What a Jewelry Appraisal Actually Tells You

An appraisal is not a price tag. It is a document written for a stated purpose, and the number on it is a value for that purpose — which is why two honest appraisals of the same ring can carry very different figures without either being wrong.

Almost every difficult conversation we have across the counter starts here. Someone puts down a piece of paper that says one number, hears another number, and reasonably concludes that somebody is not being straight with them. Usually nobody is being anything but straight. The two numbers are answers to two different questions.

We're Chapel Hills Jewelry — family-owned on Freeport Road in the Aspinwall area of Pittsburgh since 1989, with our own bench in the building, and we do appraisals in house. Here is the explanation we end up giving in person several times a month.

What an appraisal is

An appraisal is a written description of a specific item, prepared by someone who has examined it, together with a value that is tied to a stated purpose and a stated date. All four of those parts matter, and the description is arguably the most important of them.

A properly written appraisal generally sets out:

• The item itself — metal and fineness, weights, measurements, construction, condition, and any maker's or designer's marks.
• The stones — how many, shape, measured or estimated weight, and the characteristics that could be established while the stones are mounted.
• A photograph.
• The purpose the appraisal was written for.
• The value basis being used, and the resulting figure.
• The date the value applies to, and a signature.

If a document you are holding lacks the purpose, the date or a real description, then whatever number it carries is very hard to use — and an insurer will usually say the same.

The three numbers people mix up

This is the whole of it.

Retail replacement value

What it would cost to walk into a store today and replace the item with one of comparable quality. This is what the great majority of jewelry appraisals are written to, because the great majority are written for insurance, and insurance is about putting you back where you were. It is a retail figure, for a new equivalent, at today's costs. By design it is the highest number the piece will ever carry.

Fair market value

What the item would change hands for between a willing buyer and a willing seller, neither under pressure, both reasonably informed — in the market where that kind of item actually trades. This is the basis used for estate purposes, for dividing property, and generally wherever a figure has to reflect the real second-hand market rather than a shop window. It is ordinarily well below replacement value.

What somebody will pay you today

Not a formal appraisal basis at all, but it is the number most people actually want. It is a live offer from a specific buyer for a specific item at a specific moment, and it reflects that buyer's market, their costs, their risk, and what they can realistically do with the piece. It sits below fair market value more often than not.

So when an insurance appraisal says one thing and an offer says another, nothing has gone wrong. You are comparing the cost of buying a new equivalent at retail with the value of a used item in a second-hand market. Those were never going to be the same number, in jewelry or in anything else.

Why the gap is as wide as it is

Three plain reasons, none of them a trick:

• Retail includes everything that puts a piece in a case. Design, manufacture, setting, finishing, distribution, the store. Reselling a used piece recovers none of that.
• A used piece sells into a different market to a smaller set of buyers, and it takes time to find them.
• Style and condition are real factors. A well-made piece in an out-of-fashion mounting is often worth more for its materials and stones than as the piece it currently is — which is a genuinely difficult thing to be told about something you love.

Worth saying plainly: this is not a jewelry problem. It is how every second-hand market works. Jewelry only feels different because the gap is large and because the piece usually matters to somebody.

An appraisal is not a grading report

These get used interchangeably, and they are different documents doing different jobs.

• A grading report — from an independent laboratory such as GIA — is an opinion about a stone: its characteristics, measured under controlled conditions, usually with the stone unmounted. It carries no value at all. A report is not a valuation and a laboratory is not appraising anything.
• An appraisal is about the whole item as it sits, and it does attach a value, to a stated purpose.

The word "certified" belongs to the first of those and only when there genuinely is a laboratory report for the stone, naming the laboratory. It is worth being careful with, because it gets used loosely, and a piece described as certified with nothing to show is telling you nothing.

One practical note: a stone already set in a mounting can only be assessed so far. Some characteristics cannot be established properly with the stone in place, which is why a good appraisal of a mounted piece will say what was estimated rather than measured. That is candour, not weakness.

When you actually need one

You probably do if you are scheduling a piece on an insurance policy, if you have inherited jewelry and an estate or a division of property requires figures, or if you have suffered a loss and have to substantiate what was lost. The purpose determines the basis, so tell whoever is writing it what it is for — that is the single most useful thing you can do.

You probably don't just to satisfy curiosity about what a piece would fetch. A formal document written to a value basis is not the fastest route to that answer, and it is not what an offer will be based on anyway. Bring the piece in and ask.

For the insurance side of it — riders versus standalone policies, deductibles, what to ask before you buy cover — we've written that up separately: how jewelry insurance works. We're jewelers, not insurance agents or attorneys, so treat the specifics as a starting point and confirm them with your provider, and take estate and tax questions to your own attorney or accountant.

Why the appraisal in the envelope is probably stale

Most inherited jewelry arrives with paperwork, and most of that paperwork is decades old. It is still genuinely useful — often it is the only record of what a piece is, who made it and when it entered the family — but as a value it has usually stopped meaning much:

• Metal markets move, and a replacement figure written years ago was written against a different gold price.
• Retail costs and the piece's own market both shift.
• Grading practice and terminology have changed over the decades, so an old description does not always mean today what it appears to say.
• Condition changes. Wear, repairs and re-tipping since the appraisal was written are not reflected in it.

The general habit worth keeping is to have significant pieces looked at periodically rather than treating one document as permanent, and to tell your insurer if a piece is materially altered — a new centre stone, a remount, a substantial repair.

Lab-grown and natural are appraised as different items

They are different products with different markets, and any honest document treats them separately and says which it is describing. If you own a piece and are not certain which you have, that is a reasonable thing to ask about rather than assume — and it is a question to settle before, not after, a value is put on anything.

What to bring, and what happens

Bring the piece, any paperwork you already have — old appraisals, laboratory reports, receipts, insurance schedules — and anything you know about where it came from. Provenance genuinely matters, and a family recollection about who bought it and roughly when is often more useful than people expect.

Then tell us what it is for. Insuring it, dividing an estate, deciding whether to wear it, working out whether to keep it or sell it — those lead to different documents, or in some cases to no document at all and a straightforward conversation instead. That is a better outcome than paperwork you don't need.

While a piece is in front of us we will also tell you what we can see about its condition — worn prongs, a thin shank, a loose stone. That is a bench observation rather than part of any valuation, and it is often the more urgent of the two. If something needs attention, repairs, sizing, restoration and finishing are done here in house.

If you're weighing up selling

Read the appraisal for its description first and its number second. The description tells you what you have. The number tells you what someone once concluded, for a stated purpose, on a stated date — and if that purpose was insurance, it was never intended to predict an offer.

Then get the piece in front of people and ask questions. Ask what basis a figure is being given on. Ask what is being valued — the piece as a piece, or its materials and stones. Ask what happens to it next. Any straight answer to those tells you more than any number on its own. Our estate and vintage jewelry guide covers how we approach buying and selling, and our estate collection shows the sort of thing that finds a second life.

Come in with it

If you have an appraisal you can't make sense of, bring it and bring the piece — the two are much easier to discuss together than either alone. We're at 503 Freeport Road, Pittsburgh, PA 15215, and you can call 412-782-1757. If it's a loose stone rather than a finished piece, our loose diamond page is the place to start.