Thursday, July 17, 2014

Appraisal Uses: When and Why

Just as you wear jewelry for different occasions such as formal, daytime, and “After Five”,  jewelry appraisals are needed for different purposes and, as a result, come in a variety of types. The following are a few of the more common appraisals. 

Insurance Replacement is the most common appraisal and may be defined as follows:
     The purpose of this appraisal is to estimate the current retail value of the listed jewelry. 
     The function of this appraisal is to establish a basis for insurance policy valuation.

The term “Current Replacement Value” should be defined as follows:
      “The price in terms of money that would be required to replace the property in question with
        another of similar age, quality, origin, appearance, condition and provenance, within a
        reasonable length of time in an appropriate market.”

Estate (Fair Market Value) 
Jewelry left to heirs in probate is valued at Fair Market Value (FMV) which is used by the IRS for estate tax liability and donation purposes.  The IRS defines FMV in part as:  “The fair market value is the price at which the property would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or sell, and both having reasonable knowledge of relevant facts.

When someone wants to dispose of his or her jewelry or estate, the best outcome may result if they put their items up for sale on a consignment basis because of the typically higher prices received.  If the property must be sold quickly, consignment is not practical.
If you are trying to sell a valuable item, you may want a resale appraisal that details the description, precise measurements and grades of stones, and a determination of the resale value within the appropriate market.

Comparison Appraisal
Jewelry is often appraised for comparison purposes when a client brings in an item to verify the identity and/or quality claimed by a third party or to determine the fairness or viability of the asking price. They may be curious of the following:
·        Did I get a good deal?
·        Is it worth what I paid?
·        Is it worth more than I paid?
·        Is it the quality I was told?

Who should do your appraisals?
Like many professions, appraising requires years of experience, ongoing research, proper equipment and continuing education. Not all appraisers are good for every assignment, but have areas of expertise depending upon the type of jewelry and the markets where the item in question is most commonly sold.  

Appraisers are not licensed, but they have plenty of rules to follow from professional appraisal associations and organizations. Their ability to comply with those rules depends on a lifelong dedication to knowing as much as they can about gems, jewels, metals, manufacturing, treatments, fraud, the marketplace, the history of art and the fickle finger of fashion.

At the bare minimum, an appraiser should be credentialed and verified as a GIA Graduate Gemologist and be in current good standing by a recognized professional appraisal association or organization.  What is also necessary is that they have been trained not only from years of experience, but in appraisal methodology and gemology.   

At Naifeh Fine Jewelry, we have two Certified Gemologist Appraisers (CGA), credentialed by the American Gem Society (AGS). The CGA title is the jewelry industry’s highest award, and the AGS is the only organization that requires yearly re-exams to its titleholders. This certification and continuing education ensures our customers that when they trust us with an appraisal, they are indeed receiving it from those who have earned the highest accreditations.

Randy Stricklin, GG, CGA
GIA Graduate Gemologist
AGS Certified Gemologist Appraiser
Naifeh Fine Jewelry