Appraisal versus Valuation – What’s the Difference?

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An appraisal is a detailed, written analysis of a jewelry item, including gemstone identification, grade, measurements, and weight. Additional testing is performed on diamonds ½ carat in size or larger, such as plotting and fluorescence. The appraisal report explains how the gemological testing is done, what equipment is used, definitions of replacement value, the approach to value, and the market selection. The value of the item is listed, which is influenced not only by the quality of the gemstones but also the quality of the item’s craftsmanship. Appraisals are usually done for insurance purposes and sometimes to determine fair market value (FMV).

The fair market value is the price at which the property would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or sell and both having reasonable knowledge of relevant facts. The buyer is assumed to be the ultimate consumer or end user of the property. FMV can be retail, auction, wholesale, or scrap, depending upon what is considered to be the most appropriate market that the property is sold in.

A valuation is typically not written and includes identification and analysis of the gemstones and metal in the item, as well as its quality. Most valuations are done to determine fair market value.

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