[Jewelry making - Article 01264] - Re: [Orchid] How Appraisals Work

[The Doctor]

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>         But the sug. retail was 4,905 and i am wondering how appraisals
>     work because i do not want to sell a piece of jewelry and have
>     customers thinking that there getting ripped off when it appraises
>     for less. Any information will be useful. 

    Nicholas, there are many different kinds of appraisals - divorce,
    fair market value (FMV), average retail value (ARV), etc. On a new
    piece of jewelry where the customer needs an appraisal for insurance
    purposes, they will be needing an average retail value (ARV) for
    insurance replacement which is the cost to replace the item. If the
    suggested retail price you mentioned in your post is an actual
    published SRP from the manufacturer, you should supply your
    customers with proof of that SRP and advise them to bring that proof
    to the appraiser, who must then use it as the actual replacement
    value. 

    If, on the other hand, the ring in question is a one-off, custom
    designed, hand-assembled or otherwise has no significant provenance,
    it must be appraised on the basis of its' constituent parts. Stones
    must be measured for weight estimation and graded for such
    characteristics as color, clarity, proportions, fluorescence, match,
    etc. The item is weighed and valued at market price of the metal of
    which it is made, and value is added for the design and execution of
    the piece. All of this is done at wholesale, then doubled for an ARV
    appraisal, or possibly halved for a divorce appraisal. Divorce
    appraisals (and others) are halved because divorce attorneys often
    return with their clients' appraised goods to liquidate (read sell)
    them, and jewelers are only interested in buying estate pieces at
    one-half wholesale or less, if possible. 

    Here's an example: If I saw (or stamp) out a heart-shaped pendant
    from sterling silver and engrave (or stamp) my name on it, the cost
    of materials along with my time and effort would drive the value up
    to somewhere around.....oh, say $10.00 US Now, take the same basic,
    stamped heart-shaped pendant in an estate that has a Tiffany & Co.
    stamp and, voila! It's suddenly worth $150 or more. Why? Because
    that's what Tiffany & Co. gets for them in their retail stores.
    Experienced appraisers are familiar with high-end designers and have
    references we use to identify their hallmarks, but can only value
    unidentified typical pieces at their constituent values. 

    Now, here's where problems can happen for the retailer. Just because
    a manufacturer's published retail price is at a certain level, that
    doesn't mean the piece is worth that price. Many manufacturers'
    lines use low clarity stones with poor color and, without
    accompanying proof that the piece retails for a certain price, an
    appraiser can only judge it based on the sum of its' parts. 

    A good practice for retailers is to establish a relationship with an
    appraiser in their area. Most will provide appraisals on new pieces
    to retailers in the trade for far less than a walk-in customer,
    simply because the suggested retail price is already established and
    there isn't much more work to do other than photographing the piece,
    checking to see if the description matches and typing & printing the
    report. Also because the repeat business is worth a volume discount,
    so to speak. 

    Nicholas, you have Broward County's only Master Gemologist (who
    bears the same last name as you) right there in Ft. Lauderdale. I
    don't plug my store or my personal web site on Orchid because I feel
    like that would be taking advantage, but this time I do want to
    offer our appraisal capabilities. Contact me off-list if you'd like
    to establish a business relationship with us. 

James S. Duncan, G.G.
James in SoFl
docktor AT bellsouth.net

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