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Purchase Price vs. Appraised Value of E-Ring

AM1102

Rough_Rock
Joined
Oct 6, 2016
Messages
26
Hi all,

I realize there may not be a straight forward or generalized answer for this question, but what should one expect an engagement ring to appraise at in comparison to the purchase price? Most people I know have had their rings appraise significantly higher than their purchase price. Why is this? Is everyone getting great deals on their diamonds and rings, or do appraisers value jewelery way above true market value/replacement value?

Any insight is greatly appreciated!
 

rubybeth

Ideal_Rock
Joined
Nov 12, 2007
Messages
2,567
You don't really want an appraisal with an inflated value, because that's just a "feel good" number, and you'll pay higher insurance premiums on an higher insurance value--most people don't know this. If possible, have the appraiser simply confirm details of the purchase, describe the item, and then insure for the price you paid, assuming your insurer will allow it.

Edited to add: I once bought a ring for around $4,000, and the appraiser valued it at over $11k! :-o I didn't want to pay the premiums on that, and had to argue them down to around $8k. :nono: I won't be using that appraiser again.
 

Bron357

Ideal_Rock
Premium
Joined
Jan 22, 2014
Messages
4,720
Appraisals aren't worth the paper they are written on. Their purpose seems to be so that the consumer who paid $5,000 for their ring feels special and clever because the "appraisal" says it's worth $8,000. And the insurance company is very happy that you pay your insurance premium on $8,000 and not $5,000. But when you go to re sell your ring, you are suddenly made to realise that the "market price" is more like $3,000.
The $5,000 you paid was retail and included taxes and store mark up, the $8,000 is insurance value which is handy for them because they get more premiums and the $3,000 is the market ie real value.
 

AM1102

Rough_Rock
Joined
Oct 6, 2016
Messages
26
Thanks both. This is what I suspected. My recent purchase appraised at just a touch over 1.75x my purchase price. I know for a fact that I got a great deal working with a PS Vendor, but I do feel the appraisal is high even taking this into account. Now I'm reconsidering having it insured at the appraised value and paying the higher premium for no reason.
 

aac2013

Shiny_Rock
Joined
Aug 31, 2014
Messages
416
I am sure others will come along and provide additional better info but until then......

The purchase price is the amount you paid for the item. The appraised value SHOULD BE the amount to replace the item at full retail cost with something of like kind. It takes into account the quality, condition, and rarity of the item. When applicable, it takes into account important historical provenance and artistic value (generally for high end jewelry houses or designers). The appraisal should also account for the current market for the item and the ease at which an item can be replaced. The appraisal is NOT what you can sell the item for if you decide to part with it. Generally speaking, you may end up getting about 65% of purchase price (not appraisal value) maybe more or less depending on a lot of factors, not the least of which is the market at the time you bought the item relative to the market at the time you sell.

Now here is the catch. There is no real industry control on appraisals. Anyone can do them. However you should only trust appraisals done by someone who is well trained, experienced, knowledgeable about the item, and independent of the seller. I recommend that you ignore the appraisal that came with your ring, particularly if the seller and the appraiser are the same person. He or she can set the appraisal at any price. Highly inflated appraisals unfortunately are common. You want to avoid those because they only benefit the seller as a sales tactic (see what a great deal you are getting, this deal won't last long) and insurance companies who get higher premiums from you. This is not to say that appraisals are unimportant. They can be very important. However you should have them done by someone who is both independent from the seller and very knowledgeable. The appraisal should include all the pertinent information about the item, the date it was performed, and a realistic replacemetal value. There are a number of very well regarded professional appraisers who contribute to this forum from time to time. They may chime in to give you additional info.
 

rubybeth

Ideal_Rock
Joined
Nov 12, 2007
Messages
2,567
AM1102|1477445092|4090569 said:
Thanks both. This is what I suspected. My recent purchase appraised at just a touch over 1.75x my purchase price. I know for a fact that I got a great deal working with a PS Vendor, but I do feel the appraisal is high even taking this into account. Now I'm reconsidering having it insured at the appraised value and paying the higher premium for no reason.
The main thing you want the appraisal to do is to protect you in case you do need to replace the stone/ring. The best way to do this is to get insurance with a company that will allow you to work with the vendor of your choice, especially if you worked with an online vendor and would just want to replace your piece of jewelry with that same company. So using the online purchase price is wise. Even if prices rise over time, if you do ever damage or lose your jewelry, the insurance company (not you directly) will work with the vendor to pay an even lower price than online retail price--yes, they negotiate and pay less, even with online vendors whose margins are already fairly thin (note: unless you are getting one of those rare cash-out policies, which are sometimes not available depending on your insurance and region of the country). So working with a company like Jeweler's Mutual and making sure the appraisal describes exactly what you have (for example. "Brian Gavin Signature Hearts & Arrows" diamond, or "Whiteflash A Cut Above" or whatever) so you can get an exact replacement is what you really want.

Part of my issue with my inflated appraisal price mentioned above is that my stone is an Old European Cut, but the GIA certificate called it a "good" cut round brilliant. I wanted the appraisal to describe it as an OEC, but the appraiser wouldn't do it. I really needed the insurance to cover a replacement of an OEC, NOT a "good" cut round brilliant, so I wound up getting a new AGS certificate (surprise surprise, they deemed it an Old European Cut) and then the appraiser had to backtrack and say, "Well, gee, I guess if AGS says it's an OEC, it is!" and then I still had to argue them down on the price. :errrr:
 

denverappraiser

Ideal_Rock
Trade
Joined
Jul 21, 2004
Messages
8,840
Bron357|1477444835|4090568 said:
Appraisals aren't worth the paper they are written on.
SOME appraisals aren't worth the paper they're printed on.

The purpose of an insurance replacement appraisal is to provide a full and complete description that allows the insurer to replace with 'like kind and quality', or words to that effect, and to provide appropriate funding to do exactly that. It's effectively the purchase order for the replacement. This means that the most important elements are the weights, dimensions, grades, manufacturing techniques, photographs and so on. It additionally provides a quality control step on a new purchase. If there's a defect of some sort in the piece, the time to have this discussion with the seller is at the beginning and I've NEVER seen a seller supplied appraisal that indicates a problem in workmanship or defective materials even though I see it in person regularly.

The funding should be appropriate to cover the cost of the above replacement. Although I agree that it does you no favors to have an inflated value, it also does you no favors to be under-valued. Could the item be replaced for what you paid? Probably. Usually even, but there's no straight way to answer that without actually looking at the piece.
 
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