What is a Jewelry Appraisal?

I think I need my jewelry appraised

An appraisal is an expert, educated, professional, and thoughtful estimate of the value of something. That estimate of value is affected by place, time, market, and purpose. An appraisal performed by someone lacking the expertise and accreditation to back it, is of limited value or accuracy.  

 “My sister said I should get an appraisal…” 

As you can imagine, many people come in to our fine jewelry gallery, asking for “an appraisal,” but they don’t know if they actually need one. 
 
At one end of the spectrum are folks that want the value of an appraiser’s expertise, but without paying the commensurate rate for that expertise: “Can you just tell me if it’s real or not?” Well, don’t be surprised if a legit appraiser is not going to do much more than a quick look and a guess if you want free advice. You see, at that point, the appraiser is doing you a personal favor by engaging the value of their experience to your benefit…but for most expert appraisers, that generosity only extends to what can be determined at arm’s length or with only the simplest of testing. 

At the other end of the spectrum, there are folks that might be ready to sign up for paying an appraiser’s hourly rate, but not actually need to spend a dime: “Yeah, I need this appraised so I can sell it.”

To make sense of the latter example, we should probably delve first into the mystery of: 

What Kind of Jewelry Appraisal? 

That’s right. There are different kinds of jewelry appraisals. Here's a video with more info, and below is a partial list:  

• Retail Replacement Value Appraisal
• Commonly requested for the purpose of insuring 
• Possibly useful for estate planning 
• Occasionally requested for “Damage and Loss” assessment Partially useful in preparing for sale to an individual (in conjunction with Fair Market Value appraisal) 
• Fair Market Value Appraisal 
• Estate Appraisal 
• Donation Appraisal 
• Tax purposes, generally speaking 
• Partially useful in preparing for sale to an individual (in conjunction with Retail Replacement Value appraisal) 
• Marketable Cash Value Appraisal 
• Requested in divorce calculations 
• Useful for estate planning

A jewelry appraisal is typically a written document, signed by the jewelry appraiser who performed the assessment, or who oversaw another jewelry appraiser. So, when someone visits us at Alara, wanting to cash out their jewelry, but requesting an appraisal, we try to set them straight as early in the discussion as possible.

Do I Need an Appraisal to Sell my Jewelry?

Not necessarily. You see, what a person wants if they would like to sell a piece of jewelry is actually a "bid to buy." Basically, by asking for a bid on their jewelry, they will be starting to learn what the Fair Market Value of their item is.

That means, there’s a far more reasonably-priced way to the Fair Market Value than securing a jewelry appraisal…and that’s to ask, at places in the area that are actively engaged in purchasing such items from the public, what their offer would be. This is because a series of “bids to buy” is the definition of Fair Market Value: what a willing buyer and willing seller would agree to, price-wise, for the item to change hands, at a certain place, at that particular time.

You don’t need me (or any other qualified jewelry appraiser) to type up on a formal piece of paper my highly educated, expert guesstimate what that amount might be. You can get actual offers at no charge whatsoever. And as the willing seller, it is your prerogative to find the highest offer.

If you hired me to perform a Fair Market Appraisal on a piece of jewelry, and then you brought that piece to a pawn shop, do you think they would care about the dollar amount listed on the jewelry appraisal I just calculated?

Nope.

That’s because their purchasing decision will be based on other information the jewelry appraiser was not privy to: (1), "shoot, I sure already have a lot of this same stuff in stock—I’m going to offer low"; (2), "shoot, my spouse would sure like that, I better offer enough so I can get my hands on it"; (3), "shoot, I’m low on inventory like this, I better go straight down the middle."

A fair market value is about a willing buyer and a willing seller. You do not have to sell it if you don’t like the offer. But by acquiring a couple "bids," you just found out what the market will bear, without paying for an expert jewelry appraisal.

Reasons to Get a Jewelry Appraisal

And then there’s the myriad reasons for which you are required to get a jewelry appraisal, which are all insurance-, legal-, or tax-related.

Insurance appraisals are based on Retail Replacement Value in most cases. They can occasionally be based on Auction Replacement Value. Either way, preparation of such documents will bill out by a qualified and ethical appraiser based on an hourly rate.

Fair Market Value appraisals for jewelry and Marketable Cash Value jewelry appraisals require greater expertise, primarily because they are associated with legal events. Because of that, they often bill out at double to triple the hourly rate of insurance appraisals.

Is it Worth Getting Jewelry Appraised?

In some cases, you have no choice. If there is a legal matter that requires a jewelry appraisal, then a jewelry appraisal you must get.

But often people ask this question because they are wondering about if they should get their jewelry insured, which typically requires jewelry appraisal. There are definitely cases where jewelry insurance (and therefore jewelry appraisal) is highly advisable.

Namely: an item of jewelry whose value is high enough that paying for a replacement out of pocket would be beyond your ability or comfort. Also, it is important to get your homeowner’s insurance agent to tell you about the “blanket insurance” you have for jewelry with your overall policy. Often there’s a clause that covers “no more than X” per piece, and “no more than Y pieces,” for a total of no more than Z. Find out what X, Y, and Z are for your homeowner’s insurance policy, and you will perhaps have a few pieces you can assign to that blanket coverage without the requirement of a jewelry appraisal (but pictures and decent descriptions would be super helpful in the case you need to file a claim). In the cases of the Y number of pieces that have a value of no more than X, it is not worth getting them appraised!

