"Feel Good" Appraisals

The most common reason to appraise jewelry is to obtain insurance coverage. An appraisal for this purpose should contain a detailed description of the item with an honest evaluation of quality and a realistic estimate of the replacement value. Typically the most reliable indication of the value of a new item is the actual purchase price.

In a practice that is closely related to Marking up to Mark Down, many jewelers offer what we fondly refer to as the "feel good" appraisal. The buyer is presented with an appraisal that overstates the value by inflating the purchase price, sometimes by as much as four times, and contains only a minimal description. (In a note on insurance coverage, most insurers charge premiums based on the dollar amount stated on the appraisal but offer settlements or replacements based on the actual replacement cost indicated by the description.) These appraisals are a disservice to the buyer on both counts. The insurance premium paid will be higher than necessary based on the stated value while the minimal description allows the insurance company to fill in the missing descriptive information to their best advantage in the event of a loss.

Please also see Not All Lab Reports are Created Equally as many of the independent grading labs are offering grading reports containing values that are more correctly considered to be "feel good" appraisals.

In an extreme example of inflated valuation and questionable grading, we received a large pair of diamonds for a custom job and appraisal.

The client stated the purchase price to be $30,000 and later sent us a copy of the appraisal provided to her. The lab was located on 47th Street in New York City and has an impressive name and web site. The report was signed by a Graduate Gemologist from GIA. The description was minimal and the color and clarity grades were both overstated by two grades (represented on the report as F color and VS-2 to SI-1 clarity, our grading opinion is H color and I-1 clarity – a significant difference). The value was estimated at $124,000, more than four times the purchase price. Our research indicated that the purchase price was a correct and realistic replacement value for the diamonds.

A side note - while a Graduate Gemologist (G.G.) should have a good foundation in identifying and grading diamonds and gemstones, not all are guaranteed to be competent as indicated in the example above.

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