The neutral zone: What makes an independent appraiser independent?

by charlene_voisin | October 1, 2015 9:00 am

By Carole C. Richbourg

[1]
What exactly does it mean to be an independent appraiser? Does independent mean better? Does it mean neutral? If you own a jewellery store that offers appraisal services, can you be truly independent when it involves a purchase made at your store? Likewise, can an independent appraiser (as in unaffiliated with a jewellery store) broker a client’s jewellery and remain impartial? 

This is a hotly debated topic in the jewellery appraisal industry. Some say no—to be truly independent, an appraiser cannot be in the business of brokering their own client’s jewellery. Others, particularly jewellery stores offering appraisal services, say yes. Buying and selling jewellery shouldn’t preclude them from being objective when acting as an appraiser. Which side has the stronger argument? 

What’s the purpose of your visit?

[2]

As an independent appraiser who also helps clients sell their unwanted jewellery, I am on the ‘yes’ side of the question. More often than not, I find there is no conflict. When clients inquire about an appraisal, the first question I ask is why they need one. Most of the time, it is to obtain insurance coverage, but occasionally it is because the client has purchased jewellery or a watch from a non-traditional source (i.e. Internet auction or private party) and they want to know whether they’ve paid a fair price. Other times it is because they have inherited jewellery and they don’t know whether it is ‘real’ or not. To put it in the words of one of my clients, “My brothers and I just need to separate the junk from the ‘good stuff,’ and we don’t know the first thing about jewellery.”

The market turmoil of 2008 and the rapidly rising gold prices that followed changed the jewellery landscape. People started going to their jewellers with Ziploc bags filled with broken jewellery to cash in on the gold rush. Slick commercials blaring on late-night TV urged folks to pack their unwanted gold into an envelope and ship it off to be turned into “cold hard cash.” I found more and more people asking for appraisals to see what their old jewellery was worth just so they could sell it. 

For these kinds of requests, I learned to suggest to the client that maybe they didn’t need an appraisal at all, but rather a consultation with an unbiased jewellery professional who could advise them on exactly what they had and the best way to sell it. 

Whose interests are being served?

[3]

I think the trade is in agreement that independent appraisers and reputable retailers want to support each other. We both believe in serving the interest of the consumer who has placed their trust in us. Informed jewellery retailers can take comfort in knowing independent appraisers who have invested the time to earn a designation at a reputable appraisal organization can be objective and unbiased. The main point is jewellers who are accredited or certified appraisers and equally certified independent appraisers who also offer consulting and brokering services both can serve the interests of consumers and earn their trust.

Not all independents choose to add brokering to their services and that’s OK. If you don’t feel comfortable assisting clients in selling their jewellery, at the very least, you can be the best advocate they have to arm them with all they need to make an informed decision. But remember, the onus is on you to refer them to someone who will not take advantage of their lack of knowledge. This consultation assignment would include examining the pieces, showing the client what similar properties are selling for in the relative markets, procuring bids from reputable, knowledgeable dealers or retailers who enjoy ready markets for the jewellery in question, and assisting them further with information on how to tap into markets to which they have access. The consultation may also include preparation of detailed images, background information, and narratives your client can use to be credible with potential buyers if they choose to take on the task of finding that ‘end user.’ Sometimes it is a bit confusing, but according to Uniform Standards of Professional Appraisal Practice (USPAP), a consultation is not considered an appraisal if you refrain from offering a value opinion or telling a client at what price they should sell. Instead, you are merely educating the client so they can choose to do what is best for them.

[4]

In my experience, consultations naturally evolve into brokering assignments. I find the majority of my clients don’t want to bother trying to sell their jewellery on their own; it is either too much trouble, they aren’t comfortable with the risk, or they just want to discreetly sell at a fair price. 

