By Calla Gold and Guest Writer Tom Seguin G.G. A.S.A. Master Gemologist Appraiser
Diamond Appraisals from Legit to Toilet Paper – Part 2
Click Here for Part 1
This in-depth two-part article will make more sense if you at least skim part one before jumping into part two.
This was written in response to frequently asked questions and a proliferation of toilet paper appraisals coming across my desk and my need to do something about it.
We Now Pick up From Where we Ended in Part 1:
Why do You Need all Twelve of These Descriptions in Your Diamond Appraisal?
This may sound like a lot of information but this is the minimum that is necessary to protect your self and to guarantee a replacement of like kind in the event of a loss.
It is the standard among professional gemologist/appraisers.
Diamond Plot, Plotting Diagram, Do You Need One and What is It?
Another question that comes up is, “should my diamond have a plotting diagram?”
A plotting diagram is a diagram that has an image of the facet arrangement of the diamond.
The Gemologist then marks the inclusions (imperfections) and blemishes (surface characteristics) on the diagram where they are in the diamond.
The inclusions are marked in red and the blemishes are marked in green.
The plotting diagrams are important for identification purposes.
If for example you take your diamond into a jeweler for repair you can have the jeweler show you your diamond under magnification and locate one of the inclusions and where it is in your diamond.
Then for verification, when you pick up your diamond you can look at the diamond and locate the inclusion again and thereby verify that it is indeed your diamond.
There are other methods of identification such as the fluorescence (reaction of the diamond to long wave ultraviolet light) and the millimeter dimensions.
The A.S.A. Master Gemologist Appraiser standards require a plotting diagram on diamonds over 1.00 carat.
The diamond plot can be used in future years for an appraiser to update the value of your 1ct. plus sized diamond.
Independent Labs and the Validity of Diamond Grading Reports
A question that comes up frequently is about the validity of diamond grading report from various independent gem labs.
The grading system for diamonds that is the standard accepted system was developed by the Gemological Institute of America (GIA) in around 1950.
This diamond grading system was developed to handle disputes between diamond dealers about the color and clarity grades of diamonds. It is the system that all dealers worldwide use. The most recognized diamond grading lab in the world is the GIA.
Many other labs mis-state or overstate the quality grades of diamonds. This is a well known fact in the diamond trade, but the average consumer is totally unaware of this common practice.
EGL Europe Certs Shown the Door by RapNet
Recently (September 2014) at the World of Gems Conference in Chicago, IL it was mentioned that diamonds with certificates using the same grades as GIA, from the EGL trade at over 40% less than GIA Certified stones and the EGL USA for over 20% less.
The reason for this is that the grades from those labs are grossly overstated in comparison to how diamonds are rated by GIA appraisers.
RapNet, and industry diamond trading site recently said they would no longer list diamonds with an EGL, European Gem Laboratory cert. Read article here.
For that reason we always recommend a GIA GTL (Gem Trade Laboratory) Diamond Grading Report. Of course some diamonds that have been in a jeweler’s inventory for some time or that have been traded in to jewelers for upgrades for size or quality might not have a GIA Diamond Report. In that case it is important to have a Graduate Gemologist Appraiser perform an appraisal and grading report.
Diamond Grading Report and an Appraisal, What’s the Difference?
The difference between a Diamond Grading Report and an appraisal can be confusing. A Diamond Grading Report does not include a value.
The purpose of this report is to provide an independent assessment and opinion of the criteria that are considered when interpreting the quality of a diamond.
An appraisal report will describe the diamond with all of those same factors but will include the value in the appropriate market as well.
When purchasing a diamond you can compare the quality factors by comparing Diamond Grading Reports. On a Diamond Grading Report there is a lot more information than the 4 C’s (Cut, Color Clarity and Carat Weight). The other information including the fluorescence, crown and pavilion angles, polish and symmetry grades will effect the value.
Interpreting the addition information can be confusing and can make big differences in price. For this reason it is a good idea to research this information. Then you will have a basic understanding of diamonds.
Then when shopping for a diamond you will be prepared to ask the pertinent questions regarding the diamonds you are considering for purchase.
Do You Need an Appraisal? Three Reasons Why You Should Appraise
The first thing that a qualified gemologist/appraiser is required to do is to meet with the client and determine what is the purpose and function of the appraisal.
There are many reasons that people get appraisals on their diamonds, gems and jewelry.
1. To insure your piece of jewelry
2. For Estate distribution
3. For Marketable Cash Value for divorce situations
Let’s take these one at a time.
- Most insurance companies require that you have a current appraisal from within 1 to 3 years and that varies from company to company. In this case, you need an appraisal.
- Estates need to figure out an equitable distribution. It may be for a taxable estate and it is required by the IRS or it may simply be for equitable distribution of the jewelry to the heirs.
