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What Is An Independent Appraisal and The Benefit In Securing One

Regular Guy

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Thanks, Judah.

I pretty much agree with you. And, did what you did, second time around, when I purchased my wife's replacement engagement ring. Nevermind that I was irritated by my appraiser's lack of affinity for some concepts discussed on Pricescope.

But, with respect to trust, I also don't think it's wacky, through a preponderance of factors, to determine the trustworthiness of a vendor, depending on who they are (whether WF or BGD or GOG or you...though in your case...not you, since you don't give these papers out, I'm hearing), and based on witnessing....right here on Pricescope, said vendors having their clients leave them, get an independent appraisal, having it turn up thumbs up uniformly, and then determine that you are good to go with just these self appointed papers from the vendor to begin with.

I do think your house analogy is "good enough." But, to make it more realistic, I think you want to make the invested agent once removed from the seller. Call them the "real estate agent." In today's world, ostensibly, getting a "seller's agent," you are "protected." However, it remains to be essentially the case that your friend (frequently, literally, your friend) the agent will not make a dime if the sale doesn't go through. And also, despite their "fiduciary obligations" as a "seller's agent," each dime they make is reduced when the sales price is lowered. Despite kicking myself in the pants for using the advice of my agent the first time, I found I yet again kicked myself the second time for doing it again. Yes, the second time, I chose not to use a friend. Against the real estate agent's advice, I chose an inspector I knew and trusted. But, really, I regret not "cutting the agent lose" once the house was found, at which point I might have then hired a real estate lawyer, who I would pay by the hour to negotiate the price, at least, if not more. But the price, yes.

Customs have developed in real estate to make the deal go through that may not be wacky, and are the norm, but are frustrating, and don't make sense, in the same way that a jeweler gives you the paper, and it is not vetted thoroughly. Overall, if the world works the way it should, maybe with both real estate deals, and jewelery, you get what you pay for, and taking the more rigorous approach isn't essential.

Being rigorous, however, isn't a bad thing. Returning to your post, maybe aspiring to be "effectively rigorous" has a lot to do with what Pricescope is about. That said, I unfortunately think it's probably not even good enough to say.....go for an independent appraiser. Also, find an appraiser that understands cut issues in the way you do, has a means for evaluating them, and set up an understanding with them before you bring them your stone, such that, if you want an opportunity for a rejection result, there is some agreement about under what conditions such a result would arise. Because, usually, although a price is associated with the services you want from an appraiser, frequently, too, you want a "go/no go" litmus test. Being able to purchase a diamond that is marginally worth what you pay for it, may not be your genuine criteria. But, asking the appraiser to tell you you've optimized for your price point may be ultimately too hard a job to ask them to do, despite the fact that's really what you want them to do. Hopefully, you can get as close to that target as you're able.
 

Rockdiamond

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I have the utmost respect for Judah- I''m quite sure he''d welcome discussion of some of the points raised. I have a different take on this.
A main point which I strongly disagree with has to do with what is termed "a conflict of interest" when sellers provide an appraisal- or comprehensive identification documentation with a diamond or jewelry purchase- let''s assume for the purposes of discussion that such paperwork includes an evaluation.

The tricky part here is that in many cases, Judah''s advice is spot on.
Clearly any seller discouraging buyers from seeking a third party appraisal is raising a HUGE red flag.
Clearly there are sellers using inflated appraisal values to attempt to influence buyers.

The other side of this is that there are sellers who''s opinions are trusted by their clients- and deservedly so. There are cases where an item is unique- and well within a seller''s area of expertise- possibly far more than the average appraiser. The seller might be better able to properly identify esoteric aspects of the stone or piece.
There are sellers that explain the basis of evaluation, and provide insightful information to the buyers.

It may be far easier to research a seller that it is to find the qualifications of an appraiser.

