With all the hubbub going around lately about bogus diamond certifications, I thought I’d discuss the other side of the scenario - assigning monetary values to all of those VSs and SIs and Gs and Hs. Having done thousands and thousands of appraisals throughout the years, I thought I’d show you how I assign dollar values to those shiny rocks and glittery gold objects. And the ring we’re going to appraise is the one in the picture. Let’s get to work.
Who can do an appraisal?
One thing that puzzles me to this day is the fact that there is no license or training required to do jewelry appraisals. You, yes you reading this right now, can do a jewelry appraisal and put that $95-$125 into your pocket. Legally, there is no requirement of who can and who can’t do a jewelry appraisal (that I’m aware of). Strange. But, having received my Gemological certification from the Texas Institute of Jewelry Technology (the BEST gemology school in the world by the way) in 1983, I feel certain that I am qualified.
So, if you’re suddenly thinking of doing your own appraisals, answer this question: Will your professional opinion hold up under cross examination in a court of law? An appraisal is a legal, binding document subject to litigation in the event of a loss. If the appraisal is contested by the insurance company, will you be able to convince a judge and jury that you were qualified to write the appraisal and can you back it up with facts? If the answer is yes, hang out a shingle. If it’s no, send them to me. I do appraisals for jewelry stores all over the country and charge on average $25 per piece wholesale. But, I digress as usual.
So, let’s go back to this lovely piece that we’re going to appraise today. This ring is 14kwg with a marquise diamond center stone and 20 round diamonds surrounding it. This ring was a staple in every jewelry store in the ‘80s and early ‘90s and I’ve probably held a thousand of them in my hands through the years and probably appraised a few hundred. And the procedure is the same every time.
Let’s do the appraisal
First off I’m going to throw it in the ultrasonic to get the funk off. Then, when it’s clean I’m going to grab a loupe, a slide gauge, a leverage gauge, and my assistant who’s gonna take notes while I dictate the appraisal. My dictation goes like this:
“Ladies 14kwg ring with an approx. 8.0 x 4.4 x 3.0mm marquise diamond center that is SI1, H-color. There are 6 3.0mm, 8 2.5mm, 4 2.25mm, and 2 2.0mm, SI1, H-color side diamonds. The mounting weighs 5.1 dwts.
“Let’s do a 2x mark-up on the center, a 3x mark-up on the side diamonds and charge the gold out at $135 per dwt retail.”
Now that this piece has been reduced to letters and numbers, let’s put on our math hat and assign some values. First off, we’re going to estimate the weight of the center diamond since its set and I’m not going to take it out to weigh it. The weight estimation formula for a marquise cut diamond is length x width x depth x .00565 for a skinny marquise and length x width x depth x .00595 for a fat one. So 8.0 x 4.4 x 3.0 x .00565 = .59 cts., whereas using the second formula with the .00595 it weighs .62 cts. Since my stone is about average, I’m just gonna split the difference and call it an approx. .61 ct. I log onto Stuller’s website and pull some comps and they are selling for approx. $1,545 per carat wholesale. So, since I called for a 2x mark-up, here’s the formula for the appraised price of the center diamond; $1,545 x .61 x 2.0 = $1,884.00.
Now for the side diamonds; according to the Stuller website, a 3.0mm costs $97, a 2.5mm costs $52, a 2.25 costs $34, and a 2.0 costs $25. Since I called for a 3x mark-up for these diamonds, the formula goes like this:
3.0 mm = $97 ea. x 3x mark-up x 6 diamonds = $1,746.00
2.5 mm = $52 ea. x 3x mark-up x 8 diamonds = $1,248.00
2.25 mm = $34 ea. x 3x mark-up x 4 diamonds = $408.00
2.0 mm = $25 ea. x 3x mark-up x 2 diamonds = $150.00
Now, for the actual mounting. It weighs 5.1 dwts and I called for $135 per dwt. Here’s my rationale, a dwt. of gold right now costs around $45. So with a 3x mark-up that equals $135 per dwt. Since gold is acting crazy, a 3x mark-up protects the customer from wild fluctuations in the market. So, 5.1 dwts x $135 = $688.50.
Okay, let’s add it all up…$1,884 + $1,746 + $1,248 + $408 + $150 + $688.50 = $6,124.50.
