By Calla Gold and Guest Writer Tom Seguin G.G A.S.A. Master Gemologist Appraiser
Diamond Appraisals from Legit to Toilet Paper
In the thirty two years I have been a jeweler, the stickiest upsets I’ve seen come from toilet paper appraisals. These are pieces of paper that say “appraisal” and are masquerading as legitimate legal documents telling you the value of your diamond.
Margo inherited her grandmother’s diamond ring. It came with an “appraisal” saying the diamond was worth $22,000.00. She assumed it would be worth more now. Her family was having a meltdown surrounding her grandmother’s choice to give her this valuable family diamond.
The family was demanding that she find out how much more it was worth as some furniture pieces that she had requested were perhaps not going to be given to her because she had “received enough” already.
To begin with Margo’s appraisal looked very boilerplate. (Anonymous with only a store name and address.) There was no listing of the certificates of the person doing the appraisal. The description was very generic and could have described any number of similar diamonds in rings.
I gave Margo the name and number of a very well respected and well educated appraiser and recommended that she get with the lawyer executor and tell him of the family shenanigans going on.
Between the executor and the professional appraiser it was found that the diamond had been vastly over-valued. Her “appraisal” was not a real appraisal even though on casual glance it seemed to be legitimate.
Long story short the family chilled out, Margo got the furniture pieces she loved and cherished and I had the pleasure of designing a new ring for her grandmother’s diamond.
The Awesome Appraiser Tom Seguin G.G. A.S.A. M.G.A. of Florida
In this looooong blog post, which I have split into two parts, I have partnered with one of the most qualified appraisers in the country, Tom Seguin, G.G*., A.S.A.** Master Gemologist Appraiser, to tell you what a real or legit (legitimate) appraiser is and what a legit appraisal is. Once you know this information you’ll never be the victim of a “toilet paper appraisal sales pitch.”
*Graduate Gemologist ** Accredited Senior Appraiser
What Type of Diamond Appraisal Do You Really Need?
Are you getting a diamond appraisal so you know you are paying a fair price?
Are you getting an appraisal so you can insure your piece?
Are you getting an appraisal just to know more about your inherited piece or pieces of jewelry?
You may not need a proper diamond appraisal, but you deserve to know the difference and decide for yourself. All these questions will be answered in this post.
What is a Real Appraiser?
Certified appraisers go through an education process from, to name a few, with the designations from their educations:
• Gemological Institute of America, GIA, (G.G.) Graduate Gemologist
• Gemological Association of Great Briton (GEM-A)(FGA),
• Canadian Gemological Association (FCGmA),
• Gemological Association of Australia (GAA Diploma)
Meaningful Initials that Trained Appraisers Earn and What they Mean
This appraisal education can take up to seven years depending on the level of training you go for. The appraisal professionals have to pass tests to prove their knowledge and understanding of the gemstones and jewelry they will be evaluating.
Then they earn the right to the initials G.G., A.S.A. after their name. These initials stand for Graduate Gemologist, American Society of Appraisers.
The other initials you see from the above institutions are similar in value.
The appraisal organization with the most stringent requirements in the United States for its highest level of certification is the American Society of Appraisers.
The Master Gemologist Appraiser is the highest designation. There are fewer than 50 Master Gemologist Appraisers in the US. The education to this level takes about seven years. Each level isn’t passed until rigorous testing is done to prove their worth.
Now you know what certification you’re looking for in a real appraiser. Now let’s look at what makes a legit appraisal.
Let’s Define a Valid or Legit Appraisal Done by a Certified Appraiser
A diamond appraisal or jewelry appraisal is an opinion of value for a particular market on a particular date. It is usually in document format, describing all qualitative and quantitative attributes necessary to arrive at the value conclusion. Source: National Assoc. of Jewelry Appraisers (NAJA).
What are the Types of Value in Different Markets an Appraiser Uses for the Value Conclusion?
The key here is value. Value is a very confusing term to many people. Any piece of personal property including jewelry can have different values on the same day in different markets. As it relates to gems and jewelry let’s look at different markets where jewelry is traded.
