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Doing Appraisals Correctly During and After COVID-19 |  September 08, 2020 (0 comments)


Horsham, PA—The COVID-19 pandemic lockdowns and subsequent economic impact may have consequences for seemingly unrelated things—and one of those is the valuation of jewelry.

Centurion recently offered a special jewelry appraisal webinar in conjunction with the National Association of Jewelry Appraisers (NAJA), featuring David S. Atlas, president of D. Atlas & Co. Inc., Horsham, PA, who also serves as NAJA’s associate director and chair of ethical issues. Atlas is a GIA graduate gemologist, a NAJA certified senior member, and a master gemologist appraiser of the Accredited Gemologists Association.

While it might not seem that the pandemic has much to do with appraisals, in fact it’s more important than ever. The resale retail market in general has rocketed in recent months, people who’ve lost their jobs may be looking to sell jewelry and, sadly, some have fallen heir to jewelry from parents and relatives lost to COVID. But in the middle of a pandemic, the market can be quite volatile, so determining a fair value is not as straightforward as one might think, says Atlas. Typically, jewelers are asked to do a fair market value report for insurance, for attorneys and clients (i.e. divorce or inheritance) or occasionally for the Internal Revenue Service.

Atlas generally has based his retail replacement pricing reports at the market level of an appropriate brick-and-mortar store selling similar product. 

“Most of my clients are older than the typical Internet shopper and would not find that kind of shopping comfortable,” he says. But the pandemic has changed that dynamic to a degree.

While he cautions appraisers away from making predictions of any kind, they need to understand market dynamics, shifts, and potentials.

“As people find comfort in electronic doctor appointments and such, they will find comfort in buying online from familiar retailers. I believe we’ll see more websites with open pricing, and see more retailers putting their pricing online.” While not every storeowner is going to love driving the customer to connect in person for pricing, more traditional retailers are likely to push online sales and it will be very useful research for doing jewelry appraisals, he said. 

Rose-color glasses vs. reality. Recent online auction results have been very good, so that’s something to keep in mind when doing an appraisal, says Atlas. But that’s also where things get a little murky. He cautions jewelers against doing “feel good” reports. 

“Use reasonable markups for insurance reports. Whatever feel-good reports you’re accustomed to creating, think long and hard about easing up on those practices,” he warns.

Chain stores especially are facing a tough situation, he says. “They’re highly competitive within their own demographic and that particular demographic has lots of hardworking people who are out of work and have very little savings. It will be very difficult for major chains to create cash flow they need, to keep all the balls in the air without steep markup compromise,” Atlas says. Even high-end retailers with big brands may see this time as an opportunity to induce a sale with a discount.

But how does a jeweler deal with the customer whose piece is worth less than they think?

Research, research, research, says Atlas. Two of his go-to sites are and Virtual Diamond Boutique. Do a search and be sure to use filters that get you as close as possible to what you’re trying to evaluate.

“Virtual Diamond Boutique gets you good wholesale information. These are asking prices, not exactly transaction prices for immediate payment. Pricescope’s retail is very near asking prices’ wholesale,” he says. Diamonds listed for actual cash value on Idex or Rapnet (or the new Get Diamonds site) are excellent sources of direct information, too, he says.

“Brick-and-mortar store transactions are necessarily somewhat higher price, but how much more is speculation, not factual, unless you keep in touch with good sources. Don’t guess!” he warns. “Building a large feel-good cushion into retail replacement value has never been a good practice, but it may be especially harmful going into the future.”

Atlas also suggests a statement in your appraisal reports explaining that volatility of retail replacement costs is likely in the next few years, and suggest customers even consider getting another report within the next six to 12 months. Some of the factors that may impact value include the price of gold, or a potential loss of many jewelry businesses which would create oversupply and declining prices.

“Don’t plan your appraising based on this, but be aware we’re going into a situation we can’t predict,” he warns, reminding appraisers that their job is to understand market potential, not predict it. 

High-end pieces. Truly beautiful rare or estate pieces continue to have a small but strong market, says Altas, but he cautions that such items are all unrelated to the rest of the common jewelry business. 

“There are always exceptions and you need to do research on those items, as they might not follow an expected price trajectory. The highly affluent may put increased trust in important and highly valuable items outside the normal monetary system. You need to watch this part of the market with great attentiveness, and not expect it to be driven by normal market forces in a common logical way. Don’t let your guard down. Auction results, contact with makers, and so on, will be more important than ever,” he says. Still, even auction data in a volatile market might not be a long-term reflection of value, so keep up to date, he urges.

Finally, Atlas says that while it’s probably not going to be a widespread issue for most retailers, there are people who will inherit jewelry from someone who died during the pandemic. 

“[COVID is] a limited period of time, but many deaths are associated with this problem. Markets may be up or down, and appraisals may be much lower or higher than at the end of 2019, but states use the date of death to determine value. 

The process for searching out comparable value will not be altered, even if the market goes haywire, says Atlas. Again, it all comes down to research. 

“Gold has risen during this period but may or may not go up in the coming months. This is the flux that no one can understand, but it’s part of the fluctuating market.”

Next: determining value in pieces with manmade gemstones.

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