On the Value of Value: Retail Appraisals

I’ve heard it time and time again when people show me their valuable jewelry: “this ring was appraised at…,” followed by a nice high numerical figure.  “Cool,” I say.  Politely.  While secretly rolling my eyes.  Why?  Because those appraisals, most likely, are too high.  They are done for insurance purposes and calculate full replacement value, or close to it: the amount the insurance will pay you if you lose it.  Since the odds are you will not lose it the insurance gets to charge a fat premium and be very happy. 

For example, let’s say you bought 14 K gold and sapphire ring 10 years ago for $1000.  Now you want to insure it.  The insurance appraisal will be done at what that ring will cost now, which is calculated as follows: material value of the goods, plus labor, x4 for full retail markup.  Assume your ring weighs 3 grams.  That will be multiplied by the current gold cost.  Make that $50 per gram = $150.  Then an appraiser estimates the weight of the stone, judges its grade (clarity and color), though usually not origin because that’s too hard to determine.  Make your stone 2 carats in weight, blue.  Then the appraiser looks up the current wholesale list price (i.e. in the Gem Guide or Rapaport List).  So they will go to the table for corundum - blue sapphire, let’s say the upper end of the column for “good quality,” 2-3 ct size, and multiply out the price.  Unless there’s a lab report that states otherwise (an appraiser is not a lab!), the assumption is the stone is heated.  So a 2 carat stone might be $1000 on average, more if Ceylon, much less if Thai – this is just an average.  If it were a 2 carat peridot, you’d be looking at maybe $60.  Precision cuts, stuff like that, are not likely to matter. 

Now what is the retail value of your imaginary sapphire ring?  $1000 + $150 + say $100 for labor (which is very low), = $1250 x 4 = $5000.  If it’s a $60 peridot, by contrast, the value is $1240.

Now let’s say you want to sell the ring.  This is where the “value” changes drastically, depending on how you go about this and how desperate you are.  Let’s make you…

1.      Very desperate.  You take the ring to your mall to show to the gold dealer.  Your ring will be weighed again.  The scrap value of 1 gram of 14K, right now, is about $30.  The dealer offers you $90.  The stone will have no value to him, he will tell you it gets scrapped or you can take it out. 

2.      Desperate New Yorker.  You take the ring to 47^th Street to sell it.  Someone takes out the stone for you and you scrap the gold for a slightly higher price than the mall (maybe $40 a gram).  You take the stone to a stone dealer.  If it’s a 2 carat peridot, it has no value there.  Everyone has peridot in that size.  A 5 carat, maybe.  But you won’t be offered the list price, because that’s what they sell it at.  If someone’s nice to you, you can get $10 or $20.   Assuming the dealer knows his stones (many don’t – they just move material), he can guess at the origin.  He’ll weigh and loupe it for cracks, rule out that it’s a doublet or fake.  Maybe he can look at it under a microscope to make a first determination of heat treatment.  If it’s Thai, heated, you’re out of luck.  A dime a dozen.  If it might be Ceylon, he may make you an offer.  But it will be at the price at which he buys, if he’s fair.  And that will be way below NY wholesale prices, because he’s a NY wholesaler and he doesn’t buy at the price at which he sells.  Duh.

3.      Desperate New Yorker (2).  You try to sell the ring as a whole on 47^th.  Again, you will be offered scrap price if it’s a peridot, more if it’s a sapphire. But the jeweler has to calculate his markup.  So you’re not likely to do much better.  The jeweler will claim he doesn’t know the stone, it could be fake, and not want to make you a different offer.

4.      Patient.  You sell the ring yourself to a retail buyer.  You can go to Ebay for instance.  If you put a reserve on the ring, it will take a while.  But you will get a better price, hopefully around wholesale, which is approximately 50% off your appraisal. 

By the way, I’m not assuming here that you own a 5 carat Burma with a GIA certificate or anything like that.  If you do, you can just take it to an auction house.  They will keep 50% of the sales price, but they may do well for you.  Anyway, if you’re reading this blog right now, that’s not you.

So, can you ever get full retail price for your finished jewelry piece?  Not likely.  After all, your potential buyer can just go to a retail store for that and get: a guarantee, a return policy, and royal treatment.  On Etsy, I charge approximately wholesale prices.  Sometimes less, on occasion a bit more (for the cheaper stones like peridot or amethyst, which are never a good deal for the buyer).  Otherwise I can’t compete.  That seems fair to me since I don’t actually have a store, and no store overhead.  For expensive stones, I charge standard wholesale prices because I usually pay less than that – NY wholesale prices are below the national wholesale average because NY gets so many direct deliveries from overseas.  I also often buy from people who sell to wholesalers.  On average, I get what you call “dealer price” – the price at which one wholesaler sells to another.  Then I charge for labor, gold price, and a small markup (20-30%). 

The upshot: if you want to sell my jewelry again, and you are in the patient category, you can make a good recovery.  Try to charge what you paid to start

If you get my jewelry appraised at retail, you’ll be very happy, but given what you just read, take that with a grain of salt.