Knowledge vs. Numbers
When King Philip of Macedon requested that Aristotle instruct his son Alexander in the ancient wisdoms, Phillip understood that Aristotle was in possession of knowledge that was important to the scientific and spiritual growth of the future King. The relationship that blossomed between the two was very special to Alexander and to Aristotle as well. Ultimately, Aristotle presented Alexander with an annotated version of the Iliad of Homer to his beloved student, a work so prized by Alexander that he carried the work with him in a gemstone encrusted box throughout his campaigns. Alexander knew that it was this transcendent knowledge, personally dictated and taught to him by Aristotle, that elevated him over all others.
It was later in Alexander’s Asiatic tour that he found out that Aristotle published his most prized work for the masses. Immediately firing off a communication to his former teacher, Alexander described that he felt as though he had lost a valuable advantage over others, in that he was denied the exclusive insight of this profound knowledge now that it was available to all. Aristotle responded that no one would understand the true import of the work without the personal guidance that he provided his former student.
Personal guidance, explanation, and interpretation of relevant facts are precisely what the appraiser offers for those who seek our services. The appraiser has the responsibility to his client to disclose all pertinent information that affects the value of the item being appraised. The appraiser must be properly trained, equipped, and affiliated with a professional appraisal organization. In today’s market, there are many stores advertising appraisal services that also are buying and/or selling jewelry. Ethically speaking, this is a conflict of interest as the appraiser could have a potential future sale/purchase interest in the item he is appraising. An appraiser should be independent without the appearance of potential conflicts, yet familiar with the current market conditions.
Codes of ethics in jewelry appraising are generally derived from other appraisal disciplines, such as business valuation, real estate, etc. All appraisers adhere to the tenets set forth in the Uniform Standards of Appraisal Practice (USPAP for short). Such tenets are adapted for each discipline and are tailored to provide uniformity in appraisal preparation. For example, your jewelry appraisal should specifically state its purpose and type; include terms and conditions, have photography and the appraiser qualifications. Appraisals can be in narrative form or simple notations, where boxes are checked that define the appraised items.
The most common type of appraisal performed today is replacement value and is required by most insurance companies for personal property riders. The values stipulated on this type of appraisal are meant to reflect the highest value one would encounter for a similar item given any special consideration, such as type of construction, brand or copyright. Other types of appraisals include Fair Market Value, Estate Value, Damage Reports and Cash Value to name a few.
Firms that sell jewelry to the public typically don’t want to be saddled with the responsibility of appraising the item they have sold simply because they want to remove themselves from the sale in order to instill confidence and trust in the customer.
Additionally, their assignment of the store’s selling price as a stated replacement value price may not accurately represent the prevailing “retail” price for that item. Why? Because the ultimate selling price is a function of the jeweler’s cost of doing business. The retailer’s overhead, credit rating and supplier base can affect consumer pricing enormously. Given this scenario the retailer will outsource the appraisal to a competent appraisal lab in the area for a more generalized opinion of value.
Another prospective function of the appraisal is simply one of verification. With many people buying their gems and jewelry over the Internet, it is a prudent practice to have those items inspected to verify quality claims made by the seller, as well as corroborating the quality set forth in accompanying certification, such as those provided by GIA, AGS and EGL. Not all these quality reports are equal; some are even problematic. Anecdotally, I have experienced significant differences in grading among these reports which could potentially result in major pricing differences.
Despite these grading disparities, the prices my customers have paid for these items were, ironically, commensurate with the “true” grade. In other words, if a customer bought a 1.00ct accompanied by quality report “C” which states the grade to be SI1 and the color G and the true grade was actually SI2, J, the price the customer paid was actually consistent with the SI2 J. So, if you are thinking you’re getting a screaming deal for a 1.00ct SI1 G diamond, think again. Some jewelers will typically use these “outside” laboratory grading reports in an attempt to show impartiality. The reality is that these reports can, in some cases, be deceptive. The case can be made however, that the deception is mitigated because the client did not pay the market price for the originally stated 1.00ct SI1 G. stone.
In the final analysis, it is always best to seek out sellers who are forthcoming with information vital to the sale and are willing to submit their product for independent analysis. Sellers of jewelry, and all products for that matter, pursue their own self interest. That self interest can present itself as unintended bias. For the jewelry purchasing public, Ronald Reagan’s axiom of “trust, yet verify” is the best advice.