What’s It Worth? What’s It Really Worth? That Depends

When I co-founded Jewelry Appraisal Services of Houston in 1994, my goal was to have the finest appraisal service in Houston. I achieved this by hard work and heavy networking. Eventually I not only worked closely with Tiffany, Tourneau and Cartier, but I also wrote and taught a seminal class to local insurance agents about valuation theory.

Until marrying Jeff, I didn’t know I would also enjoy actually selling these fine objects I had become an expert in. And I just love it. But I still love good old valuation theory.

I wrote about this a few years ago and am asked about it frequently, so thought I would update the info a bit.

When asked to appraise an item of value, guests in our stores or offices sometimes are annoyed by follow-up questions. When we ask “What kind of value?” we always explain that the conventional definitions of appraisal often differ from the official meanings of the word. I will share a condensed version of various definitions and uses of the word.

  1. Retail Appraisal: This one is tricky, since many retailers utilize a huge markup in their stores while others have a much smaller markup. Additionally, smaller, less expensive items will often – even in the finest stores in the land – have a markup of 200 to 300 percent, while more-expensive items, such as $100,000 diamonds or gem-quality emeralds, usually have a much smaller percentage markup. Depending on the store, the ring pictured here – a G Color VS1 GIA 1.70 ct. cushion cut in a platinum mounting – may retail appraise for $20,000 to $30,000.
  2. Insurance Appraisal: Also tricky, as many insurers (and many states) have different rules. But for the sake of argument and simplicity, let’s say retail and insurance values tend to be similar.
  3. Wholesale Value: It’s important to note that some jewelers have not paid for their goods. This type of sourcing is called “memo.” Jewelers who stock their stores with memo goods often pay a higher price for the luxury of not paying for it in cash. Jewelers who are not undercapitalized own their goods, and the resulting cost is much less. The same 1.70 ct. ring could be purchased at the wholesale level for $8,000 to $10,000, depending on method of purchase.
  4. Fair Market Value: This is generally defined as willing seller + willing buyer, with neither being in distress or under financial constraints. This is a value you might achieve if selling to professional buyers/dealers. The ring pictured might bring $7,000 to $9,000, depending on the dealer’s needs at the time.
  5. Liquidation Value: This typically means that the seller is under financial or time constraints and must sell quickly. In this case, if the seller is not careful and does not shop around, or if the ring pictured is offered to a jeweler who has no real need for it, it may only bring $5,000 to $6,000. The bottom line is to take a careful approach when getting something appraised. Understand the definitions of the word and know exactly what you want.

So is the “value” $30,000 or $20,000? $8,000 or $5,000? All values are correct. It depends on who the buyer is, who the seller is, what their needs are at the time, and the purpose of the appraisal.

If you seek a diamond, fine sapphire or ruby, or need to ask a question about gemology, give me a call for a private consultation in one of our stores. I (or one of our other GIA graduates) love to talk gemology. No obligation, of course.

It takes highly educated experts like the team of graduate gemologists at Old Northeast Jewelers to understand and identify the true value of fine jewelry. Bring in your family heirlooms for an appraisal and offer; stop by or call 727.898.4377 for an appointment.

JEFF HESS, Owner & Appraiser

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