Buying a diamond can be pretty overwhelming. After you get through all of the basics regarding diamond 4C’s, there’s still one more thing you should take into consideration – understanding the difference between a diamond appraisal and diamond certification.
So, diamond appraisal vs. diamond certification, which one is better?
The truth is neither is better as both are important when purchasing or even selling a diamond.
In this article, we’ve covered the main differences between a diamond appraisal and diamond certification and provided a better insight into the diamond appraisal process.
So, without further ado, let’s dive in!
What Are Diamond Appraisals?
Diamond appraisals are documents that describe a diamond’s physical features and assess its quality and assign a value to the stone. They’re slightly different from generic jewelry appraisals due to the specialized knowledge needed to accurately assess a diamond’s characteristics and thus estimate its value.
Diamond appraisals are conducted by experts with a solid understanding of diamonds and their value. While these experts are ideally gemologists with GIA qualifications or from some similar third party, this isn’t essential.
The appraiser will assess your stone’s 4C’s, examine the ring, and compare it to other similar pieces.
After a detailed evaluation, experts will provide you with detailed documentation regarding your diamond that will describe its characteristics and assign it a value.
A good appraiser should offer:
- A full explanation of their appraisal method, including any lab work they plan to perform and what measurements they intend to take.
- Necessary credentials that show that they are qualified to appraise diamonds.
- A clear understanding of why your diamond is getting appraised so that you can get a proper type of appraisal.
- Documentation that contains a sealed statement of purposes and value containing the signature of the appraisal.
What Are Diamond Apprasials Used For?
Diamond appraisals are commonly commissioned for insurance purposes.
Suppose your diamond jewelry gets stolen or lost. In that case, you can submit your diamond appraisal to the insurance company, which will cover the diamond as proof of its value, and that will ensure that the compensation you get is accurate.
Your diamond appraisal will also determine how much money your insurance will charge you for the premium.
Additionally, there are other reasons why you would want to get your diamond appraised:
- To determine the value of inherited jewelry
- To determine the value so you can accurately split the property in the event of divorce
- For potential tax purposes
- To show that you own the diamond if someone else claims them
- To learn the value for possible future sales
Types Of Appraisals
Appraisals will vary based on their purposes and the quality of your diamond. Usually, you will receive one of the following types of assessments:
- Replacement value appraisal: This type of appraisal will provide you with an estimated market price of similar diamonds if you need to replace yours due to theft or loss. This appraisal type is the most common, generally used for insurance purposes.
- Fair market value appraisal: This type will give you an estimated amount that you would most likely receive from a buyer if you were to sell your diamond jewelry. This document is also often used for tax liability purposes in estate settlements.
- Comparable replacement value appraisal: You will receive this type of appraisal if your diamond has an uncommon cut or historical significance. This document is similar to the previous one but is used for items one can’t purchase anymore.
It’s worth mentioning that if you intend to get an appraisal so you can sell your diamond ring, then the appraisal type you’re looking for is a fair market value appraisal.
What Is Diamond Certification?
Diamond certification is a third-party-issued document that describes a diamond in detail. These third parties are, in fact, diamond grading labs.
Along with each stone you consider when shopping for diamonds, you should also receive – and examine – its certification. This certificate or “diamond report” is issued by the grading lab, and it describes all the factors of a diamond.
Trained professionals judge and measure the diamond by utilizing professional equipment.
Now, each lab grades and describes diamonds differently, but sometimes this difference can be significant. Several grading labs exist, and it’s essential to be aware of which ones are reliable and trustworthy – and which are not.
Because diamond grading reports aren’t made equal, you can’t compare the value and price of diamonds across varying certifications. Be sure to purchase a stone with a certificate issued by a highly reputable grading lab.
- How Do I Get My Rough Diamond Certified?
- What Is The Difference Between Certified And Non-certified Diamonds?
Difference Between Diamond Appraisals And Grading Reports
A diamond certificate will outline your diamond’s specific characteristics, measurements, and shape.
The diamond grading report lets you know that the stone is, in fact, a genuine diamond and not some other material. Also, it describes the diamond’s cut, carat, color, clarity, proportions, and polish.
The key differences between an appraisal and grading reports are:
- An appraisal also includes details about the ring, metals that are used, and setting type.
- A diamond certificate doesn’t assign a value to the stone, while an appraisal does.
- The information on a diamond certificate doesn’t change over time, no matter what. The physical properties of the diamond will stay the same, whereas the value of a diamond ring can change over time. Therefore, an appraisal can become outdated.
While the professional appraiser might ask for a diamond grading report to aid them with their paperwork, the need for an appraisal isn’t changed.
Deeper Dive Into Diamond Appraisals
We’ll cover them in more detail to help you better understand diamond appraisals and highlight things you should watch out for here.