I''m by no means suggesting "blind trust"- yet let''s not throw the baby out with the bathwater by suggesting that ALL documentation provided by sellers for this purpose is bad.
There are cases of sellers issuing either appraisals, or evaluation documentation that are NOT deceitful in any way- and are acceptable to most insurance companies.
Personally I believe that in such cases the seller is providing a valuable service to the client- one that is part of the "value added" equation. Even to the extent that a seller provided identification document can assist an appraiser in evaluating the purchase.
Bottom line for me is that IMO it''s not a "clear cut" case of conflict of interest for a seller to provide an appraisal if the other aspects are correctly handled.
 

ChunkyCushionLover

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Date: 4/23/2010 4:04:40 PM
Author: Rockdiamond

I have the utmost respect for Judah- I''m quite sure he''d welcome discussion of some of the points raised. I have a different take on this.
A main point which I strongly disagree with has to do with what is termed ''a conflict of interest'' when sellers provide an appraisal- or comprehensive identification documentation with a diamond or jewelry purchase- let''s assume for the purposes of discussion that such paperwork includes an evaluation.

The tricky part here is that in many cases, Judah''s advice is spot on.
Clearly any seller discouraging buyers from seeking a third party appraisal is raising a HUGE red flag.
Clearly there are sellers using inflated appraisal values to attempt to influence buyers.

The other side of this is that there are sellers who''s opinions are trusted by their clients- and deservedly so. There are cases where an item is unique- and well within a seller''s area of expertise- possibly far more than the average appraiser. The seller might be better able to properly identify esoteric aspects of the stone or piece.
There are sellers that explain the basis of evaluation, and provide insightful information to the buyers.

It may be far easier to research a seller that it is to find the qualifications of an appraiser.

I''m by no means suggesting ''blind trust''- yet let''s not throw the baby out with the bathwater by suggesting that ALL documentation provided by sellers for this purpose is bad.
There are cases of sellers issuing either appraisals, or evaluation documentation that are NOT deceitful in any way- and are acceptable to most insurance companies.
Personally I believe that in such cases the seller is providing a valuable service to the client- one that is part of the ''value added'' equation. Even to the extent that a seller provided identification document can assist an appraiser in evaluating the purchase.
Bottom line for me is that IMO it''s not a ''clear cut'' case of conflict of interest for a seller to provide an appraisal if the other aspects are correctly handled.
That has been my experience as well and I agree. The average appraisor doesn''t have anywhere close to level of knowledge needed to appraise fancy shape diamonds or branded lines for cut or value.
One appraisor I used through the PS appraisor listing, told me an August Vintage Branded Cushion should be valued the same as a Pear. While appraisors in general are perfectly fine for grading clairty, weight and color, most fall far short in grading cut or assigning proper replacement value for fancy shapes. They usually have to call the sellor or view their website for this information.

What good is a third party appraisal if the appraisor has less expertise about the market and quality of the goods than the retailor?

I see nothing wrong with a trusted seller providing an appraisal to a customer especially for insurance purposes. In fact I would see it as a disservice if the seller won''t issue an appraisal upon request to me for the purchase price that I can use if the insurance company required it.

There is absoluetly no conflict of interest if the seller is providing the replacement value type of appraisal and listing the purchase price as the value of the item.

If on the other hand a retailor I don''t know is trying to pass off their own in-house appraisal as independant and to be used to confirm to unsuspecting buyers the quality and fair market value for an item I would take exception to that and reccomend a third party appraisal.
 

ChunkyCushionLover

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"A sales receipt is of far lesser importance to the insurance company, since the valuation applied/charged is not designed to be an independent assertion of actual market value."

Every insurance company I have dealt with in Canada asked for one of two things both were equally acceptable:

1) an appraisal from a recognized Canadian appraisor
or
2) the bill of sale which detailed the item and its specifics in sufficient detail along with the purchase price.

My independant appraisal from the US pricescope listed appraisor was not acceptable to two insurance companies.

This generalization you made above does not apply to many insurance companies.

