How to appraise your appraisal

by Tamanna Bhasin | February 7, 2024 4:02 pm

By Sonja Sanders

If you’ve spent even a second in the jewellery trade, chances are you’re not a stranger to appraisals. Appraisals are crucial to the industry, they’re needed for insurance purposes, legal petitions, auctions, estate sales, online sites…the list goes on. In the last four decades, technological and educational advancements in the world of jewellery have pushed for an evolution in appraising standards, ensuring integrity, and safeguarding both jewellers and their clients. So, lets look at appraisals.

The Canadian standard

In 1989, the Uniform Standards of Professional Appraisal Practice (USPAP) was developed by a collective of American appraisal societies and the Appraisal Institute of Canada (AIC). ¹ Through the AIC, Canada respectfully adopted USPAP standards as a guide for its own various appraisal industries. In 2001, a uniquely Canadian national standard was introduced for these appraisers, through the Canadian Uniform Standards of Professional Appraisal Practice (CUSPAP).

In addition to following the regulations outlined in CUSPAP, Canadian appraisers who are accredited with an association or society must abide by strict requirements. The Canadian Jewellers Association (CJA) has a detailed list of conditions for their Canadian Accredited Jewellery Appraiser designation. Jewellers Vigilance Canada (JVC) also has a committee to develop guidelines for jewellery appraisers. Contributors to the committee include the CJA, the Canadian Gemmological Association (CGA), and other related Canadian institutions. Additional information on requirements is published in Canadian Gemstone Guidelines.

The foundation of a reliable appraisal

There is a lot of work and notes behind the scenes that contribute to a professional appraisal.  Some appraisals are short and to the point, a compact “passport” style, while others follow the standard “full-length” format. Regardless of length, the document’s components should be accurately and fully presented as required by industry and national standards. Such components should include:

• Company or appraiser’s letterhead, as well as their contact information.
• Client’s name and address.
• Date the appraisal was performed.
• Current metal market on the date of the appraisal.
• Currency used, both for the metal market and the valuation (it is not uncommon to see the metal market listed in U.S. dollars and the final appraisal value in Canadian funds).
• Reference number (proper record keeping and cross-referencing is necessary).
• Appraiser’s credentials, such as the institute they graduated from (GIA, Gem-A, HRD, etc.), their appraisal course-designation, or the association they are accredited with.
• Many associations now require that their members state the “Purpose and Function.” Doing so clarifies that the proper market was considered for the required use of the appraisal.

     – Purpose outlines price (retail, fair market value, etc.). 

     – Function describes the end-use of the appraisal (insurance, estate settlement, probate…).

• The appraiser’s signature (either physical or digital).

 

At the heart of an appraisal

A thorough and accurate appraisal must include a detailed description of the item. The document should clearly identify the following information:

• Item (ring, necklace, earrings, etc.).
• Metal (if gold, should specify the Karat).
• Gemstones and diamonds. The appraisal should state a stone’s treatment (if it is enhanced, a simulant, synthetic, etc.) and its proper grading (such as the 4Cs).
• State the measurements of article, stones, and chains to justify their calculated weight.

     – Proper measurements are important, not only for justification of weights, but because the appraised item may someday have to be reproduced.

     – As Canada follows a metric system, the measurements and weights should be metric. Further, the measurement needs to be accurate to at least two decimal places. If a stone weighs less than 1.00 ct then the stated weight should have a 0 before the decimal (e.g. 0.12 ct.).

     – Although the lengths of chains and pearls are mostly stated in inches, it is recommended that the metric measurement also be mentioned (e.g. 20 inches/ 50.80 cm).

• Weight of the item as a whole.
• Article’s type of manufacture.
• List of instruments used during the appraisal.
• Value of the item.

Legal terms to look for

A reliable appraisal would be sure to outline its “Limiting Conditions,” any disclaimers or disclosures relating to the appraisal process. This protects the appraiser from any future claims or issues and includes supporting statements regarding the appraisal. The promise of “Confidentiality” must also be included. An appraisal should not be made available to another party (outside of legal authorities) without the client’s permission.

The reasonable and educated appraiser must investigate and confirm all the facts so that care is taken to satisfy the requirements of completed work. An appraiser must practice due diligence” especially when involved in legal matters. They have a fiduciary responsibility that puts them in the position of trust and honesty.

It is the hope that all appraisal documents clearly indicate the appraiser’s adherence to both legislated and voluntary compliance. However, it is not impossible to receive a document lacking in several areas and compromising the end-use. Hopefully, this checklist will provide you with the information you need to identify a genuine appraisal. 

References

¹Evolution of the Canadian Uniform Standards of Professional Appraisal Practice (ubc.ca)

Sonja Sanders grew up in a jewellery industry family and learned goldsmithing and gem appreciation as a teenager. She now operates her family’s jewellery business with her husband, Joe and two of their children—the store’s third generation. She is a master goldsmith, Graduate Gemmologist with the Gemological Institute of America (GIA), and teaches appraisal courses across Canada. She is the author of the Professional Jewellery Appraiser course. Sonja enjoyed her work, of almost a decade, with the Canadian Jewellers Association where she was involved with the Accredited Appraiser Program, education and served on the board. She is a lover of antiques and estate jewellery and can be reached via email at shopwithsonja@bellnet.ca or pjaconnect@gmail.com.

Source URL: https://www.jewellerybusiness.com/features/how-to-appraise-your-appraisal/

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