What is a Qualified Appraisal?

(Part Three of a Three Part Series)

                                                                              

An Appraisal is an UNBIASED Opinion of Value

Your appraisal should be an unbiased opinion of value for a particular market on a particular date prepared by a qualified independent professional.  An appraiser is a skilled professional with expertise in both the subject matter being appraised as well as thorough training in valuation science, appraisal report writing, USPAP compliance and experience with the market place for the item in question.  Your appraiser should be an expert and have the credentials to prove it.

If the appraiser buys, sells, brokers, works for (or with) a business that deals in jewelry, coins, or watches their appraisal valuations can be considered tainted.  A "free appraisal" from the store where you purchased your item is nothing more than "documentation of purchase" and commonly have inflated values.  This is nothing more than a marketing tool. 

An “Estimate to Replace” or an “Insurance Document” is not the same as an appraisal.  Although it may be accepted by the insurance agent; in the case of a claim, it may be rejected by the insurance company for failing to meet the minimum standards of an appraisal.

Your appraisal should be in document format, describing all qualitative and quantitative attributes necessary to arrive at the value conclusion.  Single page appraisals frequently lack critical information needed by your insurance company should you make a claim.  If you submit an appraisal to the insurance company in which either the grades or values are knowingly inflated or intentionally misleading; you may be guilty of fraud or conspiracy to commit fraud and may be prosecuted or have your claim denied.  Remember your policy is a legal document!

Your Appraisal Should be USPAP Compliant 

Your appraisal should be USPAP compliant.  USPAP (Uniform Standards of Professional Appraisal Practice) is a set of standards that were created in response to the Savings & Loan crash of the early 1980’s designed to prevent potential appraisal abuse in future real estate transactions. The standards were expanded to include personal property appraisal practices.  In any litigation situation, a USPAP compliant appraisal assures the user their appraisal has been written to the current state of appraisal report writing standards. It is one measure of the level of professionalism to which the appraiser subscribes.

Your Appraisal Should Be Professionally Prepared

Insurance companies often receive valuations on one-page preprinted paper entitled “Appraisal” containing descriptions such as “Diamond solitaire ring in 14kt gold” and then a value.  With the aid of computer software programs, today many appraisals are being produced “while-you-wait” in 15 minutes or less, some including a single picture of your appraised item, and valuations based on software programming, not market research.  Proper attention to detail, due diligence, market research and analysis are cornerstones to producing credible appraisal reports, not canned software programs or values based on the appraiser’s longevity in the business.

Your appraisal should:

·         Be typed.

·         Describe the type of report, the intended use and intended users of the report.

·         Inform the reader of the location where the inspection was performed, the date of inspection and the valuation date(s).

·         Include definitions of value, market selection, approach to value, and value conclusion considerations.

·         The methodology used in the grading of the items.

·         Contain a Privacy Notice.

·         Contain a signed Certification of Appraisal Practice.

·         Contain a detailed description of the item, including the gram weight of the item, any marks on the item such as makers mark, hallmarks, karat stamps, engravings, and any other relevant comments.

·         Contain detailed descriptions of any gemstones including their type, style of cut, dimensions of the gemstones, carat weight, color grading, clarity grading, treatments, and cut grade.

·         Detail any tests performed on the metals.

·         Detail the method of manufacture and quality of workmanship.

·         Contain an assessment of the condition of the jewelry, coins, and watches.

·         A listing of the references used in the valuation analysis.

·         The qualifications of the appraiser.

·         A list of the equipment used in the appraisal.

·         A list of pertinent definitions.

Your Appraisal Should Contain Numerous Photographs

As the saying goes, “A Picture is worth a thousand words”.  Jewelry, coins and watches can be difficult to photograph properly.  A professional appraiser should have the proper equipment to photograph your items from different angles and provide sufficient pictures of the appraised piece to afford the intended users of the report adequate information to understand the item and its condition.  The appraiser should also be able to provide enlarged, microscopic detailed photographs of noteworthy points where appropriate.

Is it to my Advantage to Have the Value on my Appraisal Higher than What I Paid for the Item?

In a word, NO!  Inflating the value on your appraisal simply means you will pay higher insurance premiums.  People think an inflated value means the insurance company will write a bigger check in case the item is lost or stolen.  Insurance companies research each claim before they settle claims, and will not pay more than the replacement value of the item.  Additionally, many insurance companies now replace the insured item instead of issuing a check.  And finally, if the insurance company can show the appraisal was intentionally written for an inflated amount, it can void your claim.  At the very least, an appraisal with an inflated dollar value means you will needlessly pay larger premiums.

How Often Should I Update My Appraisal?

 

The value of your possessions can change over time, just like the value of your home.  Most insurance companies advise you to have a new appraisal done every 3 – 5 years and update your policy when the value of the items changes to ensure adequate coverage.  Ask your insurance agent how often the insurance company requires an updated appraisal. 

 

Remember, prices go up and down with the economy, market conditions, and style trends.  An appraisal more than two or three years old may be of little relevance in today’s market.  If the precious metals market has significantly changed from when you had your appraisal done, it may be a good idea to have these items reappraised as their values may have significantly changed.

 

www.negemappraisals.com

(781) 729-0506 or (207) 604-4423

New England Gem Appraisals specializes in the appraising of fine jewelry, diamonds, gemstones, coins, watches and silver flatware.  Qualified independent appraisers serving the Boston area, greater Massachusetts, New Hampshire, Maine, Rhode Island, Connecticut and Vermont. 

Beth Doughty holds the titles of a Graduate Gemologist (GIA); Master Gemologist Appraiser®, Senior Accredited Appraiser with the American Society of Appraisers; and Certified Master Appraiser with the National Association of Jewelry Appraisers.

Steve Doughty is one of a very few qualified appraisers whose practice is solely appraising rare coins and watches.  Steve has been conferred the prestigious title of Numismatic Scholar from the American Numismatic Association's Florence School of Numismatics.  He is a member of the American Numismatic Association, the National Association of Watch and Clock Collectors, and the National Association of Jewelry Appraisers.