“Appraise the Appraiser” - Help for Consumers
Dedicated to the memory of Bill “Rockdoc” Lieberum, 1948-2007.
The average consumer is often shocked to learn that only a small percentage of “independent appraisers” are unbiased and/or current on continuing education, grading systems, equipment and standards. Since there are no requirements to be a jewelry appraiser, a vast number of so-called appraisers lack the knowledge, tools or independence to satisfy a well-educated consumer.
A commitment to “smart shopping” should not end after researching your seller. If an appraisal is sought, you should appraise the appraiser with the same tenacity.
As a retailer we do not endorse any specific appraiser. Nevertheless, we took time last year to interview several accredited and respected professionals whom we consider “role models;” well-known in several sectors of the trade. We hope our questions and their diverse answers about appraisals will be helpful as a guideline for those who do their “smart shopping” globally.
- Many thanks to John Pollard for his role in producing this article
David Atlas Neil Beaty Patti Geolat
D. Atlas & Co. Inc American Gem Registry, Inc Geolat & Associates
Bill "RocDoc" Lieberum Arthur Anton & Julie Nash Richard Sherwood
1948-2007 Anton-Nash LLC Sarasota Gemological Lab
“Appraise the Appraiser” - Help for Consumers
1 Basic Questions
2 Diamond-Specific Questions
3 Selecting an Appraiser
4 Tough Stuff: Valuation, Regulation & Accreditation
5 Participating Appraiser Information
I. Basic Questions
What is the #1 thing clients are seeking in an appraisal?
DA: A legitimate helping hand and someone unbiased to trust.
NB: For new purchase appraisals they want to know if they got what they thought they got. People are concerned that dealers are misrepresenting things, either deliberately or simply because they don’t know the information. Another priority is securing appropriate documentation, which will cause their insurance policy to be as valuable as possible. A poorly written appraisal can both raise the price of a policy and can increase the difficulty of an accurate replacement in the case of a loss.
PG: Is it the stone that was advertised and did they pay the right price?
BL: Peace of mind. Comfort. Making sure that everything is hunky-dory.
AN: Insurance and assurance. They want to verify that they got what they were told by the seller. They also need insurance on the piece. Some are just plain curious.
RS: Reassurance. It’s like going to the doctor and getting a physical to be sure you’re healthy. They want to be sure the diamond is what it says it is. They want to be sure the vendor has not left anything unsaid.
What do clients consider the most important part of the appraisal?
DA: The accuracy of the information supplied by the seller and the dollar value. Is the diamond beautiful?
NB: The education. When people walk out the door they almost always say they learned more than they thought they would. This is also my favorite part. Many clients start out thinking that an appraisal is nothing more than the value conclusion and walk out really understanding and appreciating their purchase.
PG: All of it. Maybe that’s because I start off by asking them what we’re trying to accomplish.
BL: All of it.
AN: The focus is on the value we assign and how it compares to what they are paying for the item. They also love to look in the microscope. We try very hard to convince them that the description of the item is very, very important due to the trend of item replacement versus payment by insurers.
RS: The quality assessment (4 Cs) followed by the price. They want to know that it is what they say it is - and if not, how does it compare. They want to be sure they’re being told the truth. The price is secondary to actually liking the service and establishing a trusting relationship with the seller.
What are the most frequently asked questions you get…
Before the appraisal?
DA: How much do we charge? How long do we take?
NB: How much does an appraisal cost? Why isn’t it free? How long does it take? Can I watch? Where are you? What is my ring worth?
PG: How soon can you see me? How much does it cost?
BL: How much does it cost? What do I get? What do you think of this diamond?
AN: How much does it cost? What’s the process? Do you have to un-mount the stone? Can I watch?
RS: Can I watch? If it’s mounted do you have to take it out? How much does it cost?
During the appraisal?
DA: Is it fully brilliant and pretty? Is it graded properly? What is it worth?
NB: Clients often ask me my opinion of something the seller told them or of conflicting things they read on the Internet. They want to know the various grades regarding the stone. They want to know why my value conclusion or grading is different from what the expected. They want to know how long I had to go to school to get all those certificates on the wall.
PG: Is it the right stone? Did I pay too much for it?
BL: What do you personally think of the stone?
