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Types of Jewelery Appraisals

All appraisals have a purpose and function. When an evaluator begins the process of appraising an article of jewelry they must determine the reasons for the appraisal so they can take the best approach to estimate the value. There are many ways to appraise jewelry and, in turn, there are many uses for the valuation. Replacement or actual cash value valuations are used for insurance, comparison, hypothetical, damage, and barter appraisals. Fair market value valuations are used for distribution of property between heirs, estate, probate, donation, and in some states divorce appraisals.  Auction, antique, collateral and casualty needs are also examples of Fair Market evaluations. Liquidation values are used for bankruptcy appraisals.

The purpose of a barter, divorce or probate appraisal is to establish the Fair Market Value in the most common and appropriate jewelry markets, and respectively their functions are to address the possibility of sale for the appraised item in various markets, to provide a basis for the dissolution of property, and to provide a basis for inheritance tax purposes or for equitable distribution of property among heirs.

The purpose of an estate appraisal is to establish the Fair Market Value in the most common and appropriate jewelry markets, and its function is to provide a basis for paying estate taxes. Estate appraisals are requested by the executor of an estate who wishes to establish the Fair Market Value of a given item in order to pay State and/or Federal estate taxes. Fair Market Value is defined as the price at which property would change hands between a willing buyer and willing seller, neither being under any compulsion to buy or sell and both having reasonable knowledge of all relevant facts in the most common market in which such goods are sold.

The purpose of an insurance appraisal is to establish the retail replacement value in the most common and appropriate markets, and its function is to provide a basis for obtaining insurance coverage. Insurance appraisals are requested by an owner who wishes to obtain insurance on a given item. The retail replacement value represents the cost to replace the described item with a comparable item, as near as possible to the original, in the retail jewelry market or other markets appropriate to the item described.

Click HERE for an example of what happens when your jewelry is improperly appraised and insured.

The purpose of a bankruptcy or liquidation appraisal is to estimate an approximate selling price for the described item in a secondary market which is specifically identified in the appraisal document, and its function is to provide a cash value that might be realized by a seller in a specific market. Bankruptcy or Liquidation appraisals are requested by an owner who wishes to convert item into cash. Because markets vary widely, this appraisal is an estimate of the possible cash value that an item, in its current condition, might have in the market indicated in the appraisal document.

Because this estimate is specific for a given market, the actual market in which an item is sold will determine the actual selling price.

The purpose of a damage appraisal is to assess the loss in value of an item or items. When determining a loss of value for insurance claim, condition plays a major role in the appraisal. A sound knowledge of metals, gemstones and other materials used in making jewelry is requisite in analyzing the effects of use, age, environment, or prior repairs or alterations. It is essential for the appraiser to note pre-existing condition, as this determination may impact liability for restoration and loss of value.

The purpose of a collateral appraisal is to establish the approximate cash value of the described items in an orderly liquidation where time is a contributing factor, and its function is to provide an orderly liquidation value for collateral purposes. Collateral appraisals are requested by a party who wishes to offer gems or jewelry in lieu of cash for a business transaction. Because a lender is generally unwilling to wait a potentially lengthy period of time before the item can be sold in the retail market, a collateral appraisal must reflect the price at which said item can be readily converted into cash in the near future. This limitation of time necessitates that calculations of values be based on the market value in an alternative market, usually below wholesale, with jewelry mountings, if any, being evaluated purely on the intrinsic smelted cash value of the precious metal based on the prevailing market base price of that day.


A hypothetical appraisal is one that is done without the benefit of the item/items in question. The appraisal is our best effort to place a current value on a piece of jewelry using a customer's description of the item/items, a receipt for the purchase of the item/items, old appraisals of the item/items, or photographs of the item/items in question. Since the item/items are not available for inspection, we cannot check for stamping or conduct gold testing to determine the karat content. In such cases we must rely on the customer's recollection of karat content of the item/items. For the hypothetical appraisal, the market data comparison is used to estimate the value of the item/items in question. The item/items used for the comparison can be identical or equivalent to the subject property.

There are other values an appraiser may give, which are wholesale value, or scrap valuations and they are used for determining dealer to dealer cost or actual scrap value of old or unrepairable jewelry.

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