What is an appraisal and why do you need an appraisal?

by Rick Lewis (G.G., GIA) of Lewis Jewelry Appraisal Services

An appraisal describes jewelry, a diamond, or a gemstone in a great deal of detail and assigns a value to it.
There are many different methods for assessing the value of an object. An appraisal may be done for insurance purposes, to assess replacement value, for selling and for valuation of an estate. It is important to communicate to an appraiser what the appraisal will be used for, so he/she can determine the appropriate valuation methodology.

Some jewelry appraisal facts:

IS A STORE APPRAISAL LEGAL? – A store selling you an item cannot give you an objective, or legal appraisal. The seller can provide a document of the “cost to replace it in their store”, which is basically a detailed receipt, that must explain any value figure higher than the paid price.

DID I GET THE QUALITY EXPECTED AT A GOOD PRICE? Beware of recommended appraisers from a seller. You must search out your own, an independent appraiser. Accredited appraisers take significant time and effort, so expect to pay a fair fee. In return you will have peace-of-mind, and perhaps save a significant amount of money! Ask about the store’s refund policy.

WHAT DO I INSURE MY JEWELRY FOR? IT’S THE DESCRIPTION, NOT THE MONEY FIGURE THAT DETERMINES THE VALUE! – You can over insure jewelry. If something happens, the insurance company is usually responsible for only what it costs them to replace it! The insurance company will go by the appraisal description. If important information is left out, or documented incorrectly, you will never get back what you had. The policy may even be voided!

THE OLD DAYS ARE GONE when a jeweler charged nothing, or a few dollars, and spent ten minutes to knock out an appraisal. The problem was, and still is, that the proper time need be taken. Because so many “lousy appraisals” wound up in court, and the customer was the biggest loser, the federal government established guidelines. You can avoid major headaches if the appraisal is right to begin with.

“I HAVE A DIAMOND GRADING CERTIFICATE!” This is not a valuation, nor does it include the jewelry. Did you know some retailers send a diamond to several grading laboratories, to see which grades the best for their profit margins? More likely than not, report information is incomplete, gathered with faulty technology, or incorrect due to unintentional human perception errors. Do not blindly accept a grading report at face value. A knowledgeable appraiser will inform you of additional information, and how it affects your jewelry value.