Diamond Appraisal Price Vs. Purchase Price
Many jewelers will provide you with an appraisal when you purchase your diamond engagement ring, and it will be higher than the price you paid for it.
For example, you purchase a diamond engagement ring, and it’s appraised precisely the amount you paid for it. It sounds like a good deal, right?
But what if you could have gotten a better deal elsewhere?
Now imagine purchasing your diamond engagement ring and getting an appraisal that shows its value is $2000 higher than what you paid. That sounds like a great deal – you couldn’t wait to tell your friends about it.
An appraisal that is higher than the diamond’s actual value has two effects:
- Because insurance companies usually won’t pay out an item’s fule value, having an inflated value can allow you to get a higher settlement if your stone is stolen or lost.
- The flipside of this is that even though this might seem like a great deal, a higher value will result in higher premiums – which means you’ll have to pay more due to the inflated value.
For instance, if you tell your insurance company that your engagement ring is worth $5000, the premium might be $100. However, if a jeweler has given a falsely high appraisal value of, let’s say, $7500, the insurance premium will also be higher – $150 per year.
While this might not sound like a lot of money, over 20 years, this is an additional $1000 you’ll be giving to an insurance company for no particular reason.
If you need to make a claim, the insurer will determine the value of the diamond and won’t pay out at a higher rate if it’s not precise. Therefore, we advise you not to take a diamond retailer’s appraisal for granted.
To make sure you get an accurate picture of the genuine value of your diamond, it’s generally better to find an independent appraiser.
Diamond Appraisal Vs. Resale Price
Usually, a diamond appraisal will go much higher than the price you’ll get if you sell it. There are several reasons behind this:
- The appraisal you received might be a “replacement value appraisal” and not a “fair market value appraisal.”
- If your diamond is encased in jewelry, people are generally less likely to pay the same amount for a previously owned jewelry piece as they would pay for a brand new one. That is especially true for engagement rings since there can be a stigma of buying one that’s previously owned.
- Retailers need to pay overhead costs. If you want to sell your diamond to them, they’ll generally offer you less than the amount of money they can get when they resell your diamond.
- Most people don’t want to pay a higher price than the original one – unless the running cost of diamonds is significantly higher.
Diamond Appraisals And Conflict Of Interest
The difference between the gem’s actual value and the purchase price also works the other way around:
If you want to sell your diamond piece of jewelry, never take the appraisal value from the person interested in purchasing it.
They have absolutely no incentive to provide you with an accurate value of the diamond – and every reason to tell you that the value is lower than it genuinely is to buy it from you for a lower price.
So, the lower the price they pay you for the diamond, the more money they will earn when they sell the diamond. Thus, if they offer you more money, they will reduce their profit.
Pawnshops are especially notorious for this – providing low-value appraisals and then bidding under that since they’re aware that most people are in a rush to sell.
On that note, the most accurate diamond appraisal will probably come from people who have no commercial interest in the appraisal result.
Finding A Trustworthy Appraiser
In your search for a reliable appraiser, you should look for one that has experience in their field, understands the legalities surrounding diamond appraisals, and has high ethical standards.
You can use several metrics to ensure that they’ll perform their job properly and professionally.
When hiring an appraiser, they should be willing to quote the following qualifications so that you know they’re trained and knowledgable in their work field:
1. Gemological Knowledge
One of the first things you should ask an appraisal is if they’ve received certification through an organization that specializes in gemstones, such as GIA.
These experts are known to be trained at appraising gemstones and are very familiar with the diamond’s 4C’s. These people will be able to provide an accurate judgment of your diamond’s quality.
2. Understanding Of Jewelry Manufacturing
While this might not seem that important, your appraiser should have a good understanding of how jewelry is produced, too.
That is especially true if you have your diamond set in an engagement ring or another piece of jewelry. A better understanding of the jewelry industry as a whole will ensure a more accurate appraisal.
3. Experience As A Diamond Appraiser
Don’t be afraid to check reviews and ask for references. Try to find someone who has experience in diamond appraisals specifically.
An individual specializing in diamonds for a couple of years might be more suitable and qualified than a jewelry appraiser who has worked for a more extended period but specializes in antique jewelry only. It’s an example – but you get our point.
4. Credentials Through An Association
Several associations offer training for appraisers and certify individuals who work under high ethical guidelines.
Don’t be afraid to ask for these credentials; it will aid you in making an informed decision when selecting an appraiser.
Related Read: How to Sell a Diamond Without Certificate?
So, diamond appraisal vs. diamond certification – which one is better?
The main difference is that diamond certification is a detailed document issued by the diamond grading lab and showcases all of the diamond’s characteristics. In contrast, a diamond appraisal is a document that shows a diamond’s value based on these factors.
If you want to ensure the quality of your diamond, you should get a diamond certification. But if you’re going to sell your diamond and want to know its value, make sure you have a diamond appraisal.