Keep peace in the family...

If you want to save you and your family a lot of money and heartache, consider this: if you specify in your will nothing more than a “percentage split” or “equal division among parties” regarding your jewelry, you will be requiring your heirs to get an Estate Appraisal performed, at its requisite high cost. In most cases, because of how jewelry collections tend to accrue, there won’t be an equitable way to split up your jewels. Invariably, one or two pieces will be worth more than all the others combined.

So, in order to follow the stipulations of your will, your family will have to liquidate all the items, and split up the resulting funds according to your instructions. Or, someone within the group of heirs would need to be able to “purchase” the items from the estate.

Typically, that’s not what people have in mind when they set up their respective wills. What people intend is for some pieces to go to each heir. At that point, each heir can decide what to do with their pieces: keep them, restyle them, sell them, or gift them to someone else.

So, it’s my recommendation that you instead have a Marketable Cash Value jewelry appraisal performed. In fact, you wouldn’t even need to get it typed up—because you will just learn the values of each piece, and then you would personally assign specific pieces to specific heirs, right in the text of your will (or in an addendum).

At one-third to one-half the hourly rate of an FMV jewelry appraisal, and with all the peace of mind that picking specific pieces brings to a difficult time, you will be doing everyone a huge favor.

How Does jewelry appraisal work?

Ahhhh, how does jewelry appraisal work? Well, the most important tip to bear in mind is this: the different types of jewelry appraisal are truly meant to be applied in different and very specific sets of circumstances. Using a Retail Replacement Value jewelry appraisal in order to “set your price” when you go to sell the piece of jewelry in question will be as disappointing as it is inaccurate.

Basically, a Retail Replacement Value jewelry appraisal shows the highest value you will ever see assigned to the jewelry in question. This is because an insurance company in the business of insuring fine jewelry needs to work with a number to provide you (in most cases) with a new piece of like type, quality, and materials. Since fine jewelry goes up in value an average of 5% per year, and most insurance companies require a new appraisal every three years, a little bit of “padding” is totally legitimate.

That said, there are jewelry purveyors who readily provide a jewelry appraisal to customers with an appraised value of two to three times what was paid for the item. These “vanity appraisals” do you no good, however. Since insurance companies generally offer only a replacement of the piece, over-paying for premiums on an inflated value benefits no one but the insurance company.

Likewise, a Retail Replacement Value appraisal is only useful in the case of attempting to sell the piece to a jeweler if it was performed by a high-quality appraiser who provides solid data regarding any major gems contained within the piece, so that the buyer may more quickly come up with a “bid to buy,” but the actual dollar value assigned to the piece is irrelevant to a prospective buyer.

Occasionally, when selling to an individual, a Retail Replacement Value appraisal of recent date might help “close the deal,” it should in no way be used for the seller to come up with the selling price. Typically, being able to sell a jewelry item to an individual for a price between FMV and RRV should make both parties feel like a winner.

What makes me qualified to appraise jewelry?

In addition to being a GIA Graduate Gemologist, I have also received specialty training from esteemed, appraisal-specific organizations, including the American Gem Society and the American Society of Appraisers. I am qualified as an expert witness, and have performed in that capacity a number of times.

What pieces should I get appraised for insurance?

My recommendation is to insure anything that would be an economically difficult for you to replace out of pocket. That number is different for everyone. The values that are determined for insurance appraisal are determined as the average amount one would need to pay in a specific area, at a specific time, for a similar or like item. Unless a piece is described specifically as custom-made, involves techniques protected by patent, or is made by a known artisan, your insurance will not cover trying to replicate the original item.

How do I figure out my cost to have something appraised?

As you can imagine, the amount of time it takes to appraise a piece of jewelry varies drastically. Gold chains usually take no more than ten to fifteen minutes apiece. Conversely, a piece with many different types, sizes, shapes, and grades of gemstones can take several hours…as do antique pieces that require diligent research.

But let’s talk more typically…a one-carat diamond solitaire ring:
Assuming the diamond in the ring is not of the highest three clarity grades, this ring would generally take:

• 40 minutes to appraise for insurance purposes x $150/hour = $100
• 60 minutes to appraise for estate purposes x $350/hour = $350

[The additional time involved in an estate appraisal has to do with all the back-end referencing the appraiser must do, as they must be prepared to defend their conclusions in court.]

But no matter what type of appraisal, the complexity (and therefore the price to perform it) varies with:

• how many different types of gems require identification, measurement, weight calculations, color grade, and clarity grade
• providing any grading reports from laboratories will cut back on that time
• how unusual the gem shapes and types are
• how many different design elements require detailed description in order to adequately aid in later replacement, if needed

How do I get my jewelry appraised?

If you’re realizing that you possess jewelry that has values higher than you could comfortably afford to replace, it’s time to get those items appraised and insured. Most insurance companies require items be reassessed every three years. [Please know that my re-up rates are as reasonable as they come.]

If you’re at that stage in life that you are getting your will in order, consider scheduling a Marketable Cash Value appraisal, so you can be in control of determining which heirs inherit which pieces, and save a lot of future unfriendly debate among your family members.

No matter what—know that if you have questions about the identification or appraisal of your gems or jewelry, no matter the reason, I am ready, willing, and able to answer them!

Your local jewelry appraiser,
Babs