What is the meaning of "Appraised Value"?

[Hongerhond]

I would like to know what the point is of stating an appraised value for a diamond.

Say for instance I buy a diamond tomorrow from one of our reputable online dealers for $7,000, I have it appraised and it appraises for $10,000, what does that actually mean? That it is worth $10,000? No, because if I try to sell it, I would be very lucky to get even $5,000.

Does it mean that the replacement value is $10,000? No, because I can go back to my reputable online dealer tomorrow and pay $7,000 again for a similar stone.

Does it mean that there are some jewelery stores that would charge me $10,000 for the diamond? Probably yes, but so what?

What then does "appraised value" mean?

 

[RockDoc]

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On 2/5/2003 2:46:40 PM Hongerhond wrote:

I would like to know what the point is of stating an appraised value for a diamond.

Say for instance I buy a diamond tomorrow from one of our reputable online dealers for $7,000, I have it appraised and it appraises for $10,000, what does that actually mean? That it is worth $10,000? No, because if I try to sell it, I would be very lucky to get even $5,000.

Does it mean that the replacement value is $10,000? No, because I can go back to my reputable online dealer tomorrow and pay $7,000 again for a similar stone.

Does it mean that there are some jewelery stores that would charge me $10,000 for the diamond? Probably yes, but so what?

What then does "appraised value" mean?
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Excellent question.....The problem is the terminology as well as the valuation is incomplete.

Items have MORE than just one value... and YOUR replacement cost may have no bearing on how your insurance company would settle its claims.

What is missing is a narrative definition of the market level(s) used by the appraiser and why. In some cases, you may need more than one value in the report.

There are many verifiable retail market levels. Pawn Shops to Tiffany's.. Everyone selling diamonds, but all charging different prices. None are wrong or right, but selecting the correct market is vital to doing a proper valuation.

Your point is cery well taken when the appraiser values an item at a grossly inflated value as it forces the consumer to pay too much for insurance coverage. BUT this does depend on how the insurance company settles its claims. The report should narratively state what and how was done to ascertain the value and support the methodology of how and why the appraiser did this.

RockDoc