The Jewelry Appraisal

The Jewelry Appraisal

Diamond Buyer - Gem Buyer - Austin, TXFirst of all, welcome to the newly launched website for B&B Diamonds. For our very first entry, I will deal with the single most commonly asked question and misunderstood issue with estate jewelry:

The appraisal.

When people meet with me their number one question and complaint is the following:
“I had this ring appraised and it is worth $10,000. Why are you offering me $6000????”

That’s a very fair question and I completely understand why anyone selling a piece of jewelry would ask it. The thing is, appraisals are done at four completely different numerical values: Retail replacement value, fair market value, wholesale cost and liquidation value. Those values are defined roughly as follows with an example of buying a car for context.

Retail replacement value – An asking price for a piece of jewelry at which any jeweler would be happy  to sell it at any time. Example – The sticker price on a used car. You would typically ask for a better deal but this is the starting point.

Fair market value  – a typical transaction price where a jeweler and a consumer would settle on selling an item with neither side being particularly motivated to make the transaction.
Example – After researching online this is the transaction price a consumer would typically pay for said car.

Wholesale cost – This would represent a jeweler’s actual cost of the item. Note that wholesaler’s typically give net 30 or 30-60-90 day terms or even longer when wholesaling items to jewelry stores.
Example – This is what brand X dealership must pay Ford for each car.

Liquidation value – This is the cost for basically the materials in the piece or basically the price at which any jeweler would write a check for the item.
Example – You know those guys with signs that say “we’ll buy your car!!!” this is what they would pay you.

Ok so, if you’re still paying attention… About 90% of appraisals are written at Retail replacement value. This is because often gold or diamonds will go up in value and consumers should be protected should they lose their jewelry and get a check from their insurance company. Having said that, when a piece of jewelry is sold to an estate jewelry buyer they are buying it with the intention of reselling it at a profit. If you ask I’ll be happy to give you all of these values for a given piece but understanding the difference between the values is the first step in confidentially selling your jewelry at the best price.

 

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