74 replies to this topic

[Matt R.]

diamondsbylauren, on Tuesday, Nov 18 2008, 03:59 PM, said:

A third party appraisal is neccesary if there is doubt about the seller, or the purchase.

ohh ok...that makes sense then

[denverappraiser]

A 3rd party appraisal is also useful if the jeweler supplied document is inadequate for the requirements. For most people, the appraisal is going to become part of an insurance contract where the insurer agrees to replace the item if it is lost or destroyed under most circumstances. The appraisal effectively becomes the purchase order for the replacement and the insurer will then go to their sources (which are usually NOT the original jeweler) to find it’s replacement. It is in your best interest to have this p.o. be as complete and accurate as possible including all details that you count as important, photographs, weights, model numbers where applicable, etc. In addition, the appraisal sets the claim limit to the policy. Notice I didn’t say ‘value’. The bottom line on the appraisal will be come the upper limit of liability for the insurance policy but this is not the same as the expected payout in the case of a loss. Sellers will often want to present an ‘appraisal’ along with a purchase that declares the value to be enormously more valuable than a transaction that just happened. This may seem like evidence of a bargain and customers always walk away happy but one of the side effects is it raises your insurance premiums forever without giving you any value at all for it. It doesn’t change their behavior in the case of a loss one bit.

Unfortunately, most jewelers treat appraisals as a free add-on and not the important contractual document that it is. The result is that 'free' appraisals can turn out to be extremely expensive indeed.

It's easy enough to decide if the report you have will be useful for insurance purposes. Read the description section and decide if it contains sufficient information to accurately replace the piece. That is to say, if the company buys you the cheapest thing they can find that meets the description, are you likely to be happy? Then read the price. If it's out of line with what you just paid, that's a clue that you've got a problem and might benefit by hiring an outside appraiser.

Neil

[diamondsbylauren]

Great post Neil!
You've struck upon a pet peeve of mine.
I see sites advertising that they will provide an appraisal with purchase, for a fee.

Talk about adding insult to injury!
I believe the seller is responsible to correctly identify whatever it is they are selling-especially in a field like diamonds where small differences can make a big difference in value.

To me, providing an appraisal which is accurate, and suitable for insurance MUST be part of the service a jeweler offers.
The seller needs to discuss the purpose of the appraisal so the buyer gets what they need.

Instead, we see a lot of sellers either charging for an appraisal - or using a bloated value to try and convince the buyer they got a great deal.

Matt- you really deserve to have a suitable appraisal - especially as you paid a rather large premium to buy a "branded" diamond.
I have a feeling not many appraisers- if any- will attach nearly as large a premium on a "Solisfara" as a seller who's charging the premium......

Edited by diamondsbylauren, 19 November 2008 - 12:50 PM.

[denverappraiser]

I have no problem with jewelers charging for appraisals on things they sell, in fact I wish more of them would do it. The problem is that doing an appraisal properly is a fair amount of work and actually involves some talent. It’s entirely appropriate that the people doing this deserve to be paid. This can, of course, be included as part of the purchase price just like the people who provide security or janitorial services but this gives a tremendous incentive to the jeweler to do a crappy job, to hire inexpensive workers and to generally put out the lowest quality job they can get away with. Since most customers don’t notice the difference until it’s far too late and because it’s ‘free’ they are happy to accept whatever is presented to them as long as the bottom line number is big. This has been going on for decades and the result is that acceptable standard of appraisals is so low that even the appraisers themselves often don’t know that they are putting out schlock work. It damages consumers, it damages jewelers, it even damages insurance companies.

Most of the sites you mention are doubly bad because they both offer lame documentation and because they claim the authors are 'independent'. What utter nonsense. If the jeweler is the client, it's not independent any more than the other side's lawyer is independent in court.

Neil

[denverappraiser]

diamondsbylauren, on Wednesday, Nov 19 2008, 03:50 PM, said:

I have a feeling not many appraisers- if any- will attach nearly as large a premium on a "Solisfara" as a seller who's charging the premium......