What? You think that’s too high for that ring? Yes and no. Remember, an insurance appraisal is about one thing - making the owner whole after a loss. It actually has very little to do with the price that the customer paid for the ring. Heck, this one was probably bought at a pawn shop for $895, but for appraisal purposes that doesn’t mean anything. If you add up the costs on all of the individual components of this ring (which we just did), it adds up to $2,369.00. If the customer walked into your store with a check for $6124 and wanted another one quickly, would you bend over backwards to make it happen? You damned sure would.
People get into trouble and have to sell their $10,000 diamond ring to their buddy for $2,000 all the time to get out of a jam. But just because you paid $2K doesn’t change the fact that it’s still a $10K diamond. Remember, an insurance appraisal is about the ability to walk into any jewelry store in the country with the insurance check and get what you lost - right now!
Now, to include a picture or not?
My standard answer on this question is unequivocally NO! Unless someone absolutely demands it, I never put pictures on my appraisals and here’s the reason. Most insurance jewelry policies have an option to ‘replace’ the piece of jewelry as opposed to paying the claim with a check. And this is exactly why I chose this particular piece of jewelry to appraise for this article. Think about this:
What if the lady who owns it hates it? Seriously. What if she really wanted a princess cut diamond in a halo setting with micro pavé diamonds in the band like all of her girlfriends have? She knows her husband is a cheapskate and he probably bought it at a pawn shop. She loves him anyway, but hates the ring.
A little known fact is that insurance companies are some of the largest buyers of jewelry in the world because they have the option to ‘replace’. So a good insurance adjuster with a good picture can log onto eBay and find this ‘exact’ ring for $1,200 to $1,500 all day long because it was so popular for so long. The insurance company can then buy it and make the policy holder whole for far less than actually paying the claim.
But remember, she doesn’t want this ring again? She’d rather just have the money and buy something she likes without any input from her cheapskate husband. Heck, she’s probably happy it was stolen because she always hated it and now she can get what she wants. Without the picture, the adjuster can’t find the exact ring. If they try to replace it, the policy holder can just say; “No, that’s not it. Just write me a check.”
Now, in the event of a loss
It doesn’t happen often, but sometimes a loss is questionable and the insurance company investigates the claim. The last time it happened to me, it was a suspicious house fire that was a total loss and a suspected case of arson and every aspect of the homeowner’s policy was under the microscope, including the appraisals on the large jewelry collection that I had done about two years before the fire.
I keep very detailed notes on the pieces I appraise, and most of those details don’t end up on the final documents that the insurance company sees. Remember this (a very important point here); No one reads a jewelry appraisal until there is a loss. Your insurance agent isn’t gonna read all the mumbo jumbo on the document because he probably doesn’t understand it. He goes right to the $dollar$ signs and assigns a monetary premium to the values that I set. Then it goes in a file, hopefully never to be seen again.
So, back to my arson case. The investigator comes in with the insurance company’s copy of my five page appraisal. They were questioning my methodology, my training, my experience, etc., since none of it was on their copy. I know some appraisers put every. single. measurement. and. note in their final written document. I don’t. I don’t see the need. Plus, appraisal forms and printer ink are expensive and maybe I’m a little bit of a cheapskate myself. So the investigator and I agree to meet again the next day because I needed time to find my notes to show him what he needed. The next day, he comes back and within like 3 minutes, he was like, “You’re fine. Thank you for your time. I’ll tell the company the appraisal is solid.”
My notes were extensive and all of my calculations were right there. All of the R.I. figures, the mm’s, the cost per carat, the price of gold, the markups I used, etc. were right there. Remember, it’s not whether or not you can write the document, it’s whether or not you can prove your methodology and convince a trained investigator in less than three minutes that your appraisal is legitimate. So, all that being said, let’s see the final written version that will end up on the legal document that will protect my customer’s investment in this piece of jewelry.
Lds. 14KWG Diamond ring. This ring contains an approx. .61 ct., SI1, H-color, marquise cut center Diamond. This ring also contains (20) round side Diamonds measuring between 2.0mm and 3.0mm ea. with an approx. T.W. of 1.16 cts.. The mounting weighs 5.1 dwts.
Total Estimated Replacement Value:$6,124.00
And that boys and girls, is how I do an appraisal. How does that stack up against all the other appraisers out there? Write us and let us know your thoughts.
And bench jewelers out there, its winter time and you know what that means - cracked callouses and fingertips. Order yourself some Mary Kay Satin Hands soap and it will keep that from happening. I’ve been using it for years and I swear by it. If you don’t have a Mary Kay rep, use mine. You can reach McKensie at 615-924-9686.