What is the difference between a Diamond Certificate and an Appraisal?
Types of Appraisals
An Insurance appraisal is desirous by a client who wishes to insure their gems or jewelry items against damage, loss or theft with the appraisal reflecting the retail costs incurred to replace or reproduce any gems in like quality, and jewelry mountings in like manufacture and degree of craftsmanship but in brand new condition. Such costs or values are estimates of the averaged current market prices at which the appraised items may be purchased in the average fine jewelry store and do not necessarily reflect the price at which the appraised item may be purchased from any one jewelry store in particular. Of paramount importance in such an appraisal is the accurate and detailed description in that insurance companies insure the jewelry items not their value the monetary value being a mathematical figure by which one's premium can be calculated.
An estate appraisal is utilized under a number of different circumstances and hence may represent different market values depending upon the actual dispensation of the estate item(s). The estate appraisal is always based on the fair market value which, as defined by Treasury Regulations, "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 have reasonable knowledge of the relevant facts". The prices noted in such an appraisal are therefore, estimates of the current fair market at retail value of the items in their present condition. They do not represent replacement values of similar merchandise.
Cash or Collateral Appraisal
A collateral appraisal is utilized when a party wishes to offer his gems or jewelry items in lieu of cash for a business transaction. In that a lender is generally unwilling to potentially wait a lengthy period of time before the item(s) can be sold at a retail fair market value - a collateral appraisal must therefore, reflect the price said item(s) can be readily converted into cash in the near future. This limitation of time necessitates the calculation of the value to be based on the fair market value at a wholesale level with jewelry mountings being evaluated purely upon the intrinsic smelted cash value of the precious metal based on the prevailing market base price of that day.
In that antique jewelry (items of 100 years or older) and "vintage" items (pieces of more recent manufacture) cannot be actually or exactly replaced in today's market, calculations of value based on the estimated costs incurred to replace said items in newly manufactured condition would be inappropriate. Therefore, with the exceptions of gemstone evaluation, estimates of value for antique or "vintage" jewelry items is a reflection of the averaged cost incurred to replace said items of similar condition, motif and degree of craftsmanship subject to the availability of said items (and their similar) in the marketplace.