How Much does your new ring appraise for?
This is a very common question. No GIA report includes a dollar value, yet it's natural that people would want to know the value of something as expensive as a diamond. Let's look at why people get appraisals, and where they get them.
Two main reasons most people need an appraisal.
To obtain insurance: A homeowners policy may automatically cover you for items up to $1000- or less or more. Generally speaking larger items will need a rider. If you need an appraisal for insurance, and the value is inflated, you may end up paying an inflated premium. In the event of a loss most policies allow the insurance company the right to replace the item. If you lost a diamond with a market value of $10,000, appraised at $20,000 the insurance company just made a nice deal- but you paid double for insurance. For this reason, we advise our buyers to have us value the item at what they actually paid in most cases. Speak to your insurance agent, and find out how much the per thousand cost is. Speak to the seller, and if the item is something which can be replaced fairly easily, use the sale price on the appraisal.
To make sure they are getting a good deal: Now we get into the dicey part. In the jewelry business, sellers advertising an item based on a high appraised value are using a deceptive sales tactic. The implication is that they are somehow selling this $30,000 item for $3,000. Doesn't take a brain surgeon to figure out businesses don't sell dollar bills for .50cents, much less a dime. The term "Certified Appraisal" is also misleading. GIA DOES NOT ISSUE REPORT WHICH CONTAIN A PRICE.
What is the appraisal value?
Even if there is no bad intention, attempting to fix a price to a diamond is still difficult.
The rarest of gems are generally the most valuable. But the very thing that makes it so valuable may mean that you will have a hard time finding an appraiser that knows the market value.
SO- assuming no bad intentions, and a good knowledge of an item: here's an idea of how wide a range that could legitimately be called the "Appraised Value" for a well cut 1.50 G/VS1 Princess Cut Diamond with GIA report.
- From a well respected online diamond seller $11,500
- From an aggressively priced Brick and Mortar store $12,500-$16,000
- From the most expensive store in Beverly Hills-$24,000
Each of these sellers need to add value to justify their existence, and stay in business. I'm sure the folks who get a little blue box find the value.
The point is, we have a range of values where the lowest number is less than half of the highest number. That means neither a $11,500, or a $24,000 appraisal is ....wrong.
A seller provided appraisal may be valuable. Sellers with integrity can write the best detailed description of what they are offering. Such an appraisal could be used to insure the item, or to help a second party appraise it.
A vital part of the appraisal service is discussing the use of the appraisal. If a seller appraises a $5000 for $10,000, and the consumer buys insurance on that basis, they will be throwing money away. Insurance companies may pay based on a descriptin, but using thier own market value. So you could have paid premiums for a $10,000 diamond- but you wil not get $10,000 from the insurance company. Realistic replacement value seems to be the best way to go.
I believe that providing a detailed appraisal should be part of the service a seller of fine diamonds offers.
Although a seller provided appriasal may be useful, do not use a seller's appraised value to determine the actual value of a diamond. If the appraisal is for insurance, check with your carrier and jeweler to make sure you don't buy too much insurance.
If you want a second opinion on a purchase you have made, choose carefully- make sure the person giving their opinion is knowledgeable, and in no way connected to the seller.