- Wholesale Value
- Retail Value
- Marketable Cash Value
Examples of the Three Types of Value
- Wholesale Value example: Joe the retail jeweler buys a 1 carat diamond from his wholesale supplier Donna at a wholesale price of $3,000.00. The public cannot buy the diamond in this market. Even though there are dealers that advertise that they are selling wholesale to the public they are not. They buy at wholesale. And in order to stay in business they have to make a profit. So, one market is the wholesale market. The wholesale value of that diamond is $3,000.00.
- Retail Value example: Joe the retail jeweler prices his new $3,000.00 diamond as $6,000.00. Joe then sells it to his customer Michael for a retail cost of $6,000.00. The retail value of that diamond is $6,000.00.
- Marketable Cash Value example: Michael takes the diamond home to his wife Connie and she is furious that he spent the money and says that she doesn’t want the diamond. Michael takes the diamond back to the Joe the jeweler who tells him that he all sales are final and he won’t take the diamond back. So, Michael takes the diamond to Victor the jeweler down the street. Now remember that all of the jewelers can buy the same diamond for $3000.00 when they need one. The Victor down the street knows this and he says “well if I need one of those it will cost me $3000.00 and I don’t need one right now. If I did, I would buy it from my normal supplier Sam, because he gives me terms to pay for it and volume discounts and other incentives that are a benefit to me. So, because my normal price would be $3,000.00 I will offer you 60% of that which is $1800.00.” The Marketable Cash Value is $1800.00.
There are three different markets for the same diamond ring in the same geographical area on the same day. You have the Wholesale Market Value at $3000.00. The Retail Market Value at $6000.00 and the Marketable Cash Value at $1800.00. This is the reality of the market place.
The value conclusion your appraiser puts on your diamond will be based on your purpose for asking for the appraisal. It will be based on Wholesale Value, Retail Value or Marketable Cash Value.
-Tom Seguin G.G. A.S.A. Master Gemologist Appraiser
Example of a Ring With Two Prices: Sale Price and “Appraisal” Price
The Appraisal That Comes With This Ring
When to Get a Legit Appraisal – Avoiding Mis-Information
When someone buys a diamond it is a major investment and like any other investment one would logically want to protect and insure it. The process can be confusing and there is a lot of mis-information in the marketplace.
Usually when a person buys a diamond over 1 carat in size, it will come with an appraisal report from the seller. Only 3 % of the jewelry stores in the United States have a Graduate Gemologist on their staff.
In order to properly identify gems and diamonds and to grade and value them one must have the gemological training and equipment. If the seller is providing you with the appraisal that accompanies your diamond you should confirm that it was done by a certified appraiser and not something the unqualified-to-appraise-jeweler just wrote up for you to clinch the sale.
Three Things to Look for in Your Diamond Appraiser
- Is the appraiser a Graduate Gemologist from the GIA or equivalent?
- Is the appraiser a member of an appraisal organization that requires the members to adhere to a strict code of ethics?
- Does the appraiser have a Certified Gemological Laboratory?
If the answer to any of those questions is no then you should get another independent appraisal. If they claim membership to these organisations, but your spidey sense is on alert, you can go to the organisations website and verify their membership.
Twelve Items That Should be on Your Legit Appraisal
Your appraisal should have these twelve items:
1. A sufficient description of the item so that you will be able to get a replacement of like kind and quality in the event of a loss.
2. A description of the mounting that the diamond is set into.
3. For the mounting it should include the metal type, ie gold or platinum
4. Karatage, ie 14kt, 18kt, 22kt gold etc. or purity of the metal for example 90/10 platinum/iridium.
5. Any metal markings and makers marks.
6. Color of the metal.
7. The shape and cut of the center diamond.
8. The measurements, color grade, clarity grade and cut grade of your center diamond.
9. The strength and color of the fluorescence in long wave UV of the center diamond.
10. You will need a plotting diagram of the center diamond if it is over 1.00 carat. This will be covered in the next section.
11. The description of the smaller diamonds or other gemstones with the number of stones, the size range, the total weight and color and clarity grades.
12. A color photograph of your diamond ring.
What’s Next in Part Two?
We’ll explain more fully why the twelve items of a proper appraisal are so important. There will be more appraisal examples and suggestions of where to go online to find a legit appraiser near you.