LEO diamond stated value versus retail price
- Thread starter jenfm
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Just to be fair, we won''t pick on the Leo product.
As a rule, the best indication of true retail value is the price on actually paid for an item. Few merchants today get away with pricing merchandise a lot higher than competing goods sold in similar stores. The Leo is probably no exception to this general rule.
Appraisers can look to any market they feel is appropriate to create their "retail replacement value". This gives wide latitude to select a mark-up that is higher than the one in which your diamond may be offered in. Now, it may not be right to purposely select a higher mark-up, but there is little law and less enforcement of any that exist to prevent it. This makes a tempting and lucrative loophole in the scheme of things. A consumer who has learned a few of the tricks of the trade can avoid such false bargains.
No doubt, most diamonds are sold with proper mark-ups, in spite of many inflated, feel-good appraisals. An appraisal is often used as a sales tool. It can be a fair use, but is often abused.
As a rule, the best indication of true retail value is the price on actually paid for an item. Few merchants today get away with pricing merchandise a lot higher than competing goods sold in similar stores. The Leo is probably no exception to this general rule.
Appraisers can look to any market they feel is appropriate to create their "retail replacement value". This gives wide latitude to select a mark-up that is higher than the one in which your diamond may be offered in. Now, it may not be right to purposely select a higher mark-up, but there is little law and less enforcement of any that exist to prevent it. This makes a tempting and lucrative loophole in the scheme of things. A consumer who has learned a few of the tricks of the trade can avoid such false bargains.
No doubt, most diamonds are sold with proper mark-ups, in spite of many inflated, feel-good appraisals. An appraisal is often used as a sales tool. It can be a fair use, but is often abused.
Certification Value?
Not sure what that is.
From my experience of seeing them, ( all of the ones Ive seen are from B&M sellers ) I believe people paid a premium for them, and could likely find better performing stones on the internet, at the same or lower prices.
If you are asking what an appraiser would value something for/at, David''s post is very appropriate, however, I would add that IF it is appraised by a well experienced and professional level appraiser the market selected by the appraiser SHOULD be well defined as to what that market was in the report.
Rockdoc
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I think the whole subject of diamond "value" is a big mess.
My first clue was my first diamond purchase at Bluenile.
I don't remember the numbers but the earrings came with an "independent appraisal" that was for, I think, 70% more than I paid.
This made my brain explode.
It has been "explained" to me a million times here, but it still doesn't make sense to me.
How can a vendor include such a thing?
How can such a thing be valid?
I give up.
I feel sorry for appraisers.
They have to explain this mess over and over.
My first clue was my first diamond purchase at Bluenile.
I don't remember the numbers but the earrings came with an "independent appraisal" that was for, I think, 70% more than I paid.
This made my brain explode.
It has been "explained" to me a million times here, but it still doesn't make sense to me.
How can a vendor include such a thing?
How can such a thing be valid?
I give up.
I feel sorry for appraisers.
They have to explain this mess over and over.
Regular Guy
Ideal_Rock
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- Jul 6, 2004
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- 5,963
I think the mess, Kenny, comes out of a complicated environment. To this end, I would say that although appraisers are more passengers, and insurers are more the drivers, there is collusion between the two, intended or not.Date: 10/11/2006 5:19:53 PM
Author: kenny
I think the whole subject of diamond ''value'' is a big mess.
My first clue was my first diamond purchase at Bluenile.
I don''t remember the numbers but the earrings came with an ''independent appraisal'' that was for, I think, 70% more than I paid.
This made my brain explode.
It has been ''explained'' to me a million times here, but it still doesn''t make sense to me.
How can a vendor include such a thing?
How can such a thing be valid?
I give up.
I feel sorry for appraisers.
They have to explain this mess over and over.
See attached.
Thanks for the responses, I don''t know anything about diamonds, so I appreciate learning about pricing and protocol. I called it the "certification" price because it''s actually listed on the little certification card that comes with the Leo diamond. The exact terminology on the card is "Est. Retail Repl. Value". Without getting into a lengthy diatribe I''ll explain further why I''m asking. I lost my diamond a couple of weeks ago and foolishly thought it was insured through my homeowners, I know, incredibly stupid - but I can''t believe how many people also think this when I tell them this story! Anyhow, two weeks later it turned up, I know, incredibly lucky, right! I immediately took it to get it insured, they asked for an appraisal. I couldn''t find my certification so I took it to a jeweler to look up the laser engraved number I knew was on it. When I got home I looked again and found the certification and was shocked to discover it was a different diamond! On the Leo Schachter website I looked up the number that had been read off my diamond earlier that day and was distressed to learn the diamond I really have is smaller and valued at about $700 less (based on the price listed on the certification, as described above) than the certification card the jeweler gave me. I believe it was probably an honest mistake, but I really think they owe me some kind of refund or credit. The amount I actually paid the jeweler was about $50 less than the Est. Retail Repl. Value listed for the actual diamond I really have. I thought I was paying $700 less than the "certification" price. It was purchased about three years ago. I appreciate any advice you all may have as to how to proceed. Thanks again.