AN: What is your personal opinion of the stone and the seller? Sometimes a client will bring in 3 or 4 diamonds and say “pick one for me.”
RS: What’s your opinion of the grading? How does it look to you? What’s the wholesale value? That is not my place to answer: Retail, discount retail and internet are the three valuations I provide.
After the appraisal?
DA: How can we protect ourselves from anyone changing the diamond? Who can we trust to set it?
NB: It depends on the nature of the appraisal. I try to answer all questions during the course of the appraisal whenever possible. If there is something that requires follow-up we talk about how to approach the next step.
PG: I try to discuss A-Z including insurance and care & maintenance.
BL: There are questions about insurance and I try to help with that.
AN: We cover so much that by the end we’re done. We have bullet points and if there is something outside of those we’ll cover it. We’ll show them how to examine the diamond and identify it under a microscope for identification and condition at drop-off. Rarely we will get a question via telephone after the fact-and usually it’s, “why did the value decrease?” Answer: “It’s all market driven and everything fluctuates-Look at current metal prices, look at the early 1980’s diamond prices etc.
RS: Who’s a good insurer? If I disagree with a grade I’ll ask if the client likes the diamond (example J that should have been graded as a K). If they do I’ll encourage the client to call the seller and report what I found and see if they’ll work with you on it.
Is there any subject that is difficult to communicate to the average person?
DA: Resale value, distress value, liquidation value. What makes a diamond “used.” Why a diamond is not worth “retail” to me. Mostly very naïve questions from otherwise pretty smart individuals.
NB: It’s hard to communicate that the same thing is worth a different amount to different people at different times, and that those differences matter.
PG: It used to be “Are you going to appraise this for retail replacement or for insurance?” The answer to that question, and why that question exists, could be a whole new article.
BL: Valuation.
AN: Value perception, especially when the word investment is used. Markup is also hard to communicate. Everyone wants to make tons of money but they don’t seem to want anyone else to make a profit or understand that the world economy and everyone’ job depends on this principal. The other is the oversimplification of the role of DeBeers in the market, which is a 20 page answer on our part.
RS: Many people want to sell jewelry and wonder why it doesn’t resell well. If I appraise something for $20K they want to know why they can’t turn around and get $20K out of it. Another thing is when there are significant differences between subjective grades.
How do you address that subject when it comes up?
DA: We discuss analogies such as fine dining, automobiles, houses, clothes luxury items. We educate them in the way a free market functions. Some end up understanding yet many just look like a deer in the headlights. We want everyone to understand their purchase. Most want to know and some grasp the issue. Many just buy and never figure it out.
NB: I provide examples. For instance; the expected price you’d pay for a ring at a boutique in Aspen is different than what you’d sell it for at a pawn shop in Denver.
PG: I turn the question back on them; I seek to understand what it they are asking.
BL: On a case by case basis.
AN: We say that if it’s sparkly and you like it; buy it. But if you’re not in the jewelry business don’t expect to make money on jewelry or diamonds. It takes connections, it takes marketing and most people don’t have either at their fingertips. As for markup, people want things at wholesale. We have a standard speech about wholesale being buying in bulk and that if you can’t resell it at a profit - it’s not a wholesale value. They may not believe us at the time, but a few brave souls have later called us to say that we were right - they didn’t make any money. We also often explain the overhead jewelers have: insurance, rent, dental and medical plans, staff education, interest, alarms, electricity for lights etc. It’s not cheap to produce a comfortable and knowledgeable jewelry store.
RS: I have a discussion about wholesale, resale and liquidation values. As for significant grading differences, I had a person come in with a 1.09 G VS2 (graded by an appraiser who sold them the diamond). It was actually 0.87 M SI2. I had to very delicately and gingerly break it to them one step at a time. That was a great time to use the SAS 2000 in order to show them objectively.
Are your clients allowed to observe or participate in the appraisal process?
DA: Yes.
NB: Yes. I think participation is important and I encourage it whenever possible. Each session goes differently depending on consumer’s requirements and what they want to learn. If the client is present this exchange is much more interactive and works better for both of us.
PG: Yes.
BL: I prefer it.
AN: Yes, absolutely. It’s encouraged. Most of our appraisals are done with the client there. This builds trust in us, our knowledge, our process and most importantly-our ethics come through loud and clear.
