Professional Jeweler Archive: The Extraordinary Assumption

November 2002

Managing/Appraisals


The Extraordinary Assumption

When you're not really sure but the client refuses further testing, protect yourself on the appraisal


What do you do when you’re involved in an appraisal that requires testing beyond your capabilities? What do you do if your client refuses to pay for further testing? Enter the “extraordinary assumption.”

The Uniform Standards of Professional Appraisal Practice defines an extraordinary assumption as “an assumption, directly related to a specific assignment, which, if found to be false, could alter the appraiser’s opinions or conclusions.” It’s quite a mouthful but very useful to the jewelry appraiser. The important caution here is that the extraordinary assumption is not a blanket statement that allows inexperienced or incompetent people to perform jewelry appraisals with immunity for their mistakes.

Here’s an example of a legitimate extraordinary assumption in a jewelry appraisal: You’re faced with appraising an alexandrite that’s very clean and exhibits a color change that gives you the strong impression that it’s natural. But the stone has no truly diagnostic features and the tests available to you are not conclusive as to its origin. You explain to your client that further testing by a gemological laboratory is necessary to determine to your professional satisfaction that it’s a natural alexandrite. The client refuses to pay for this testing and won’t allow you to mail the stone to a lab.

Here is where you may use the extraordinary assumption. First, explain to the client you can assume the stone is natural based on its color, but that the appraisal will clearly state the value is based on this assumption. Also tell the client the value estimate will change dramatically if the assumption is proven incorrect (i.e., the stone is synthetic). If the client agrees to these terms, proceed with the appraisal.

You must state clearly in the appraisal the value is based on an assumption. Not doing so leaves you open to anything from subsequent ridicule to a lawsuit. Sure, you fully informed your client of the ramifications and she agreed at the time, but five years later her memory is a little fuzzy. In her mind you are simply the idiot she paid to guess about her alexandrite. So protect yourself and be fair to your client by fully documenting what you assumed and why you assumed it. It’s a good idea to cordially word in the appraisal you had to make the assumption because the client refused further testing.

To recap: Appraisers should use the extraordinary assumption only when there is no other option. Always discuss the ramifications of the extraordinary assumption with your client. Clearly explain the assumption in your report in a readily visible area. Now you’re protected.

– by Julie Nash, ASA, GJG (GIA) and Arthur Anton Skuratowicz, CGA, GJG (GIA)

The authors operate Anton Nash LLC, Independent Jewelry Appraisers and Jewelry Trade Consultants, Colorado Springs, CO; (888) 440-6274, www.AntonNash.com.

Copyright © 2002 by Bond Communications