The reason that this is important for equitable distribution is this; Fair Market Value is the price you would expect to receive when selling a pre-owned piece on the secondary market.
If for example there is a diamond ring in an estate that has two heirs that are children of their deceased mother. One is a woman and the other is a man. The mother wanted her daughter to have her ring, but they had to be fair to the son so that he would receive an amount of money from the estate equal to the Fair Market Value of the ring.
That way if in say one months’ time the daughter decided to sell the ring she would be able to get the amount of money that the son had received in cash. If the ring were appraised at retail replacement value then the daughter would not get anywhere near the amount of money when selling the ring that the son had received in cash. You’d definitely want to get an appraisal in this case.
- Another reason for an appraisal at the Marketable Cash Value level is for dissolution of marriage. The scenario is similar to the estate appraisal as explained above. The courts look for the marketable cash value so that the party that is to receive the jewelry in the settlement will not be penalized in the event they try to sell the jewelry. They will never be able to get the amount of money that was paid for the items when they were purchased new so the market level that we seek in the marketable cash value which is the amount of money that could receive if the items were offered for sale in their current condition in the most appropriate secondary market.
– Tom Seguin G.G. A.S.A. Master Gemologist Appraiser
What About Just Getting Your Jewelry Value Questions Answered?
A fourth reason that many people come in for an appraisal is really not a formal appraisal at all but rather just a consultation. People come to own jewelry in many different ways and it is very common that they don’t know what it is that they have.
In that event many appraisers will charge a consultation fee which is based on an hourly rate and identify, grade, value, photograph and research the jewelry items that you have while you sit with them in their office.
The fee is similar to an attorney’s fee and in using this method you can get a lot of information in verbal form in a very short period of time.
How Much Should You Pay for an Appraisal by a Professional Appraiser?
In the past it was common practice for appraisers to base their fee on the outcome of the appraisal. That obviously would tempt the appraiser to over value the item. That practice is considered unethical today. Fees should be based on an hourly rate or by the item.
Discount Jewelers and Toilet Paper Appraisals
When you buy an expensive, especially diamond focused item, from a jewelry store that has discount sales, you should have the value verified by an independent appraiser.
Many chain jewelry stores run sales marking items off 30% to 50% on a regular basis. It isn’t a true sale, but a gimmick to make more sales.
In the not too distant past several states enacted legislation saying that for jewelers to advertise a percentage off sale they had to prove that they had sold a larger number of the items at the higher price to legitimize the sale.
Most of those “Discounters” only mark the items up to an unreasonably high price to later mark them down a percentage making the buyer think they are getting the benefit of a tremendous bargain when in fact they are paying the full retail price.
Then the discount seller provides an “appraisal” at the higher price that the buyer uses to obtain insurance.
This “appraisal” form is a boilerplate, stamped out form, available on pads from office supply stores and online. It is filled out by the salesman or store owner. Neither of these individuals have the knowledge or certification to back up their “valuation” of your jewelry. This is not a legitimate appraisal. It’s worth toilet paper from a standpoint of valuable documentation.
The insurance company uses the valuation number on the toilet paper appraisal to calculate the premium on the insurance and the jewelry owner pays more for the insurance than they need to.
The customer believes their jewelry is worth more than it truly is. If they use these toilet paper appraisals until their death, their heirs will pay taxes in excess of what they should, as these overpriced pieces of jewelry are valued in fantasy land.
Discount Jewelers and Toilet Paper Appraisals
If you have a diamond ring that you paid $8000.00 for and were told that it was worth $12,000.00 and you get an appraisal for the higher amount, you will be paying an unnecessarily high premium. The $4000.00 difference between the stated value on the appraisal and the real value of what you paid for will equate to $60.00 per year in additional premium based on a 1.5% of value premium cost.
Getting an Appraisal so You Can Sell Your Diamond – An Iffy Proposition
Are you getting an appraisal because you want to sell your old wedding ring? In my opinion, if the center diamond isn’t big enough it’s not worth getting an appraisal. If you want to sell a diamond over one carat in size a diamond plot and appraisal might be worth doing. If you are selling to a private party.
A diamond dealer won’t pay you more because you have an appraisal. He can see the color and clarity without the help from an appraisal. If you want to sell to a private party then it might be worth it, but not if the diamonds are small.
From Legit to Toilet Paper Appraisals
A legitimate appraisal costs money. It is done by a certified appraiser with initials after his or her name and memberships in legitimate appraisal groups or societies.
A legitimate appraiser makes a significant portion of their income from doing appraisals. You are paying a professional for their work based on years of training and experience.
A legitimate appraiser identifies themselves as an appraiser with all noted initials on their business card and on their website.
The appraisal they charge for is legit.
A jeweler who just sold you a diamond ring and typed up a quick description on a triplicate generic form that says, “Appraisal” in big letters across the top is not an appraiser. If he inputs:
A) The price you paid or,
B) An inflated price for “insurance purposes.”