In my experience the majority of insurance companies in Canada are not providing policies with the replacement with similar value goods or playing the "replacement value" game and trying to save money on payouts. Most have pretty straightforward policies , they cut you a check for the insured value. The premiums are also based on the insured value as well which is exactly the appraisal value or the purchase price.
 

CharmyPoo

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Date: 4/23/2010 9:22:27 PM
Author: ChunkyCushionLover

That has been my experience as well and I agree. The average appraisor doesn''t have anywhere close to level of knowledge needed to appraise fancy shape diamonds or branded lines for cut or value.
I agree with this statement as well and it reflects my presonal experience.

Here is another question - how independent are independent appraisers? Many vendors / appraisers form friendships or business relationships over the years. There are vendors who frequently recommend specific appraisers or work with the same ones over and over again. Are these appraisers swayed when diamonds come from these specific vendors? Are their apprisals impacted for fear they will not get the flow of referrals from these vendors?

As an example, I once was making a purchase for a diamond I have not seen and sent it to an appraiser recommended by the vendor. The appraisal report was glowing with no signs of concerns. When I actually saw the diamond, it left me thinking if the appraiser actually saw the diamond!
 

Karl_K

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Date: 4/25/2010 5:32:35 AM
Author: CharmyPoo
Date: 4/23/2010 9:22:27 PM

Author: ChunkyCushionLover


That has been my experience as well and I agree. The average appraisor doesn't have anywhere close to level of knowledge needed to appraise fancy shape diamonds or branded lines for cut or value.

I agree with this statement as well and it reflects my presonal experience.


Here is another question - how independent are independent appraisers? Many vendors / appraisers form friendships or business relationships over the years. There are vendors who frequently recommend specific appraisers or work with the same ones over and over again. Are these appraisers swayed when diamonds come from these specific vendors? Are their apprisals impacted for fear they will not get the flow of referrals from these vendors?


As an example, I once was making a purchase for a diamond I have not seen and sent it to an appraiser recommended by the vendor. The appraisal report was glowing with no signs of concerns. When I actually saw the diamond, it left me thinking if the appraiser actually saw the diamond!

appraise your appraiser is the answer.
I have a short list of appraisers I would recommend and would use myself.
Many of them are here on PS.
They have met many of the PS vendors in person and even had dinner with them.
They have also kicked the same vendors in the backside to stand up for their clients which is what the clients paid them to do.
Some everyone knows about and a lot of them everyone don't because they were settled to the clients satisfaction in private.
A good appraisers represents his/her client to the best of his/her abilities regardless of outside issues with the vendor.
That is one reason an independent appraiser is important because any particular vendor has less hold on them.

The thing you have to keep in mind with appraisers is the person they represent is the person who pays them. That is why it is important to be the client and not have the vendor be the client.

http://journal.pricescope.com/Articles/58/1/%E2%80%9CAppraise-the-Appraiser%E2%80%9D---Help-for-Consumers.aspx
 

Judah Gutwein

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Thanks to all for your feedback thus far.

RD,

You raise an excellent point, regarding a sellers ability to describe the nuances of his product and certainly when said product falls within a specific area/niche of expertise, of which the seller is sometimes more qualified than a typical appraiser. In all instances however, my opinion was that sellers should offer full disclosure and transparency as to the ramifications of their provided documents.


CCL,

Thanks. I appreciate the same points you highlighted and supported from RD's posting. See my respose above.

Re: The ("lesser") value of a bill of sale to insurance companies, my opinion was/is that it is a fair extrapolation to generally write that a bill of sale is of lesser importance (I didn't use the word useless) to insurance companies, since ALL insurance companies accept actual appraisals, whereas many will not accept a bill of sale in lieu of an appraisal. The fact that an insurance company specifically in Canada preferred an appraisal document specifically from a Canadian appraiser, does not diminish my quoted statement.


