Diamond & Jewelry Appraisals

Anyone who has purchased a diamond or a piece of fine jewelry has probably thought about getting an appraisal before he makes his purchase. Most likely, you want to know that you are not being overcharged for what you are buying and that the quality of what you are buying is as advertised by the seller.

Or, perhaps you are being told that what you are purchasing will “appraise” for X times what you are paying for it. You feel good about that. But is that really the truth?  How do you know?  Is it even the most important question you should be asking? What does the number on the appraisal even mean? Some people have come to me with an appraisal thinking that this is the value and price they should be getting when they sell that diamond or jewelry item, even if they paid much less for it.

Even if you don’t think about getting an appraisal before you make your purchase, you probably will need an appraisal in order to have your jewelry insured in the event of loss or damage.

It’s SO confusing!

Let’s try to simplify the issues and figure out what the real purpose of an appraisal is.

Even if you don’t think about getting an appraisal before you make your purchase, you probably will need an appraisal in order to have your jewelry insured in the event of loss or damage.

It’s SO confusing!

Let’s try to simplify the issues and figure out what the real purpose of an appraisal is.

What are the Purposes of Appraisals?

There are two valid purposes for appraisals in the context of purchasing a diamond or piece of fine jewelry. Neither purpose is to make you “feel good” that you bought a bargain. As in the purchase of anything, there is no free lunch. An educated consumer knows that; one of the purposes of our Education Center is to make you an educated consumer.

A diamond or piece of fine jewelry sells for what it is worth – considering the place in the chain of distribution where one is making the purchase; that is, are you buying from a retail store, a wholesaler or a manufacturer. That doesn't mean that you can't get the same item for less. You may be able to. But first you need to know WHAT you are getting so you can compare an "apple" with an "apple." This is where an appraisal can help you.

Purpose No. 1: Are you getting what is being advertised?

The primary purpose of an appraisal before you make a purchase should be for the purpose of assuring yourself that the quality of what you are purchasing is as advertised. It shouldn't be to make you feel good that you are buying a "bargain." Let's distinguish between loose diamonds and diamond jewelry.

If you are buying a loose diamond, and the diamond is accompanied by a gemological certificate from the Gemological Institute of America (GIA) describing the diamond, then you are already more than half-way home. You need to know that the diamond you are buying is the diamond described in the certificate. You don’t really need a formal “appraisal” for that. Any reputable jeweler can look at the diamond and the certificate and determine that the diamond matches the certificate. If the certificate is from a laboratory other than the GIA, you have different issues. But that is an entirely different discussion for another time. (See Diamond Advice - Two Identical Diamonds - But with Different Prices?) For the purposes of our discussion I will presume that your diamond is certified by the GIA. Note that I am not talking about value and whether the diamond is one that you should actually buy. See What About Value below!

In the case of diamond jewelry, you want to know that the quality of the diamonds contained in the piece is as advertised and that the carat weight is also accurate. While government regulations require a seller to be accurate in the description of diamond weights in jewelry, what are you going to do, take the diamonds out of the piece to weigh them? The price of the piece of jewelry is often directly related to the diamond carat weight contained in the piece. For you to evaluate the price of the item, you need to know that the carat weight of the item is as advertised. If you don't know the seller and his reputation, you do need an independent evaluation of these factors.

What about price? As far as price is concerned, an independent appraisal can only go so far in assuring you that you are paying a fair price for your purchase. Independent appraisal laboratories (those that don't sell diamonds and jewelry) usually use a standard formula to evaluate a loose diamond based on its grade. The desirability of the diamond is not factored in and they cannot tell you whether it is a diamond you "should" buy or not. Not being in the business of buying and selling they don't know the answer to that question and can't guide you. Only a reputable diamantaire can give you that honest advice. So it is difficult to evaluate price and value just from an appraisal. See What About Value below.

Purpose No. 2:  Appraisals for insurance purposes.

One of the most important issues when it comes to dealing with insurance companies in the event of a loss is your need to assure yourself that the insurance company doesn't just replace the grade and weight of your diamond. If you have purchased the "right" diamond, a desirable one, you want to replace the diamond, not just the paper grade. Therefore, the appraisal should describe your diamond or piece of jewelry in great detail.

For the appraisal of a loose diamond, the appraisal should reference the certificate with all its statistics and identifying features. Without the details, an insurance company may just want to replace the size and grade of the diamond. But there is much more to your diamond than just the grade. You want to replace the look of the diamond too. The dimensions and other characteristics are all part of that, not just the color and clarity of the diamond.

As far as the value placed on an appraisal for insurance purposes, you should not be concerned if the value to replace the item is not multiple times the purchase price. As I mentioned above, the purpose of the appraisal is not to make you feel good. It is to protect you. Our policy at A. Fishman & Son is to appraise an item for replacement cost (after all, if you purchase at a manufacturer, you don't have to replace it at retail) plus we factor in an inflation quotient for the future. At this valuation, you won't be overpaying on your insurance premiums.

What about Value?

What the appraisal of a loose diamond, even one certified by the GIA cannot tell you, is whether you are purchasing the "right" diamond - one that is desirable. Just because the diamond is certified by the GIA and the diamond matches up with the certificate, and just because the valuation on the appraisal leads you to think that you got a "great deal," does not mean that it is a desirable diamond or one you should buy. The best advice I can give you about assuring yourself that you are paying the “right” price for what you are buying is two-fold.

First, you should educate yourself about what it is that you are buying so that you can truly compare apples with apples. If you are looking at the same “grade” of diamond but with certificates from two different laboratories, then you are not comparing the same thing. Even with certificates from the same laboratory and with the same grade, there can be a significant difference in the desirability of the diamond based on what those diamonds actually look like. See Diamond Advice - Two Identical Diamonds - But with Different Prices?

Second, and perhaps more importantly, know from whom you are buying. There is no substitute for selecting a reputable jeweler, be it a retailer, wholesaler or manufacturer who is known to be honest. And the best way to assure yourself of that is to get references, and a lot of them, with access so that you can contact them directly to find out their experiences. With that kind of background information you can be comfortable that the jeweler you are working with is dealing with you fairly.

Where do I go for these Appraisals?

In the case of both of the purposes described above, especially if the person you are buying from is not familiar to you or recommended, you should turn to an independent gemological laboratory to do the appraisal for you. One that does not sell diamonds or jewelry.

If the jeweler from whom you are buying is someone you have trust in, you can rely on that jeweler for your insurance appraisal. In fact, as we do at A. Fishman & Son, there should be no charge for this appraisal. It is simple and easy to do. After all, this jeweler has just sold you your diamond or piece of jewelry and should know all of the details.