:)
Brilliant_Rock
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- Jul 25, 2006
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Sorry, it is indeed confusing. I don''t think anyone switched my ring. I think they gave me the wrong certification. The sizes were very close. I thought I had a 0.77, I really have a 0.75. All the other ratings are the same, Near colorless (I) and SI(2). But those Leo cards have the Est. Repl. Price right on them. I''ve seen scans of the cards elsewhere on this forum. Mine looks just like those. The card the jeweler gave me said $5770. The information listed on the website for the laser number actually engraved on my ring says $5045. I paid $4995, not including tax. It was purchased 3 years ago.
RE: Values
The term estimated replacement value is highly questionable. One is driven to ask how estimated it is?
I would assume that since the certification card was issued three years ago, the cost of replacing the diamond is higher, plus the platinum mounting sells for a lot more than a gold one.
Documents commonly called APPRAISALS, really aren''t appraisals in the most strict requirements of what an appraisal is.
An insurance appraisal needs to have the report written in such a way that the value reported is relevant to how the consumer''s insurance company will settle a claim, should one happen. The method of settlement from insurance companies vary with the type of policy the consumer buys.
The most common insurance policy type offered is a REPLACEMENT policy. Each company''s policies on how the claim is settled varies. To learn this you need to thoroughly review the policy language about "how claims are settled" in the policy.
One usually consistent scenario is that the insurance company will NEVER pay more for the replacement that the stated value amount in the policy, regardless of the replacement cost. The tricky part here is that values change, so most jewelers and appraisers - assuming the appraisal will be the document used for a number of years add a percentage to the price paid, with the intent of "making sure" there is enough coverage to fund a replacement in the future. Predicting what will happen in a marketplace in the future and making a guess as to a document on which both the insured and the insurer rely is really a questionable practice. It is important to know what the policy says about WHO is going to do the replacing. If you can go to your choice of seller, and they will pay whatever that seller wants to charge for the replacement, that is great, but if the insurance company has their own replacement source who is willing to sell at a small mark up over the cost of the item to the insurance company, the value reported should be titled "Insurance Company''s Cost to Replace". In that the consumer will pay premiums based on the stated value reported using an appraisal that is made for substancially more than the purchase price is just wasting the money paid for insurance premiums. A very common scenario is that frequently happens, is that the company will only pay the amount THEIR replacement company says they would charge them. SO if you have $ 10K of insurance coverage for an item you paid $ 7K for, it is likely that if you have a loss shortly after the purchase the insurance company can replace it for no more than $ 7 you paid, and most likely less.
So simply written what is commonly called an appraisal really expressed in the most basic terms is nothing more than a "price quote" to replace the item in the even of a loss. An "appraisal" is different, as it requires market research, a statement of the valuation approach used, the results of the research, and in some types of appraisals reporting actual comparable sales data.
Another important fact of replacement insurance polcies is that the replacement will be made based on providing "like and kind quality" . How detailed the appraisal has been written is PARAMOUNT to how well the replacement will be made, in the above type of policy. IT IS ALSO VERY IMPORTANT to make sure the policy is an ALL RISK TYPE policy as well, and to carefully review any "exclusions" written into the policy.
I will say however that most insurance companies really do try to settle the claims they have "reasonably", but this is tempered by the adjuster assigned to the claim by the company. Some adjusters are very professional and will be exceedly fair about the replacement, but others may not be on your side, as the insurance company''s adjuster''s job is to attempt to save the company money when they can. Regardless of what the agent selling the policy says, it has been my experience that in a loss settlement, the insurance company will follow the terms of the policy EXACTLY. There is also a section in most policies that lays out a procedure you MUST follow, if in the event of a claim you and the insurance company cannot agree on the replacement. This is important reading too.