Garry,

I'm not an Indpendent Appraiser. However, I would imagine that part of the rubric for defining and assessing value to a clearly marked branded item (such as the high end brands which you mentioned), is to incorporate the specific (increased) open market value commanded by these brands. This goes back to the age old question of defining 'value' as it relates to perceived value and what an individual is willing to pay for an item. The fact that luxury brands command a premium, increases their replacement value in an appraisal so as to be commensurate with their worth on the open market. This issue is beyond the scope of my article, which is why I do not specifically address it.


CharmyPoo,

Karl is exactly right. Appraisers also need to be appraised
1.gif
This is why I linked to that excellent and important article on this topic at the end of my own article.
 

Modified Brilliant

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Date: 4/25/2010 5:32:35 AM
Author: CharmyPoo

Date: 4/23/2010 9:22:27 PM
Author: ChunkyCushionLover

That has been my experience as well and I agree. The average appraisor doesn''t have anywhere close to level of knowledge needed to appraise fancy shape diamonds or branded lines for cut or value.
I agree with this statement as well and it reflects my presonal experience.

Here is another question - how independent are independent appraisers? Many vendors / appraisers form friendships or business relationships over the years. There are vendors who frequently recommend specific appraisers or work with the same ones over and over again. Are these appraisers swayed when diamonds come from these specific vendors? Are their apprisals impacted for fear they will not get the flow of referrals from these vendors?

As an example, I once was making a purchase for a diamond I have not seen and sent it to an appraiser recommended by the vendor. The appraisal report was glowing with no signs of concerns. When I actually saw the diamond, it left me thinking if the appraiser actually saw the diamond!
These are very vaild points, so here are my personal feelings on the topic (other appraisers may not agree)...
I am looking out for my clients best interest. You will pay me for my time and expertise. It doesn''t matter to me whether you purchase a particular diamond or not from a certain vendor. I am only working for you.
Oftentimes, a vendor will recommend a certain appraiser based on where the person resides and the logistics of receiving a package, setting up an appointment and evaluating a diamond.
Hope this is helpful.
 

denverappraiser

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There are lots of different types of appraisals that are done by Independent Appraisers and this issue addresses only one objective, insurance. That’s ok, and it’s what most people think of when they think of a jewelry appraisal but it's important to understand that a critical assumption has been made. This assumption usually makes the appraisal process fairly straightforward, especially with new stuff. The goal of insurance is to provide information and funding to make the client whole again financially in the case of a loss, and this generally comes down to estimating what it would be reasonably expected to cost to replace the subject item with another one of like kind and quality, new, at local retail, today.

This requires two separate and distinct steps. First, you must define what ‘like kind and quality’ means. That’s the weight, grading, stone counts, karatage, style, age, designer, branding and whatnot that makes it whatever it is. It’s the description portion of the appraisal and this should contain whatever it is about your piece that you want to be considered if a replacement is ever required. This is the area where most sales receipts come up lacking. A jeweler can, and should, provide a complete description of what they’re selling but often the receipt or bill of sale, or jeweler supplied appraisal will be fantastically abbreviated. That’s where the big problem with using receipts for insurance comes from. Every insurance company I know of will generally accept a bill of sale to bind an insurance contract if it contains an appropriately detailed description (preferably with photos), a sensible value conclusion, and that is signed by someone unrelated to the insured who is testifying to the accuracy of the above.

The second part is setting a price. With branded items like Garry mentioned, it’s really pretty easy. The only place you can buy NEW Tiffany items at retail is to buy them from Tiffany’s, so current production Tiff stuff where you’ve already determinedwant it is is a straightforward question of estimating what Tiff’s is going to charge for another one like it. Who better to know that than Tiffany and what better comparable sale is there than that exact item having sold on that very day?

With more ‘generic’ goods it gets a little more tricky. The first problem word is ‘retail’. Not all jewelers charge the same for their skills and services and not all stores have experience with the same sorts of merchandise. It’s a common game to estimate what it would cost in a ‘regular’ store, whatever that is, with the assumption that the guys you bought from gave you a bargain. Maybe they did and maybe they didn’t, but they nearly always say they did, and this is a common question that consumers have for Independents. Most PS vendors are fairly aggressive on price so it’s not surprising that similar goods cost less than they do at the local high end stores. Whether this is evidence of a bargain is an entirely different question.

