Somebody comes in with an appraisal, we make an offer, and the offer is well below the number on the paper. They are annoyed, and they are right to want an explanation. Here it is.
Different questions, different answers.
The question it answers
- Insurance appraisal
- What would it cost to replace this at retail, quickly?
- Cash offer
- What is this worth to buy and then resell?
Who it is written for
- Insurance appraisal
- Your insurer
- Cash offer
- You and the buyer
Assumes
- Insurance appraisal
- Full retail, new, replaced fast
- Cash offer
- Resale market, time to sell, cost to carry
Written by
- Insurance appraisal
- Someone you paid to write it
- Cash offer
- Someone putting their own money down
An appraisal is deliberately generous. That is the point of it. If your ring is stolen you want the insurer to hand over enough to replace it at a retail counter this week, not enough to go hunting for a bargain over six months.
Who paid for the appraisal.
An appraisal is a service you commission. Nobody is putting their own money behind the figure, and a higher number costs the appraiser nothing. There is no dishonesty in that, but it is worth understanding that the incentive does not point toward conservatism.
An offer is the opposite. Whoever makes it has to live with it. That is precisely why it is lower, and also why it is the more honest signal of what the piece is worth in the actual market.
The parts we are working through.
- 01
What it is
Metal tested rather than read off a stamp, stones identified and graded, hallmarks and maker checked. This is the part that is simply factual.
- 02
What that is worth today
Metal against the current spot price, stones against what comparable stones are actually trading at, and the piece as a whole against what it would sell for.
- 03
Whether it sells as a piece or as materials
A designer piece with a market of its own is worth more intact. Something broken or unsellable is worth its metal and stones, which is usually a smaller number.
- 04
What it costs to carry
How long it will sit, whether it needs work before it can be sold, and the cost of holding it in the meantime.
Ask to be shown the working.
You are entitled to understand a number before you accept it. Ask which parts are metal value and which are the piece itself, ask what the stones were graded as, and ask whether it is being bought to resell intact or to break.
Anyone unwilling to walk you through that is telling you something. We will do it at the counter with the piece in front of you, and you are free to leave with it and think about it.
Get more than one offer. We say that knowing exactly how it sounds. A number you have compared is a number you can accept without wondering, and we would rather you sold to us having checked than sold to us wondering.