RS: Yes. I prefer it.
What are the most important points you stress with clients observing your process?
DA: Openness and subjectivity in grading. Evaluation is not a dark science, but entertaining and enlightening. We give them a good show and make sure they understand their diamond.
NB: I want to understand what the consumer wants to learn from their appraisal session so that I’m providing the right information for their purpose. I wish to provide the truth in a way that’s useful to him or her. Hopefully I accomplish this.
PG: One of the most overlooked pieces of information in general is care & maintenance. Very few people are told about how to care for a piece of finished jewelry. Once we have finished assessing the piece and discussed insurance I ask if they have been told how to care for their jewelry.
BL: All aspects of anything they want to know. I like questions. I spend considerable time commenting and answering questions even if they are not in-person. I find it’s easy to chat about it because the answer to one question may lead to another question.
AN: We focus on the condition and workmanship of the piece, particularly the diamond plot for identification and condition of the diamond. We want to make sure that the stones are secure and if they are not, we want the client to see and understand why and what needs to be done to correct the situation. We want to demystify everything. We tell them; don’t be afraid to ask questions. The cut junkies need more numbers attention, but it’s still the same. An important question we ask the client is “are you happy with the piece?” Ultimately, the piece has to hit the client on an emotional or style level, if not all the D, IF and fabulous workmanship in the world won’t mean anything.
RS: I stress all of the Cs and how they interrelate in the diamond. The balancing act of color, clarity, cut and their influence as far as price goes. As long as any single factor is not askew it’s good. In the old days it was 50% color, 30% clarity and 20% cut but that’s shifted. Cut plays a much larger part now.
If the client is not present, what is different about your process?
DA: We cover all the bases. We grade the diamond and create a separate appraisal. We transmit this all via .PDF and then consult with them on the phone or via email. We understand their needs, or we believe we do.
NB: I ask the client via phone or email the same set of questions about what their requirements are. Otherwise it’s about the same although it’s a little less interactive. The long distance process tends to take longer because of the shipping involved. Most walk-in clients take about an hour, long-distance can take a week or so depending on my schedule.
PG: Nothing. Whatever works for them is how we’ll communicate. Some people are here. Others drop off and pick up. Others get the information via phone, mail etc.
BL: They don’t get to see it with their own eyes. I prefer to see the person and “teach” their eyes. When they’re not there that’s not possible so it may take more time to communicate what they would normally see. That’s why I don’t like charging by the hour.
AN: We prefer direct contact, but if there are any questions afterward we will discuss them via notes or phone calls. If we don’t have direct contact, then we did the appraisal through a jeweler-and most of our jewelers are very good about answering questions or referring the clients directly to us. The appraisal itself is pretty comprehensive so a person has to be very very interested to want to go beyond it.
RS: I prefer to communicate via email. With the 5 page report pretty much all the questions are answered. With that report very little follow-up is required.
Do you offer one type of appraisal and fee, or different levels?
DA: Different fees for differing services. Internet clients need a particular level for unseen diamonds and we offer them a one price fee approach which covers everything. Most services in house are based on carat weight or time.
NB: There are many different levels, which depend on the needs of the client. The simplest is a new purchase documentation or a basic pre-loss insurance appraisal. That gets you through a standard insurance replacement appraisal; full report, photographs, insurance replacement valuation, etc., all done while you wait and while you watch. More elaborate services like estates, expert witnessing, appraising the value of charitable contributions, etc., are priced differently. Mobile appraisal services are also available at client sites worldwide for an extra fee.
PG: It’s a wide range of services. For example, a lady this morning had an appraisal with me that was 13 years old. She had the stone reset and just wanted to know if it was the same diamond. The verification is minimal and it increases from there. I can do just that or do any number of add-ons which the client can request; or I will make a suggestion if I note something that should be called to their attention. My ARM designation is a big part of what I do; recommending appropriate coverage. This includes walking someone’s house to perform such a recommendation on a large scale. I find internet clients are obsessive about having the most information.
BL: Fee structure is step-by-step. For instance, if I look at something and it is obviously not what they were hoping in an immediate assessment it will be a no-charge or extremely small charge. Once we find something worth the time we go forward. We have fees by carat or by hour. Some appraisals (not gemological evaluations) require the appraiser to have certain credentials, belong to organizations, etc. and those structures are different.
