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UNDERSTANDING APPRAISALS
An appraisal is a written record of the
design, quality, authenticity and value of an item. Your Insurance company may
have requested one for an art object or piece of jewelry you have. The
descriptions of design and quality of the item are often helpful when selling,
but the evaluation usually is not.
WHAT APPRAISED VALUES REPRESENT
An appraisal for insurance estimates the
retail replacement price of the item. This is the cost of making an exact
duplicate of the item described, including the profit for both the wholesaler
and retailer. An appraised value is not what you would receive if you sold the
items. Very often the appraised value is much higher than the actual cash
value. Appraisals generally do not account for age, condition or marketability
on an item. This is especially true for jewelry items.
HOW JEWELRY IS APPRAISED
The jewelry industry makes it a policy to
appraise items at their duplication price. This protects the customer if the
item is ever lost or stolen. This does not take into account that jewelry
styles often change, and that items become worn from use. Appraisals seldom
take into account that jewelry can depreciate and often does. Jewelry is
usually made of gold, silver, or platinum, and set with precious stones. These
components have value, but often the piece of jewelry they are in has limited
appeal, is worn, or has gone out of style. You would not expect a 15-year-old
Cadillac to be appraised for the price of a new one, and you know that a
20-year-old suit wouldn't be appraised for the price of a new tailor-made one.
Most people do not question a jeweler when he appraises jewelry. Some people
we know were surprised by the high values placed on their jewelry. They knew
they had paid considerably less and thought the values were exaggerated.
ESTATE APPRAISALS
Estate appraisals performed for probate are
often much closer to the actual cash value. The usefulness depends on the
market experience of the appraiser and the method used in pricing. Some of
these appraisals indicate realistic selling prices. Many appraisers lacking
market experience use various formulas to determine the "fair market
value." These arbitrary calculations quite often arrive at prices that
are overvalued.
HIGH APPRAISALS FROM THE EARLY 1980'S
In 1980, gold, silver, diamonds, and jewelry
were at record highs. If you have an appraisal from that time, the values are
likely to be dramatically inflated when compared with today's prices.
ANTIQUE JEWELRY
Some items are classified as antiques or
fall into a category of "period jewelry." These items could be worth
more than when you originally purchased them.
OFFERS ARE MORE HELPFUL
If you are considering selling something
what you need is an offer, not an appraisal. If someone tells you the price
you should receive for something they are not making an offer. An offer is the
actual price someone will pay you today for your item.
A dealer who takes a consignment at
estimated selling prices is not making an offer. Your items may not sell for
some time and they may ultimately bring considerably less than the estimate.
In fact they may not sell at all.
UNDERSTANDING OF PRICE IS CRITICAL
It is the perception of price that
determines whether we buy an item from a client. The price we pay is
determined objectively by several factors including quality, rarity, size, and
the merchantability of an item. If an appraisal has placed an unrealistic
perception of value on an item, the client almost never sells. No one can meet
their expectations. However, we buy nearly every item offered to us when the
client understands the correct value of what they have.
A FEW WORDS ABOUT CONSIGNMENTS
We rarely take consignments. Selling jewelry,
rare coins, art, and collectibles by consignment is rarely successful. Some of
the reasons are as follows.
- The dealer has no incentive to sell your
items when he has similar items in his own inventory that he has already
paid for.
- A jeweler or dealer will take items on
consignment for which he does not have a clientele.
- Many jewelers and dealers are in financial
trouble. It is possible that the items are sold and the consignor is not
paid.
- It can be difficult to determine if the
item you consigned ids the same one that is returned to you.
- The price that the item is consigned at is
not what it may ultimately sell for. It may not even sell at all.
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