For a retail replacement appraisal, which is what 99% of appraisers are doing, on a branded item, the appropriate value is what it would reasonably be expected to cost to buy a similar item of that brand, at retail, new, on a particular date and usually locally. It doesn't make a bit a difference what something else costs and it doesn't make a bit of difference what it would cost in a different marketplace, what a used one would cost, etc. The value of a Rolex has to do with what other similar Rolexes cost, not what a Seiko costs, even if the Seiko has similar features, keeps equally good time and could be argued is actually a 'better' timepiece.

Neil

[Matt R.]

denverappraiser, on Wednesday, Nov 19 2008, 05:47 PM, said:

diamondsbylauren, on Wednesday, Nov 19 2008, 03:50 PM, said:

I have a feeling not many appraisers- if any- will attach nearly as large a premium on a "Solisfara" as a seller who's charging the premium......

For a retail replacement appraisal, which is what 99% of appraisers are doing, on a branded item, the appropriate value is what it would reasonably be expected to cost to buy a similar item of that brand, at retail, new, on a particular date and usually locally. It doesn't make a bit a difference what something else costs and it doesn't make a bit of difference what it would cost in a different marketplace, what a used one would cost, etc. The value of a Rolex has to do with what other similar Rolexes cost, not what a Seiko costs, even if the Seiko has similar features, keeps equally good time and could be argued is actually a 'better' timepiece.

Neil

Neil,
I'm a bit confused, but it sounds like you are saying to read over the insurance policy (which I was able to open with the supplied appraisal) and ensure it covers what I feel comfortable with and go forward as I see fit from there, am I correct?

[Matt R.]

diamondsbylauren, on Wednesday, Nov 19 2008, 03:50 PM, said:

Matt- you really deserve to have a suitable appraisal - especially as you paid a rather large premium to buy a "branded" diamond.
I have a feeling not many appraisers- if any- will attach nearly as large a premium on a "Solisfara" as a seller who's charging the premium......

David,
I appreciate your concern, but my curiosity in the appraisal is not that I feel I paid a premium or was overcharged in the least, I simply want to make sure I am doing everything correctly in the process. It is insured, but I am just very anxious to feel I did all the right things.
In regards to this "large premium", I understand from the posts a few weeks ago that I paid a premium for this diamond, but you truly should look at this type of diamond also. Maybe its not for everyone, but once I saw this next to the other diamonds of the same specifications seen, it blows it away.

Thanks again for the help.

[denverappraiser]

Matt R., on Wednesday, Nov 19 2008, 05:55 PM, said:

Neil,
I'm a bit confused, but it sounds like you are saying to read over the insurance policy (which I was able to open with the supplied appraisal) and ensure it covers what I feel comfortable with and go forward as I see fit from there, am I correct?

Read the item description in the appraisal and look at the pictures. It should include all of the specs that you would like to be considered in the eventuality that your insurer needs to replace the piece. Aside from the usual 4c's type of thing, this would include the branding on the diamond, possible branding on the mounting, cutting details on the diamond if you consider them to be important, photographs of the piece, etc. Basically, imagine that you lost the piece and this report were the purchase order for it's replacement. Anything that's not there, they get to make up. Are you likely to be happy with what they come up with? For the budget, look at the value conclusion and compare it with the price you paid on nearly the same date. If they're importantly different, make sure you understand why. If you paid $5000 and the seller 'appraised' it for $10,000, this doesn't mean that your insurer will pay $10000 in the case of a loss. They're going to buy the cheapest thing they can get that meets the description that YOU gave them in the appraisal and they are going to pay the least amount they can for that. They have full time professional shoppers on staff and they enjoy an enormous buying power so it's reasonable to expect that they can get at least as good a deal as you did and any money above and beyond that will be wasted premiums. In this example, you will have been paying premiums on a $10000 limit when the most they could EVER pay is $5000. Of course they agree to this. What's not to like? This is the closest thing there is to money for nothing. It's consumers who should be complaining about this, not the insurers.

Neil

[diamondsbylauren]

Interesting topic.
Neil- on a purchase of a ( for example) a 1.00ct Diamond with a GIA report, what information from an appraisal, apart from replacement value, should not be included on a bill of sale?
In terms of the cost, or who should prepare an appraisal: At some level, there's a person or people that are buying the diamonds for whatever store or site is selling them.
At that level, the people buying the diamonds for the seller should be in the best position to assess the value of that type of diamond, theoretically. If the buyer does not possess this information, the store they work for won't be in business long.
If they possess detailed info on their diamonds and jewelry, and purposefully withhold it, that's also a problem.