AN: We charge a minimum fee per item. We can sort what they have and do IDs and determine if items are or are not worthy of appraisal at an hourly fee (this is only if they have literally tons of stuff). We don’t charge to peruse a few items if we are already on scene.
RS: I have a “Comprehensive Diamond Analysis” or “Advanced Diamond Analysis.” Both up to 2 carats for a flat fee. More per carat after that.
II. Diamond-Specific Questions
What is your position on examining pre-existing grading reports for diamonds you are appraising?
DA: No problem. We can do an objective job when we see them or do our own work first. Whatever suits the client is okay. We prefer to take less time and see existing reports, but it is not our call.
NB: If the client wants me to grade blind that’s fine; it’s good fun and it helps build confidence but it doesn’t really have a big affect on the appraisal. For most new purchases I do this as a matter of course. In customary insurance type work the lab documents are important to the replacement value of the property and for new purchases there are always questions about it so I always ask the customer to bring prior reports with them to the appraisal even if we don’t look at them until near the end.
PG: If the client wants me to grade blind that’s fine, it’s not going to change the appraisal.
BL: Whatever the client wants to do; it’s not going to change the appraisal.
AN: It’s up to the client. It’s not going to change our assessment. We will adjust measurements and weight to match the report if it’s mounted and we are certain that the stone we are evaluating is the same as the stone in the report.
RS: I’ll do whatever the client wants me to do; it’s not going to change the appraisal.
What do you discuss with your clients regarding the grading done at major laboratories?
DA: I respect major labs. I don’t say anything when I have nothing nice to say unless I must. I prefer GIA and AGS paperwork to other labs for distant clients.
NB: I don’t discuss whether I think a lab is good, bad or indifferent. I do my own grading. After I grade it I look at the lab report and if there are differences of significance I will point them out and discuss each and every one.
PG: Certain labs have greater reputations than others. While I don’t say I have the last word I explain that they’re paying me for my opinion. If it’s a report from a lab that is flagrantly wrong I’ll be forthright in my opinion and recommend they could go to GIA or AGS for a second opinion. If it’s from a strong lab and I think it’s a borderline stone but a fair call I will represent it that way. I like to think of myself as being more consultative than arbitrary. I want to be an advocate for the good transaction; to help the transaction happen and to leave the customer well-informed. If there is a disagreement I will try to help both parties. I am comfortable with AGS and GIA as arbitrators.
BL: GIA is strong on clarity/color. I don’t agree with GIA, IGI or EGL on cut.
AN: We tell them that AGS and GIA set the standard. If it’s an EGL report I may give pre-instruction about the likelihood of our grading differing from the report. With other labs, I definitely inform the client of this possibility.
RS: The labs set the standard. Someone has to be the “last word.” I respect the AGS and GIA.
Do you have a practical tolerance in areas such as color, clarity and finish? For example; is one grade between appraisers or appraiser and lab ok?
DA: The tolerances when grading un-mounted diamonds are normally one grade in color or clarity. I suppose a grade of polish or symmetry would also not be unreasonable. So long as humans are doing the grading there will always be some cross-over gray zones near the edge of one grade into the next. Some labs observe slightly different standards on top of this, too.
NB: For most applications one grade is tolerable. When there are differences I will discuss why it is different and what the repercussions are. The client can determine if it’s relevant to their situation.
PG: Correct. One grade. That’s the industry standard.
BL: I’m looking for the diamond to be within a reasonable tolerance. If I feel very strongly about a grade that translates to a lot of money I may recommend it go back to the lab for correction, but that would be a situation where it seems to clearly be elsewhere. Case by case.
AN: When it’s un-mounted within one grade is acceptable for color or clarity. For mounted the color may be within two and with clarity the grade can’t be better than what I’m seeing mounted, but it could possibly be two grades worse. We assign value on the grade we see.
RS: That’s right. In my mind I divide each grade into 3 tiers and tell clients my opinion. So it usually makes sense even if it’s a letter grade away.
What is your approach to establishing a clarity grade and how is it in-step with, or different from, the traditional GIA/AGS approach?
