Diamond appraisals: ultimate guide

Diamond Appraisal Price vs Purchase Price

Many jewelers will give you an appraisal when you buy a piece of diamond jewelry and, almost without fail, it will be higher than the price you paid for it.

Picture this: you buy a diamond ring and it is appraised for exactly the amount your paid for it. You think you got an OK deal, right? But you may be left wondering whether you could have got a better deal elsewhere…

Now imagine that you buy your diamond ring and receive an appraisal showing its value is $2,500 higher than you paid. Wow! You got a great deal and you’re going to tell your friends!

An appraisal that is higher than the true value of an item has two effects:

1. Since insurance companies typically will not pay out the full value of an item, having an inflated value may allow you to receive a higher settlement if your diamond is lost or stolen.
2. The flipside of this is that while this may seem like a good deal, a higher value will result in higher premiums from your insurance company. You’ll be paying more due to this inflated value.

For example, if you tell your insurance company that a ring is worth $5,000, the insurance premium may be $100:

However, if a jeweler has give a falsely high appraisal value of $7,500, the insurance will also be 50% higher – $150 per year:

While this may not sound like a lot, over 20 years, this is an extra $1,000 you’re giving an insurance company for no real reason. If you do need to make a claim, the insurer will assess the value of the items and won’t necessarily pay out at the higher rate if it isn’t accurate.

It’s therefore smart to take a diamond retailer’s appraisal with a grain of salt.

To ensure you receive an accurate picture of the true value of your item. it’s better to find an independent appraiser.

Diamond Appraisal Price vs Resale Price

Typically a diamond appraisal will run much higher than the price you will receive if you sell the item. This is due to several factors, including:

• The appraisal you have may be a ‘replacement value’ appraisal, rather than a ‘fair market appraisal’.
• If your diamonds are encased in jewelry, people are less likely to pay as much for a previously owned item than they are a new one. This is especially true when it comes to engagement or wedding rings as there can be a stigma of purchasing one that is second hand.
• Retailers need to pay overhead costs. When selling to them, they will offer you less than the amount that they can receive when they resell the diamonds.
• Most people are unwilling to pay a higher price than the original retail price unless the running price of gemstones is substantially higher.

Diamond appraisals and conflicts of interest

The difference between the purchase price and the actual value also works the other way.

If you are looking to sell an item of jewelry, you should never take the appraisal value from someone who is interested in buying it.

They have no  incentive to give you an accurate value, and every incentive to tell you it’s worth less than it is so that they can buy it for a lower price.

The lower the price they give you, the more profit they will have when they sell.

By giving you a high offer, they are reducing their own profit:

Pawn shops are especially notorious for this – giving low value appraisals and then bidding way under that because they know that people are likely to be in a rush to sell.

The most accurate appraisal is likely to be from someone who has no commercial interest in the outcome of the appraisal.

Finding a trustworthy appraiser for your diamond jewelry

In your search for an appraiser, you should look for an individual who has high ethical standards, understands the legalities surrounding diamond appraisals, and has experience in their field. To help you sort through appraisal listings, there are a few metrics you can use to ensure that your appraiser will perform their job accurately and professionally.

Qualification Requirements for a Diamond Appraiser

When hiring a diamond appraiser, they should be willing to cite the following qualifications that prove they are trained and knowledgeable in their work:

Gemological knowledge

One of the first things you should ask is to see if they have certification through an organization such as the GIA (Gemological Institute of America). These experts are well trained at appraising gems. They are very familiar with the 4 Cs of diamonds and will be able to provide accurate assessment of the quality of your diamonds.

Understanding of jewelry manufacturing

While this may not seem as important, your appraiser should have a well-rounded understanding of how jewelry is manufactured. This is especially true if your diamond is set in an engagement ring, a necklace, or another piece of jewelry. A fuller understanding of the industry as a whole ensures a more accurate appraisal.

Experience as a diamond appraiser

Don’t be afraid to ask for references or read reviews. Try to find someone who has had experience in appraising diamonds specifically. Someone who has specialized in diamond for a few years might be more qualified than a jewelry appraiser that has worked longer but specalizes in antique jewelry, for example.

Credentials through an association

There are several national associations who train appraisers and certify those who work under high ethical guidelines. Asking for these credentials will help you make an informed decision on choosing an appraiser.

Associations of Diamond Appraisers in the United States

In the United States, there are several well-known jewelry associations that require their members to follow a strict ethical standards. Finding an appraiser who has been certified by one of these organizations will give your peace of mind that your appraisal will be accurately conducted and without the risk of your diamonds being misplaced or stolen.

Do your due diligence to research any organization cited by the appraiser you want to commission. If you are concerned about their qualifications, call the association to ask for clarity and to ensure that the professional is actually certified through them. The following is a list of five well-known associations in the United States:

• Accredited Gemologists Association
• American Society of Appraisers
• International Society of Appraisers
• The Jewelry Judge Network
• National Association of Jewelry Appraisers

An appraiser with credentials will often charge more for their expertise than someone without the same level of expertise. However, choosing a better professional is well worth the extra cost. These highly trained individuals will draft the documentation that you need and should be able to stand behind their work if it is ever called into question.

Additionally, there have occasionally been times where an appraiser will notice something about a diamond that proves it is more valuable than it was previously assessed by a novice.

Appraising Loose Diamonds vs. Diamonds Mounted In Jewelry

Our last thing to know if not related to the quality or the honesty or the appraiser, but concerns the difficult that all appraisers can have when appraising a diamond that is set into jewelry.

Mounted diamonds are harder to appraise because the mounting itself can hide some of their characteristics, making the evaluation less precise.

For example, a yellow gold setting, like the one below, setting can make the stone look yellower than it actually is:

The warm yellow of the gold is visible through the diamond, making it appear more yellow that it should.

This means that the color grade assigned to the diamond would likely be lower than the actual grade of the diamond, which would result in a lower valuation.

When a diamond is mounted in a ring setting, it’s also impossible to accurately measure its carat weight. Instead, the carat weight must be estimated using the diamond’s measurements. Again, this can have a significant effect on the diamond’s valuation.

It’s not common that people are looking to sell a loose diamond, but if possible it’s a good idea to have a diamond appraised in its loose state, rather than when set into jewelry.