Another tricky area has to do with the cost of custom making things. The subject item may have been made very efficiently in an overseas workshop and then sold for an attractive price but what happens when that item is discontinued, which it’s sure to be? The replacement then becomes a custom job using local labor, and this is nearly certain to cost more. Possibly quite a bit more. For insurance purposes, this often means that it’s ‘worth’ the latter even though it cost the former. As with the above, this is NOT evidence of a bargain although the jewelers routinely want to use it as such and consumers are often all too eager to believe that it is.

Neil Beaty
GG(GIA) ICGA(AGS) NAJA
Professional Appraisals in Denver
 

Rockdiamond

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There''s another aspect I''ve noticed here on PS frequently.
A consumer is asking about stones- looking for quantitative answers as to which one is "better"
In many cases the suggestion is made to purchase one, and send the stone to an independent appraiser for evaluation.
To me this seems to miss an important point.
An appraiser might love a stone that the consumer would not.
 

Regular Guy

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Date: 4/26/2010 1:28:40 PM
Author: Rockdiamond
There's another aspect I've noticed here on PS frequently.
A consumer is asking about stones- looking for quantitative answers as to which one is 'better'
In many cases the suggestion is made to purchase one, and send the stone to an independent appraiser for evaluation.
To me this seems to miss an important point.
An appraiser might love a stone that the consumer would not.
Rockdiamond, although this concern might be a reasonable one, my concern is that it is infrequently a problem. Appraisers more typically will address the what & how much, but...will NOT make the evaluative comments you fear, and that I would hope for.

In addition to what it is, and how much it's worth, if you and the appraiser can work out a set of criteria in advance of the appraiser seeing diddly squat...then...a determination could be made as to how close they came to hitting the target.

The opportunity to do this is made by Neil elsewhere (edited to add...see #18), at least by request by the customer...but I don't think we see it very often happening.
 

Garry H (Cut Nut)

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Date: 4/26/2010 11:04:40 AM
Author: Judah Gutwein
Thanks to all for your feedback thus far.

RD,

You raise an excellent point, regarding a sellers ability to describe the nuances of his product and certainly when said product falls within a specific area/niche of expertise, of which the seller is sometimes more qualified than a typical appraiser. In all instances however, my opinion was that sellers should offer full disclosure and transparency as to the ramifications of their provided documents. Ramifications? Sorry....I don''t get you Judah?




Garry,

I''m not an Indpendent Appraiser. However, I would imagine that part of the rubric for defining and assessing value to a clearly marked branded item (such as the high end brands which you mentioned), is to incorporate the specific (increased) open market value commanded by these brands. This goes back to the age old question of defining ''value'' as it relates to perceived value and what an individual is willing to pay for an item. The fact that luxury brands command a premium, increases their replacement value in an appraisal so as to be commensurate with their worth on the open market. This issue is beyond the scope of my article, which is why I do not specifically address it.
A couple of posts below yours Neil writes beautifully on this topic Judah. But to you both, where do you draw the line between Tifffany and a generic retailer? Is a typical Guild store - say the most upmarket in a community, that has a long history of charitable works and sells at a premium price - does it also deserve a call from an appraiser to check the price? And would you accept that price as THE value? What if the reciept has a lower value (mates rates)?
Essentially Judah, where do you draw the line in such cases - is there a fuzzy zone that you did not cover in your article?
This slide is a little old, but I have used it in presentations to valuers (what we caall appraisers in Australia).
 