DA: We use GIA methodology as we have learned from seeing GIA reports. We do not use SI3 on any report. We will grade clarity enhanced diamonds although we have been asked to grade very few.
NB: In-step with GIA.
PG: In-step with GIA.
BL: In-step with GIA.
AN: In-step with GIA.
RS: In-step with GIA.
Do you assess whether a diamond is “eye-clean,” and if so what are your definitions?
DA: I can assess such a stone, but never recommend that terminology. It is even more subjective than standard grades for clarity. I have written extensively on how we define the term. It is highly useful between dealers, but so badly misused by the general trade that it is not a safe term much of the time.
NB: I do not. If requested I explain that it depends on your eyes, the lighting, the distance and even what you had for breakfast. There is a reason that this is not a standard judgment in diamond grading. If the client isn’t present for the inspection or they otherwise ask I’ll discuss whether it’s eye-clean to me and in my lab. As part of the ICGA requirements, I have regular eye exams just to be sure.
PG: It’s not typically asked.
BL: If they ask I’ll make the determination but I will describe it in every lighting condition and distance. I’ll also ask if they’re nearsighted.
AN: No, as this covers most of the clarity scale – in theory.
RS: Eye-clean at a distance of 15 inches under normal office lighting.
How do you approach characteristics which may influence durability and how do you make the determination of ‘safe’ or ‘unsafe’?
DA: We examine all details and report all details. We use “durability” as a basis for reporting problems. A diamond may never break even if it is not perfectly durable. I don’t think we have ever used “safe” or “unsafe” terminology. If a diamond has inherent vice, we report it. We plot any problematic characteristics. However, we do not attempt to hurt retail sales carelessly. So long as a consumer is made aware of issues, we are content.
NB: The examination yields the determination. Normally I analyze the stone through the microscope for girdle thickness variations, feathers, cleavages, design problems with the mounting, and then through cross-polarizers for stress. I photograph the face up profile of the stone as well as the girdle inscriptions, the most distinctive and recognizable inclusion and any damage present.
PG: I believe this is part of the appraiser’s responsibility and it’s a delicate discussion to have. It is something that can aggravate a seller, because some of them don’t think it’s the appraiser’s role. A feather heading straight for a corner, an open inclusion, etc. are things to look for. An included crystal breaking the surface which you know is going to come out and become a cavity is another to look for. Everyone will get told the same thing, but I may deliver it differently if someone is preparing to buy the stone and has not committed, as opposed to someone who is inheriting or already owns it.
BL: Step by step. Strain is an issue although some don’t assess it. I learned this from George Kaplan.
AN: With a background as jewelry setters we consider the pressure that will be applied in order to set the stone during our evaluation. If the stone appears extremely “unsafe” to wear or mount, we put a notation to this effect in our comments. We consider the setting choice as well and advise the client to have a conversation with the setter if appropriate.
RS: I have a ‘threat level’ scale: None, minor, moderate, significant, severe. So if I spot a surface-breaking feather I point it out. Talk about how many surfaces it breaks. Look at it in the polaris-scope. Make a determination. If there is one surface break and small strain it could be minor. With three breaks and lots of strain it is significant. In all cases I will assess it via pricing. It may be possible to compensate with setting and insurance. The recommendations will be appropriate to the threat level.
Are there any unique angles to clarity assessment you would like to share?
DA: We use standard methods including occasional immersion techniques.
NB: I try to provide clients with a photograph of the most recognizable inclusion for the purpose of identifying the stone, and teach them to look for it.
PG: I don’t think so. My approach is standard.
BL: About strain, or distorted crystal growth: If you have red strain in the center of the stone it can actually cause more dispersion which can improve it. But if it runs parallel with the grain it can be a problem. The most dangerous colors of strain are green and purple on the edge of the stone, like the girdle.
AN: We wet grade clarity. They do this at the GIA lab too; use soapy water and a soft paint brush. This helps when showing a client inclusions under magnification too. Dirt and dust float in the water and the client sees this and doesn’t mistake dust for inclusions.
RS: The wedge technique, along with brush and soapy water that allows you to see into the diamond better, especially with VVS clarities.
What is your approach to establishing a color grade and how is it in-step with, or different from, the traditional GIA/AGS approach?