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Understanding Appraisals

An appraisal is a written record of the identity, design, quality and value of an article. The identification and description of the items in such appraisals are often helpful when selling, but the evaluation of value usually is not.

Appraised Values
An appraised value for insurance is an estimate of the retail replacement price. It covers the cost of making the exact duplicate of your items, including both the wholesaler’s and the retailer’s profits. An appraised value is not the amount you would receive if you sold the items. In fact, an insurance value is usually significantly higher than the actual cash value. Appraisals frequently ignore the condition, age and marketability of the items. This is especially true in the case of jewelry appraisals. If your insurance appraisal is dated in the early 1980’s, the values may be significantly inflated by today’s standards.

Offers to Purchase
If you are selling something, it is better to have an offer to purchase rather than an appraisal. Get the actual price someone will pay you today for an item. Someone who tells you what you should get for an item but won’t buy it himself is not making an offer. A dealer who suggests a consignment of items at estimated selling prices is not making an offer. Your items may not sell for some time and they may ultimately bring considerably less than the estimate. In fact, they may not sell at all.

Price Perception is Key
AB&L finds that price perception usually decides whether we are successful in buying an item from a customer. The price we must pay depends on objectively determined factors- including the quality, size, rarity and marketability of the item. Sometimes appraisals impart an unrealistic idea of value to a customer. No one will be able to meet his or her expectation. We normally buy everything that is offered to us by people who have a correct understanding of the value of their items.

Importance of GIA
The Gemological Institute of America or GIA is the only industry accepted standard for an unbiased quality grade of a diamond. With a GIA certificate, a diamond can be sold from dealer to dealer on face value, without the need of a second opinion. Any other 3rd party appraisal is typically used as a marketing tool by a retail jeweler, and does not carry the weight or integrity of a GIA certificate. Typically, a 3rd party appraisal has an inflated valuation that is way above retail, as well as an inflated grade of clarity and color.