denverappraiser

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Date: 4/26/2010 4:27:58 PM
Author: Garry H (Cut Nut)
A couple of posts below yours Neil writes beautifully on this topic Judah. But to you both, where do you draw the line between Tifffany and a generic retailer? Is a typical Guild store - say the most upmarket in a community, that has a long history of charitable works and sells at a premium price - does it also deserve a call from an appraiser to check the price? And would you accept that price as THE value? What if the reciept has a lower value (mates rates)?
Essentially Judah, where do you draw the line in such cases - is there a fuzzy zone that you did not cover in your article?
Personally, I DON’T draw that line, I let the client do it. In fact, I often insist on it. I routinely include manufacturer hallmarks, brand names and even part numbers in my reports precisely to define what is ‘like kind and quality’ for purposes of replacement. If there’s nothing about the piece that’s unique to that particular source, and we’re writing for insurance replacement purposes, I point out that the insurance company CAN find alternative sources and, if it’s going to cost less money for them, this is almost certainly what they will do. A jeweler’s charitable works may be a fine reason to shop there, but it doesn’t make their stuff ‘worth’ more, at least not as an insurance question. At the same time, the fact that a particular designer may not be very popular or that I don’t personally like her designs doesn’t make her work worth any less either. If that’s what she makes, that’s what she charges for it, that's what the client bought and wanted insured, and it’s reasonable to expect that that’s what she would charge do to it again, that’s what it’s worth for insurance purposes.

The good buddy discount is another tricky problem. If you talk to some jewelers, nearly everybody gets one and if you talk to others, their employees pay the same as everyone else and it’s a point of pride that they haven’t had a sale in 100 years. Most are somewhere in between. The question simply is a matter of deciding what it really would be expected to cost to buy something there in an arm’s length transaction, as opposed to reading what it says on the price tag. These may or may not be the same and telling the difference is part of the expertise you’re expecting of a good appraiser.

Neil Beaty
GG(GIA) ICGA(AGS) NAJA
Professional Appraisals in Denver
 

Rockdiamond

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Date: 4/26/2010 3:27:03 PM
Author: Regular Guy
Date: 4/26/2010 1:28:40 PM

Author: Rockdiamond

There''s another aspect I''ve noticed here on PS frequently.

A consumer is asking about stones- looking for quantitative answers as to which one is ''better''

In many cases the suggestion is made to purchase one, and send the stone to an independent appraiser for evaluation.

To me this seems to miss an important point.

An appraiser might love a stone that the consumer would not.

Rockdiamond, although this concern might be a reasonable one, my concern is that it is infrequently a problem. Appraisers more typically will address the what & how much, but...will NOT make the evaluative comments you fear, and that I would hope for.


In addition to what it is, and how much it''s worth, if you and the appraiser can work out a set of criteria in advance of the appraiser seeing diddly squat...then...a determination could be made as to how close they came to hitting the target.


The opportunity to do this is made by Neil elsewhere (edited to add...see #18), at least by request by the customer...but I don''t think we see it very often happening.
I have no doubt whatsoever that Neil, or any appraiser with integrity would not allow any misconception to stand- however there certainly are other appraisers that would.
But the advice given by consumers to other consumers is the issue- we disagree about the frequency, however my perception is that it''s often.
This relates directly to Judah''s suggestion that an appraisal is an absolute necessity.
 

Judah Gutwein

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Garry,

The word "Ramifications" in the context of that sentence, was taken (almost verbatim) from my paragraph in the article where I write (regarding consumers who simply rely on the sellers 'appraisal' document as a means of securing insurance):

"This type of customer needs to have a clear understanding that such a document cannot be construed or considered an appropriately independent and impartial appraisal report. If and when this is fully and properly disclosed to the customer, at least the customer is informed and empowered as to the ramifications of such a document and is made aware of his options".

Regarding your follow up points as it pertains to the 'value' of high end branded items vs. generic - Again, I am not an Independent Appraiser and your question is beyond the specific scope of the article. However, to the extent that you raise some interesting points, my position is still the same as it was earlier.

I imagine that an Independent Appraiser who is being asked to assess a clealry marked designer piece of jewelry (from one of the high end brands you previously mentioned), for the purposes of determining fair market replacement value, will incorporate into their considerations market factors pursuant and applicable to that brand. There is no disputing the fact that high end brands command a premium over comparable generic merchandise.

