Professional Jeweler Archive: You Sold It - Should You Appraise It?

July 2000

Managing/Appraisals


You Sold It - Should You Appraise It?

You can't be unbiased about merchandise you sell


Retail jewelers often ask whether it’s appropriate to appraise jewelry they’ve sold. It depends on what they mean by appraise. An appraisal is an unbiased evaluation of quality and a value based on market research. This is difficult to do for an item you’ve sold. If “appraisal” means documenting the quality, description and selling price (not asking price), yes, you can do it.

How can you provide a report that’s useful to your customers and not harmful to your reputation? Follow these guidelines.

Don’t Call It an Appraisal

Calling the document an appraisal implies you are unbiased and have conducted market research. If you sold it, you have bias. Instead, you can call it an “Insurance Documentation Report,” which makes clear you are documenting only quality, condition and selling price, not conducting a market survey of similar jewelry.

Documentation reports are a service. If you use this type of report to close a sale, there’s a fundamental problem with your business ethics.

Commit to Telling the Truth

Start with sales presentations. Don’t tell a customer the diamond you’re selling is the very best quality unless it is a D flawless Ideal cut. Then there won’t be a temptation to repeat the misrepresentation in writing on a report. If you sold a K/SI2 with a 65% table, then that’s what the report must state.

Don’t Inflate the Value

Writing a report that inflates value is lying. It also causes clients to pay higher insurance premiums than necessary. One of our customers, for example, paid $2,400 for a diamond that came with a seller “appraisal” of $5,900. We set him straight immediately with our appraisal of $2,375. He was so incensed about being lied to in writing he returned the ring and reported the seller to the Better Business Bureau.

What Is the Value?

With few exceptions, the value is what you sold the item for. If you can sell an item for $1,000, don’t write a report for $2,000. We continually see clients who are perplexed when they buy jewelry for 50% off and our appraisal reflects the price they actually paid. When these consumers learn the price they paid is exactly what the item usually sells for, they don’t shop again in the store that duped them.

There are rare instances when the selling price may differ from the final figure on the report, such as when a custom piece is priced for four hours of labor and it actually takes 10 to make. The figure on the report can reflect the additional labor, but you must explain the difference between the price paid and the figure on the report.

Don’t Hype the Quality

Remember our customer who paid $2,400 for a diamond the seller “appraised” at $5,900? The seller also stated in his “appraisal” the diamond was F/VVS2. The diamond was actually I2 and fracture-filled. Though extreme, this example illustrates that a retailer who inflates quality will fare badly when a third party is consulted. And sooner or later, a third party will be consulted.

– by Julie Nash G.G., G.J., A.M. and Arthur Skuratowicz G.G., G.J., A.M.

Julie Nash and Arthur Skuratowicz operate Anton Nash LLC, Independent Jewelry Appraisers and Consultants, Colorado Springs, CO.


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