly - warts and all.

 

[denverappraiser]

The desire to buy without paperwork may also be about the time. If they just buy it now, the competiton is over. You're obviously shopping this around and they may lose a deal later that they can get today. I agree with you that it's good to just present the facts that are facts without games and let them bid whatever they want. Most of the jewelry buyers don't have the budget on hand to buy this sort of thing and I'm a little surprised you've got this much enthusiasm from potential buyers, even if it's a D color, unless they think it's a better grade than you've quoted.

The inscription service is inexpensive if it's already in the lab for grading but the shipping if you're far away is a problem to be sure. Why are you so eager for it?

Where are you?

 

[Amys Bling]

Wow, I'd love to see a picture of that!

 

[centralsquare]

Wow, I'd love to see a picture of that!

Agreed!

 

[helen_gin]

Agreed,so nice.

 

[diamondseeker2006]

I wouldn't worry about the laser inscription, either. Any reputable diamond broker can tell if the stone matches the report. (It's not like there are a lot of 4 carat pears floating around!) Just get the GIA report and you can choose whether to disclose it or not. And how about a picture of the ring? We'd love to see it!

Neil, how can she insure the unset stone while at GIA for grading?

 

[tyty333]

Yes, we would love to see a picture! I'm another pear lover!

 

[denverappraiser]

Neil, how can she insure the unset stone while at GIA for grading?

She's got an appraisal of the complete piece already. It's highly likely that she can just ring up her favorite insurance agent and they'll be thrilled to help her out. If they're paying attention they'll protest briefly about the FMV definition but, in most cases, the sales agents aren't even aware of the question and if they do, it's likely that the appraiser can reissue a report for the same item for insurance purposes (expect a fee for this by the way). This is largely about insuring it during the process of pulling and resetting by the way. In terms of shipping, USPS insures registered mail up to $50k. GIA specifically refuses to accept liability for things while in their posession but, in practice, I think they are a highly secure facility and I would be willing to bet that they actually carry a pretty good insurance policy. I"m not very worried about them but any standard sort of insurance policy would cover a loss by GIA.

 

[Cynthadia]

I pulled the appraisal out this morning and, as it turns out, I mis-stated three things.

First, I previously stated that the center stone was 4.6 carats. In fact, the appraisal states that it is 4.22 carats.

Second, I previously stated that the appraiser stated that the FMV was $48,000. That was incorrect. The FMV appraisal is $49,370.

Third, I stated that one diamond broker offered us $38,000 for the ring. My partner told me last night that the offer was if you find a buyer who will pay $48,000, let me know before you sell because I can do better.

Now that I've gotten that out of the way, here's what the appraiser had to say.

One stamped platinum lady's cast engagement ring & wedding band with a polished finish. Condition is good. Identified with markings of "10% IRID PLAT." Containing:

One prong set pear shaped cut diamond, measuring 15.29 x 8.88 x 5.41mm approximate weight of 4.22ct.

Clarity: SI-1
Color: I
Cut: Good

Four bar set baguette cut (tapered) diamonds, measuring from 6.50 x 1.50 x 1.28mm (depth est.) to 7.00 x 2.50 x 2.13mm (depth est.) approximate total weight of 4 Stones = 0.84ct.

Clarity: VS-1
Color: H-I
Cut: Good

Total weight of Diamonds: 5.07ct.
Total Weight of Ring & Wedding Bang: 5.30 dwt

Total Fair market value: $49,370.00

The ring will be delivered to us in early September. I'll make sure to post some pictures before we remove the big stone and send it off to GIA for grading. Irrespective of GIA's grading, I can't wait to see how the loose diamond will measure compared to the measurements in the setting.

By the way, even though I've spent the last two years reading all I can about diamonds, my understanding of the topic remains rudimentary.

 

[denverappraiser]

Assuming that description is correct, $38k is a pretty decent dealer bid. In rereading your post, I gather by the comment that you'll be getting the piece in September that you aren't in posession of the piece so can I presume that the buyers haven't actually seen it yet. This would rule out the possibility that their grading differs from that of your appraiser, at least at this point.

You might want to make sure they're ok with waiting while you get a GIA and shop it around. This bid may be based on another customer waiting in the wings who happens to be looking for the right thing and they may be time sensitive. Most consumers who are buying things like this only want one after all.

 

[AprilBaby]

Pears are not "out" around here! Lets see a picture of that beauty

 

[tyty333]

Pears are not "out" around here! Lets see a picture of that beauty

Yes, its early Sept. We want to see!!!