You may have heard the story of someone buying a brand new car from a dealer and then driving it in large quantities. When the car is sold second-hand down the road, it is always worth a lot less than what was initially paid for it at the dealership.
Buying jewelry and selling jobs in a similar way. The value often devalues over time, and the initially paid retail price is inflated to cover business expenses: employee salaries, rent for the building, marketing, electricity, etc.
As in any business, jewelery retailers need to cover their costs, as well as make a profit. Therefore, their pricing policy usually falls in the range of being double or triple the wholesale price.
Retail profit margins are seen everywhere, with even more dramatic margins in the electronics and fashion industries. For example, someone can buy a pair of $ 50 jeans that cost $ 8 to do.
So, as you can see, the margins for excellent jewelry are quite reasonable.
Importance of estimates
By obtaining an estimate made for your jewels, the purpose of the estimate needs to be distinguished in advance and discussed with the estimator. The reason for this is that different types of estimates have different values, and if the wrong type of estimate / value is assigned, it probably will not support as a legal document.
Here is a failure of any value and types of esteem that affect jewelry:
Replacement value per minute
Defined as the highest monetary quantity that would be required to replace a property with another of similar age, quality, origin, appearance, origin and condition within a reasonable time period in a suitable and relative market.
Fair market value
The price at which the property would change hands between a willing buyer and a willing seller, none that is under any constraint to buy or sell and both that have a reasonable knowledge of related facts.
By far the most common estimate made for jewelry is the Insurance Estimate, which often first comes into play by buying an engagement ring.
With the purchase of an article of sentimental, high value, it is essential to make an insurance estimate so that your insurance company will cover problems that may arrive over time with a ring.
Essentially, the value must be similar to replacing jewelry with a similar piece of jewelry in a relative market sold for the retail price.
This type of estimate uses the Replacement Value Per Minute. Retail stores sometimes provide insurance estimates, or you can contact the National Association of Jewelers for a recommended estimator near you.
By switching to higher power jewelry or trying to make extra cash, a Resale Estimate determines the Fair Market value of the jewelry for the purposes of evaluating the jewelry with the intention resold.
The jewelry can then be re-sold in the trade or can be sold directly to an end consumer.
The mandate of IRS regulations that Fair Market Value is used to evaluate objects owned by a deceased person and an estimate of all their assets is made for distribution and tax purposes.
Estimation of family division
In a divorce, on the death of a family member, or in property planning, a family division estimate can be created, which lists all the real estate, assigning the Fair Value to the exam date.
Jewelry as a guarantee
Although banks do not usually enjoy jewels so collateral for a loan, there are companies that do offer loans for such collateral jewels, such as Cash for Gold.
Often, these specialty companies include a complimentary estimate as part of their process.
Charitable contribution or gift
This type of estimate is used by donating valuable jewels to a tax-exempt US graduate organization, such as a university or a museum, and Fair Market Value is used in estimating .
Damage or loss of value estimate
An estimate used by adjusters, insurance companies or the insured party, this type of estimate is used to evaluate a lost, stolen, damaged, or destroyed item of personal property.
A value is established for the article in its original condition, as well as its present value in its present condition.
What estimate should it include
In general, each estimate must include a description of the jewels: weights, grades, measurements, stones, metal type, treatments, etc. It must verify the credentials of the estimator and list the relative value for the type of estimate.
Pricing policy estimates vary widely, and estimators can charge a constant rate or an hourly rate, usually within the limits of $ 50 – $ 300, based on credentials and experience.
Certainly check that your estimator has Omissions and Mistakes as well, which will protect the estimator in case there is any mistake made on the estimate, and which will ensure that it is properly compensated if there is a mistake.
Reality of value
The pricing policy of selling your jewelry usually comes under the jurisdiction of needing a Resale Estimate, as mentioned above. The idea of Fair Market Value may seem little summarized, so let’s put this example in more manageable terms.
Let’s assume that Joe bought a diamond ring for $ 5,000. Before sales tax the price is $ 4,500. Reselling the ring to a trustworthy contact / trading company would generally introduce a price of $ 1,500 to $ 2,500. Why is the resale price so much lower?
As mentioned before, a jewelry retailer has to pay for wages, maintenance on a building, furniture, security cameras, marketing, water and electricity, among other things, as all entrepreneurs do.
These overheads increase the price of the diamond ring, but are not linked to the value of the diamond ring without additional associated costs.
The finding of an authenticated gemologist (FGA / GG). and the appraiser for evaluating your jewelry, or working with a company that has them in staff, will help you on the journey to recovery of as much as what you originally paid for your jewelry as possible.
Do your homework and investigate your jewelry, discovering what the jewels within a similar scope sell to online, as well as between trustworthy individuals, such as your local merchant or jeweler.
An alternative option for sale works with an established auction house, such as Christie’s or Sotheby’s (for high value items), selling through an online platform like Craigslist , or selling directly to a friend.
Author: Olga Gonzalez is an authenticated gemologist (FGA) and Founder / CEO of Stone PR , a communications agency located in NEW YORK that specializes in fine jewelry trading, and has been working in business since 2005. Olga was writing for a variety of trade publications since 2008; also has the experience of esteem and is the United States Ambassador for the Gemmological Association of Great Britain .