Neil's subsequent response to your question certainly sheds light on his specific approach. Perhaps you can create an individual thread to poll the PS Appraisers for their individual approaches in response to your question.
 

oldminer

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An appraiser must establish the goals of each individual client and formulate the proper level of value which fits the client's needs the best. A person who buys at Tiffany & Co on a regular basis or who owns a particular item bought from Tiffany may well require the value to be what Tiffany would replace such item(s) for. However, with the economy the way it is, some people who own fine items just want basic coverage and would not wish to pay for the added premium cost of replacement with a new, name brand item. Many TIffany items can be bought in the second hand market at much reduced prices, but replacement is not often as easily accomplished. It is a trade off that the client can deciude to make.

There are several other fine retailers with Tiffany level clients who can decide the same way.

THen, we have folks who have purchased "Designer" or "Name Brand" products which command a higher price than quite similar looking non-designer or non-branded items. These folks can make the same choice and either pay the full premium for a name brand or same designer replacement or they can choose to save a few bucks and go with a generic replacement value. It is up to them.

What is not in the hands of clients is appraising a non-designer, non-name brand, non-Tiffy sold new item as if it was from one of those more costly marekt levels when the item is NOT from such a pedigreed market type. Such an appraisal practice is known as "betterment" and it is considered unethical to describe an item with non-existing characteristics in order to inflate the value.

The mere fact that Garry or others can characterize virtually similar items having quite wide asking price values is proof that various market levels actually co-exist very happily. Not everyone shops a Walmart and not everyone shops on Rodeo Drive. People go to the level of market which they believe they fit comfortably into and they usually want replacement values according to their own buying habits. It makes perfect sense.

Appraisers do not set the prices. Merchants do that. Appraisers look at the many markets and select the right one for that client. This leads to more variation in appraised values than one can imagine, but appraising is an expert opinion and experts can usually defend their choices pretty well. We need to live with many different market levels and many different values for very similar items.

TO a large extent, the quality of the appraiser can be judged by how well they select the proper market for each client and how well they lock down the wiggle room for insurance adjusters to muddy the waters with improper replacements when there is a loss. Sadly, you may not know how good the appraiser was until it is very late in the game.
 

Karl_K

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Date: 4/27/2010 10:53:04 AM
Author: oldminer
they lock down the wiggle room for insurance adjusters to muddy the waters with improper replacements when there is a loss.
That to me is the most important reason to use an independent appraiser.
The more documentation you use to bind your policy the better.

You would not believe some of the stuff I have had insurance adjusters pull(computers but the same mindset).
What you are doing is defining like kind and not letting the adjuster do that.
Your appraiser with the ring in hand is in a much better position and often better educated in value/design/craftsmanship than the adjuster or jeweler looking at the broken diamond/ring or a fuzzy picture or worse one line of text.
 

Rockdiamond

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How many consumers are out there paying for insurance based on inflated appraisals?
These folks get the shock of their lives when they suffer a loss, only to learn they are not insured for anything other than replacement.
If the appraiser used a high market replacement value, the difference between what the insurance company actually pays out, compared to what the consumer thought they were insured for is massive.

We have heard of cases where an agent was actually able to step in and assist.
The case I''m thinking of involved someone who''d insured their ring for $15,000....or so they thought.
When the ring was lost, and they called us to replace it with a similar quality, the price was less than 1/2 of what they''d been paying insurance on - and the insurance company did not even want to allow them to buy their own ring!
The insurance company tied to force the client to accept a replacement , from a jeweler associated with the insurance company.

IN this particular case, the consumer had a business, and a lot of other insurance purchased through a broker.
He was actually able to get the insurance company to pay out what the ring was insured for. But this is oh so rare. Usually the insurance companies run roughshod over the consumer in these cases.
 

