A certification of a diamond is not the same as an appraisal. After a diamond is certified (by GIA, AGS, IGI, EGI), it arrives at a jeweler’s store. Diamond appraisals can be performed by anyone, and currently does not require any training, education, or licenses. They are often performed by the salesman, the same one selling you the diamond. An appraiser can assign a different value to a diamond. It is not uncommon for this analysis to vary, as some stones are right on the line between two different grading properties. The appraiser can choose a higher or lower grade, and still be within industry tolerances.
The next thing to remember so you are completely prepared is to know how jewelers use a diamond appraisal to complete the sale. In an investigative report by Dateline, two Dateline staffers posed as a couple looking for an engagement ring. They were consistently shown appraisals as proof of what the diamond was worth (just like you would get an appraisal for your car from your insurance if it was totaled). Walmart even said their diamonds appraised above their sale price because of Walmart’s known buying power. Appraisals are based on the four “C’s of diamond grading: carat, cut, clarity, and color.
So Dateline did what no other consumer would do: they purchased several different rings from many top retailers, took the stone out of the ring, and sent them to separate grading institutions. When the report s came back, there were some surprising results. The diamond grades (and appraisals) came back with significantly different results. So why was there such a difference? It’s in the fine print. They say “This report is not a guarantee” and “Diamond grading is not considered a science… results of any examination performed may differ.” Even some of the gradings that came back (from the original grading on the certificate) came back different.
This difference in opinion is called tolerance (margin of error). One particular person grading the stone can see a completely different set of characteristics in a different way, just as a tourist would explain their experience of a city based upon their perspective. They may be different, but these differences are still within the tolerance that the industry allows. A diamond from Zales that appraised for $1275 was later valued at $638, almost half the price!
“I think it’s probably one of the more shameful things in our industry — appraisals used as marketing tools,” says Don Palmieri, a senior member of the American Society of Appraisers. “You get a high appraisal, you walk out thinking you just got the last great deal. But you just got misinformed with that document. In most case, they are grossly inflated.”
Appraisers are estimating replacement value for the determination of an insurance replacement. Consumers should use a sales receipt rather than an appraisal for insurance purposes.
Just because the price tag says $2,000 doesn’t mean that’s what you have to pay. Just like you don’t pay the same price that’s on the car at the dealership, everything is negotiable.