Brokering isn’t for every independent. You must be an informed appraiser, do your research, and have a handle on the various markets, broad and local. Continuing on the theme of best serving the consumer: if you make the claim you can get the highest price for gold jewellery, make sure you do. In addition, an experienced and knowledgeable appraiser, retailer, or independent should be able to recognize an obscure hallmark or trademark that elevates a piece of jewellery well above ‘scrap’ price. Sometimes, as a result of my research, I have found select stores in my area are able to get the client better results than I could for fine coloured gemstone jewellery, some mid-market brands, and well-made, fashion-forward pieces. An independent appraiser should recognize where other markets yield better results. If you are an independent appraiser, create and maintain good relationships with local reputable jewellers in your area. In addition, engage with and inquire about their consignment procedures, commission schedule, and get to know the mix of jewellery in their stores. 

I know a high-end retailer that really understands the consignment market. First, they only accept items they feel will actually sell in their store. Second, they price the items fairly, and third, they take only a 30 per cent commission. This same jeweller, in addition to a few others in my area, takes trade-ins. If you are aware of nearby retailers that do the same (and you should be), use this knowledge to provide your client with other options. When paying off debt is not the reason for the client disposing of unwanted jewellery, you might suggest a custom redesign with a trusted local retailer you have researched. In the end, you have sent the jeweller a client who knows what they have, its value as a cash offer or as a trade-in, and is aware they have the option to put the piece on consignment. 

A ‘fee’ bit of advice

[5]

I reconcile the fact I could be both an unbiased independent appraiser and broker clients’ jewellery (for a percentage-based fee) this way: if I had spent a significant amount of time appraising an inexpensive item, the hourly fee would have far exceeded the broker’s fee, especially when all the client wanted to know is what they could expect to get for the piece. Consider it from this perspective: how will generating an appraisal document best serve my client or potential buyers? And what about an appraisal for resale? Well, again, who am I to set the price at which a client sells their jewellery? As I see it, experience tells me all these appraisal scenarios involving jewellery the client no longer wants almost always points to either a consultation assignment or a brokering assignment. An appraisal assignment that doesn’t serve the client’s or the potential buyer’s interest makes for neither a very satisfied client nor creates repeat business for you.

Jewellers have traditionally educated their clients in hopes of making a sale—it is just part of the job description. An independent appraiser that does not have the added benefit of other revenues like jewellery sales and repair income might ask, “If I spend all this time educating the client and they decide not to broker the piece through my office, haven’t I just wasted my time and lost money?” Just like any professional service, valuable, timely, and useful information is not free. In the event the client does not engage your services to sell their jewellery, charge your customary hourly fee for the consultation. Just be sure to make the client aware of your fees at the time of the first inquiry. One way to think of it is that even though it might take you two minutes to identify a synthetic colour-changing sapphire, for instance, it took years of experience and thousands of dollars in education costs to be able do so. I cannot stress this enough: charge for your time—most appraisers undercharge. If the consultation assignment evolves into brokering, the decision whether or not to charge the hourly consultation fee, in addition to the brokering fee, is really up to the appraiser.

A place for all 

[6]

Finally, the question of independents versus retail jewellery store appraisers seems to revolve around neutrality—separating roles to best serve the needs and gain the consumer’s trust. It seems to me the natural progression of independents assisting their clients to dispose of unwanted jewellery leads to the conclusion that reputable, certified independents that broker are critical for the benefit of the consumer and the industry in general.

Reputable retail jewellers hold a valuable place in the industry; their expertise and experience allow consumers access to quality jewellery and repairs. Unfortunately, there are also a troubling number of less-than-reputable jewellers in the world who take advantage of consumer trust. With nothing to sell but their expertise, independent appraisers give consumers other choices. Retailers can refer to knowledgeable independents for more complicated assignments, independents can direct clients to jewellers when it is to the customer’s benefit, and best of all, the consumer is well-served while everyone remains profitable in an industry we love. 

[7]Carole C. Richbourg is an independent gemmologist/appraiser in northern California and has been appraising full-time since 1999. She is an accredited senior appraiser, master gemmologist, and a fellow of the Gemmological Association of Great Britain (Gem-A). Richbourg is co-instructor for the American Society of Appraiser’s (ASA’s) GJ-202 appraisal report writing for insurance coverage class. She may be contacted via e-mail at carole.richbourg@finejewelryappraiser.com[8].

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