He just gave you a document with the legal value of a piece of toilet paper.
It’s up to you whether you want that as the final appraisal for yourself. It’s fine if you do, just as long as it’s an informed choice and not you thinking, “Wow, I just got like a $200.00 appraisal for free. What a deal!” or “Oh my gosh! I paid $10,000 to Joe the Jeweler for this engagement ring and he just gave me an appraisal for $15,000. Dude, it’s better than real estate, I just made $5,000!”
What’s the Fine Print?
“This is not an offer to buy”. Some people have thought that if an appraiser said granny’s ring is worth $5,000 that the appraiser is acting as a buyer and they could sell it to the appraiser.
This is not so.
An appraisal stands for the fair market price you’d pay in a jewelry store for this item theoretically.
How Can You Find a Legit Appraiser?
What Other Appraising Organizations are There?
There are a number that come to mind. The International Society of Appraisers, ISA, the American Society of Appraisers, ASA, The American Gem Society, AGS and the National Association of Jewelry Appraisers, NAJA.
The International Society of Appraisers
The ISA has personal property appraisers that appraise many different things so they are not that specialized in Gems and Jewelry. I think there are only 30 or so in the US that appraise jewelry at all.
ISA used to be more involved in gems and jewelry, but have fallen off somewhat so most serious GG’s (Graduate Gemologists) don’t consider them a factor.
The American Gem Society has the CGA (Certified Gemologist Appraiser) program.
The American Society of Appraisers
The American Society of Appraisers is the oldest appraisal society in the United States. ASA has been training professional appraisers since its precursor, the American Society of Technical Appraisers, began in 1936. Today, ASA is still the country’s only multidisciplinary appraisal society, providing its members the most solid grounding in the appraisal principles that underlie all classes of property: real, personal, tangible and intangible.
Although small in number, ASA is the acknowledged leader in gems and jewelry appraising – the appraisers Federal agencies turn to most often to perform the most sensitive assignments.
Our titleholders (Accredited Member, Accredited Senior Appraiser and Master Gemologist Appraiser®) are among those that consumers trust the most for all their varied needs, from insurance coverage appraisals to estate valuation and liquidation matters. (From the website.)
American Gem Society
The American Gem Society, AGS, does a good job and they are led by Cos Altobelli. But to be a CGA you must be affiliated with an AGS store.
To be an AGS store involves completing a lot of membership qualifying steps. It is work to earn the the AGS store standard. The CGA designation is not available to appraisers that are not connected to an AGS store.
The National Association of Jewelry Appraisers
The National Association of Jewelry Appraisers is the only appraisal association in the United States that devotes itself solely to the appraisal of gems and jewelry. All of their energies focus on these, and only these, subjects which are updated with new information as it becomes available.
The NAJA conducts various programs designed to serve the interests of both its members and the public at large in matters relating to appraisal theory and valuation science. Major elements of their program include:
• A referral program designed to make the services of properly qualified appraisers available to those who have need of such services
• Education of the public in matters relating to the profession of gem and jewelry appraising
• Promulgation of a Code of Ethics which is to be adhered to by all members of the association.
• A program for the advancement of members and the awarding of appropriate designations to those members meeting the associations’s various membership level requirements.
• The establishment of appraisal standards for gem and jewelry appraising
• Promotion of educational seminars and meetings on topics related to gem and jewelry appraising; for both members and non-members.
• Miscellaneous activities to make the public more aware of the professional standards to be used in gem and jewelry appraisals and to gain recognition for members of this association.
Now you are ready to get appraised or not, properly or not. You know the difference between a legit and a toilet paper appraisal. The diamond is in your court. The choice is yours. Choose wisely.
Tom Seguin G.G. A.S.A. Master Gemologist Appraiser
Master Appraiser, Tom Seguin G.G. A.S.A.
Tom Seguin G.G. A.S.A. Master Gemologist Appraiser
Tom Seguin is an independent appraiser of fine jewelry serving the Tampa Bay area from his office in Bradenton, Florida. Mr. Seguin began his career in the jewelry industry in Sarasota, Florida in 1982. He earned his Graduate Gemologist (G.G.) diploma from the Gemological Institute of America in 1986 and earned his Master Gemologist Appraiser designation from the American Society of Appraisers in 1987. ). Fewer than 50 people in the United States have attained that level of certification. Mr. Seguin owns and operates Suncoast Gem Laboratories, which is the only state-of-the art Certified Gemological Laboratory of the Accredited Gemologists Association on the Gulf Coast of Florida. He is a senior appraiser with the National Association of Jewelry Appraisers and adheres to the Uniform Standards of Professional Appraisal Practices (USPAP).
In his spare time you will find Tom with his wife Donna and their two sons climbing the crags of western North Carolina.