The alternative choice of insurance type is a stated value policy. In the event of a loss, they pay in CASH to you the amount you insured it for. In the case of Chubb''s policy they also will pay 150% of the stated value, should the cost of where YOU want to buy the replacement has increased over time. No adjusters, no shopping for the best price, no going to someone you don''t like to do the replacement..... you just get a check to purchase what you wish.
There is tons more that I could write about this, if anyone has questions contact me and I''ll try to explain the answers for you.
Rockdoc
It is always good, to have the values updated periodically, and not let appraisals that are years old be the basis for your coverage.
The term estimated replacement value is highly questionable. One is driven to ask how estimated it is?
I would assume that since the certification card was issued three years ago, the cost of replacing the diamond is higher, plus the platinum mounting sells for a lot more than a gold one.
Documents commonly called APPRAISALS, really aren''t appraisals in the most strict requirements of what an appraisal is.
An insurance appraisal needs to have the report written in such a way that the value reported is relevant to how the consumer''s insurance company will settle a claim, should one happen. The method of settlement from insurance companies vary with the type of policy the consumer buys.
The most common insurance policy type offered is a REPLACEMENT policy. Each company''s policies on how the claim is settled varies. To learn this you need to thoroughly review the policy language about "how claims are settled" in the policy.
One usually consistent scenario is that the insurance company will NEVER pay more for the replacement that the stated value amount in the policy, regardless of the replacement cost. The tricky part here is that values change, so most jewelers and appraisers - assuming the appraisal will be the document used for a number of years add a percentage to the price paid, with the intent of "making sure" there is enough coverage to fund a replacement in the future. Predicting what will happen in a marketplace in the future and making a guess as to a document on which both the insured and the insurer rely is really a questionable practice. It is important to know what the policy says about WHO is going to do the replacing. If you can go to your choice of seller, and they will pay whatever that seller wants to charge for the replacement, that is great, but if the insurance company has their own replacement source who is willing to sell at a small mark up over the cost of the item to the insurance company, the value reported should be titled "Insurance Company''s Cost to Replace". In that the consumer will pay premiums based on the stated value reported using an appraisal that is made for substancially more than the purchase price is just wasting the money paid for insurance premiums. A very common scenario is that frequently happens, is that the company will only pay the amount THEIR replacement company says they would charge them. SO if you have $ 10K of insurance coverage for an item you paid $ 7K for, it is likely that if you have a loss shortly after the purchase the insurance company can replace it for no more than $ 7 you paid, and most likely less.
So simply written what is commonly called an appraisal really expressed in the most basic terms is nothing more than a "price quote" to replace the item in the even of a loss. An "appraisal" is different, as it requires market research, a statement of the valuation approach used, the results of the research, and in some types of appraisals reporting actual comparable sales data.
Another important fact of replacement insurance polcies is that the replacement will be made based on providing "like and kind quality" . How detailed the appraisal has been written is PARAMOUNT to how well the replacement will be made, in the above type of policy. IT IS ALSO VERY IMPORTANT to make sure the policy is an ALL RISK TYPE policy as well, and to carefully review any "exclusions" written into the policy.
I will say however that most insurance companies really do try to settle the claims they have "reasonably", but this is tempered by the adjuster assigned to the claim by the company. Some adjusters are very professional and will be exceedly fair about the replacement, but others may not be on your side, as the insurance company''s adjuster''s job is to attempt to save the company money when they can. Regardless of what the agent selling the policy says, it has been my experience that in a loss settlement, the insurance company will follow the terms of the policy EXACTLY. There is also a section in most policies that lays out a procedure you MUST follow, if in the event of a claim you and the insurance company cannot agree on the replacement. This is important reading too.
The alternative choice of insurance type is a stated value policy. In the event of a loss, they pay in CASH to you the amount you insured it for. In the case of Chubb''s policy they also will pay 150% of the stated value, should the cost of where YOU want to buy the replacement has increased over time. No adjusters, no shopping for the best price, no going to someone you don''t like to do the replacement..... you just get a check to purchase what you wish.
There is tons more that I could write about this, if anyone has questions contact me and I''ll try to explain the answers for you.
Rockdoc
It is always good, to have the values updated periodically, and not let appraisals that are years old be the basis for your coverage.
Thank you so much for the excellent information on insurance. It will help me a lot in evaluating my policy. But the real focus of my question is do I have any grounds for a refund or credit or any kind of recourse with the jewelery store for selling me a smaller and lower valued diamond than I thought I was buying. And if so, how much compensation would be valid. I am going to call the jewelery store manager, but I wanted to be approaching him from a position of knowledge and confidence. Thanks.
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