Even from a standpoint of servicing their clients.
If someone does suffer a loss of a diamond or piece of jewelry, and wants to replace it, a seller that does not possess detailed records could not help thier own clients.

I'm in no way questioning the need for professional appraisers - but I still feel sellers of fine diamonds and jewelry need to provide detailed blls of sale.

Matt- glad you're satisfied.

[denverappraiser]

David,

A well-written purchase receipt is absolutely sufficient for insurance replacement purposes and I completely agree that the selling jeweler, possibly in collaboration with the manufacturer, are in a better position than anyone to prepare this document. They know things like actual weight that 3rd party appraisers often have to guess at and have adequate time to inspect things in advance without either making the client wait or making them nervous over leaving valuable property with a stranger. In branded cases like we’re talking about here and where they are an authorized dealer, they even have access to the factory to know exactly the dealer costs and conditions, what models have been discontinued, etc. In no way am I disagreeing with you here. What I’m disagreeing with is that it’s unreasonable for the jeweler to separately charge for this service. All fees should be disclosed up front of course, and a client is welcome to decline the deal if they don’t like it or they can attempt to negotiate a better package if they like, but I see no problem at all with including this as a line item.

The minimum sales receipt required to comply with sales tax and general bookkeeping requirements is not generally sufficient for a customer’s insurance purposes. A jeweler is certainly welcome and encouraged to include first rate insurance documentation as part of the deal if they want but it is not mandatory and, in fact, most don’t. By separately charging they establish that this as a service that is of independent value to the client above and beyond and it puts them on notice that the quality of their work is subject to scrutiny. I view it as rather like charging extra for setting or shipping or, for that matter, a fancy box or anything else. At the same time, clients who are offered and ‘appraisal’ for an optional fee and who then refuse can be reasonably held to low expectations in terms of paperwork, photography, archiving, etc.

Neil

Edited by denverappraiser, 20 November 2008 - 09:00 AM.

[diamondsbylauren]

I guess this is one where we can agree to disagree.
Personally I feel that an accurate, detailed description should be part of the service a jeweler offers - and should be included with the diamond.
I feel that charging for such a service is excessive.
Furthermore, I believe the higher quality sellers will provide this as normal service. I think that many ( if not most) of the places that are charging for appraisals are simply padding the bill, and likely NOT providing the type of service a professional appraiser would.
Certainly, from what I've sen online, the places charging for appraisals are of the ilk who are passing off stones with bogus reports as "Certified"

How many stores hire a true independent appraiser to examine things they are selling?

[denverappraiser]

diamondsbylauren, on Thursday, Nov 20 2008, 03:05 PM, said:

How many stores hire a true independent appraiser to examine things they are selling?

Ah, that gets onto one of my hot buttons. It's not an independent appraisal if the dealer is the client. To answer your question, none.

Neil

[diamondsbylauren]

Of course you're correct- any appraiser hired by the seller is not independant at all. If a seller is knowledagable and honest, the appraisal they provide will be perfectly suitable for insurance purposes.
BUt we seem to be agreeing in full here...
Any store charging for an appraisal ( which is suggested to be an independent appraisal) is, at the very least, charging for a service not provided?
At the worst, it could be seen as gross misrepresentation, couldn't it?

[denverappraiser]

As I said, I have no great problem with sellers separately charging for documentation services as long as the fees are properly disclosed and agreed to in advance and yes, sellers are perfectly capable of providing suitable paperwork for insurance purposes. Whether they actually do this is an entirely different question and is different for each individual seller.

Any store that sells a service of 'independent' appraising for items that they are selling (or buying), regardless of who authors the report is playing games with the truth and I would be inclined to not only disregard the 'appraisal' but to call into question other things they may have to say as well. Fool me once - shame on you, fool me twice - shame on me.

Neil

[diamondsbylauren]

We really do seem to be saying the same thing Neil.
If a store has the balls to advertise a non independant appraisal for a fee, well, I'd be surprised if anyone would buy it.