Karl_K

Super_Ideal_Rock
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Aug 4, 2008
Messages
13,003
Date: 4/27/2010 3:35:18 PM
Author: Rockdiamond
How many consumers are out there paying for insurance based on inflated appraisals?
not very many pricescopers at all if they have been here a while and paid attention.
Outside of them a lot, because they got an inflated appraisal often from the place they bought it that is 2x-3x the purchase price.
 

elle_chris

Ideal_Rock
Joined
Feb 19, 2004
Messages
3,474
I have yet to see a seller''s appraisal that''s not inflated. This includes the PS vendors.

I go to my appraiser to confirm the color, clarity, and cut of the stone. I also like him to show me the inclusions so I can identify my own diamonds. If it''s a completed piece, the appraisal takes into account any name branding and what same/like pieces go for.
An appraiser can tell you the good, the bad, and the ugly, and determine if you paid a fair price. If they don''t lke a stone, I''d expect my appraiser to tell me exactly why. Is there a durability issue? Is the cut terrible, color off? Things of that sort.
If it''s a branded cut, I expect him to take that into consideration as well. If not, then I''d point it out.

All in all, if I''m paying big bucks, I trust an independant appraiser more so than any vendor/jeweler regardless of my history with them. Even on PS, there have been cases where the grading report was off. One that comes to mind is Harriets 3.50ct I that was appraised as a K at one appraiser, and a J at another. Those grades change the price quite a bit. But the incorrect grading was not mentioned to her when she initially purchased the stone. I''ve also had this happen and have sent stones back just for this reason. Who wants to pay for one grade and get another? Either way, I trust my appraiser to give me an unbiased opinion. That''s the whole point to me.

And Karl''s right in that it''s usually the appraisal that come from the jeweler that''s inflated, not the appraiser.
 

oldminer

Ideal_Rock
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Sep 3, 2000
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6,634
One walks a tightrope in setting the value on an appraisal. As an independent appraiser I find people are happy with an appraisal a bit to a lot higher than what they paid, but heaven help the retailer and the appraiser if the appraisal is $100 less than what was paid. A sale can be lost. A customer can be lost. A stores reputation can be severly injured for no reason by attempting to be as realistic as possible in an appraisal.

I don''t condone high, "feel-good" appraisals or the use of inflated appraisals as a "sales tool", but there is good reason not to appraise below the sales price of a properly priced item. For years, especially before the Internet saw diamonds being offered, stores and appraisers always gave somewhat inflated appraisals although the major retailers who charged absolutely top dollar provided only sales price appraisals. Many fake "retail" prices continue to be advertised. This is a nationwide problem way beyond just in diamonds. The diamond industry has undergone a strong jolt of reality in the past several years and we now find most good appraisers are making every effort to find the right market level for each client and to avoid inflated work. You have to expect a store which pays an appraiser to create sales documents to pump up the numbers a bit more than what an appraiser who works for the consumer may tend to do. That''s what avoiding potential bias involves. More reality and a bit less hype.
 

Richard Sherwood

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Sep 25, 2002
Messages
4,924
We should keep in mind that the pricing we see here on Pricescope is not typical of the retail market as a whole. It is among the most competitive pricing in the world, with internet retailers typically having considerably less overhead than your average bricks and mortar retailers. And since the vast majority of diamond purchasing is done through the bricks and mortar venue, the default pricing of most appraisers is at those levels.

The appraisals I''ve seen from most the "Pricescope" internet vendors have actually been at what I would call a reasonable (non-internet) retail replacement level. I don''t really consider the majority of them as "inflated". What I think of as "inflated" is where a retail b&m jeweler who operates at a robust selling markup appraises an item he sold at 50% or more than his selling price.

That''s why correct grading by an independent appraiser is key. Then you know what you have, and can compare pricing between the various market levels using not only the appraiser''s opinion but also various different search engines, such as the one on Pricescope.
 

Rockdiamond

Ideal_Rock
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There has been a point raised, in another thread about the term "independent appraiser"

The question was-if consumers are selecting an "Independent Appraiser", should they be concerned if the appraiser is engaged in buying and selling as a business?
 
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