“We guarantee it will appraise for double what you pay.” What’s wrong with this picture? Are appraisers supposed to reflect what things sell for in the marketplace or appease the jeweler by making everything sound like a steal of a deal? When avenues for discounted jewelry became prevalent in the marketplace several years back, this half-of-retail scenario held up for the discounters for a while. However if the retail markups in this industry have dropped – which they certainly have, so shouldn’t the apprised values? So why do some appraisers keep appraising sky high even though the industry margins keep getting smaller? Because the “half price” jewelers want them to, that’s why.
The consumer does not appreciate hearing that their insurance company is offering them half of the appraised value in a settlement after paying premiums on the full amount, but guess what? The insurance companies are shopping through brokers and discounters for their replacement, and usually get better prices than consumers do. In establishing the original coverage they have to rely on the appraiser’s information and use that value portion to set premiums. If that value is way over a realistic purchase price it only inflates premiums and sets up a future confrontation with the client. Yes, appraisals need to reflect the overall marketplace and give the consumer options for replacement, but they also need to be realistic and not merely a “feel-good” value the jeweler wants “their” appraiser to reflect.
As appraisers of fine jewelry and gemstones, NGL has been asking that question a lot lately as have many customers and jewelers alike.
By definition, retail means the price paid by theultimate consumer, but with traditional jewelers’ practices out the window in today’s marketplace, retail ain’t what it used to be.
In the “old days” the retail environment was relatively stable. One could apply standard mark-ups to cost and arrive at values that very often stood up to the comparables in their marketplace. Today, comparables researched through market data (which is the preferred and most representative method of appraising) have brought retail figures down to leave some jewelers out of the mainstream.
The appraiser’s first job is to accurately identify and describe the article being appraised. The process of applying standard gemological procedures in a consistent nature gives tha appraiser credibility in this evaluative process. To accurately describe the quality of a given gem and the mounting it is contained in are the basis for the appraisal and certainly the most important component in the insurance replacement process.
When the subject of “value” comes up, however, most jewelers feel the appraisal is only a vehicle to facilitate the sale. As long as the appraised prices reflects a “savings” to the customer, it is considered a sales tool.
To satisfy their impression of what makes a customer happy, many jewelers seek out the appraiser who will report their perception of “suggested retail price” regardless of what the item sells for. This they feel, implies the selling price as being a bona fide discount. All too often the opposite is true, if a comparable item is readily available at the new price and offered elsewhere for a similar amount it can be argued that the advertised price has now established a new retail for that item.
In the end, all the discounting game really acomplishes is either a false customer satisfaction or confusion. By reporting a value reflective of a “regular price” that never really existed, the jeweler and appraiser both are not only doing a disservice but are courting disaster in the eyes of the Federal Trade Commission and the office of the Attorney General.
With guidelines currently being written for appraisers, leading to licensing and regulations, this issue is at the forefront of discussions.
The jewelry appraiser who reports “value” to be that of a price unsubstantiated by actual sales will find themselves under a watchful eye.