She finds the diamond certificate in an old file and notices that the diamond is a 2.1-carat with G color, VS2 clarity and is a round brilliant cut. The Gemological Institute of America (GIA) graded it years ago. The document says that the stone was well cut and has the proper proportions. It was purchased on their 10-year anniversary and the receipt shows that it was purchased from ABC Jewelers for $19,700 and is in a platinum setting.
Jennifer Goes to the Jeweler
Jennifer decides to take a trip to the jeweler and asks for an appraisal. She recalls that the jeweler was quite helpful and wonders if he would tell her what it is worth. So, she drives down to ABC Jewelers and meets with the shopkeeper. She informs him that she bought the engagement ring there and wants to sell it because the marriage didn’t work out. The jeweler then looks at the certificate and confirms that the stone matches the documentation. He looks at some paperwork and then types up a document saying the jewelry is worth $35,000.
One week later, she calls the jeweler. He remembers her and she asks how much he would buy it for. Most stores do not buy back items. But in his case he said that he could offer her $6,000. This offer made Jennifer unhappy and she thought that the store was trying to take advantage of her.
Incidentally, when an appraisal is made, the correct assessment of value is not, “How much it is worth?” The correct question is “How much will you pay me for it?”
Trip to the Santa Clarita Pawn Shop
After that endeavor, Jennifer decides to go to the neighborhood pawn shop. She does not want to go to a typical pawn shop. She wants one that was private, upscale and confidential. So, she searches the Internet and finds Valencia Loan Company, with offices in Santa Clarita and as well as a Pawn Shop in Beverly Hills, California. (Okay, here comes the shameless plug.) The company has high ratings from its customers. (It really does.) She calls and made an appointment. When she arrives, a very friendly receptionist greets her. She is taken back to the comfortable buying office. She is surprised by how clean the offices are. (That’s what people tell us, anyway.)
After taking looking at the stone with a gem magnifying glass the expert prepares to explain a few details. He says that he first needs to ask a few questions and lets her know that if she has any questions she should feel free to ask.
Jennifer says she would be happy. She said that she has gotten offered a very low price and she does not understand the reason. She has all sorts of questions that that have not gotten answered.
Okay, says the expert, “Do you remember where you bought the ring and how much you paid for it?”
Jennifer replies, “I got it for an anniversary present about 11 years ago at ABC Jewelers and,” as she recalled, “it cost $19,700 including the setting.” She adds, “GIA certified the diamond.” She asks if she had paid too much for it.
“Actually, $19,700 sounds reasonable,” he replies. He asks to see the GIA certificate.
Jennifer answers, "Yeah, here it is,” as she looks down then hands it to him. She purports, “And there is the appraisal that I had done. But I don’t understand why I’m getting such low offers.”
The gem expert, says, "Well, let me explain. There are a number of reasons. First, appraisers often give written appraisals for insurance purposes to be sure that you are compensated if the ring was ever stolen. Plus the store will often give a high appraisal in order to make you feel that you got a good deal. However, if you ask them how much they will buy it for, that number drops like crazy. So, as you may have heard, the question is not ‘what is it worth?’ but ‘how much will you pay me?’
Second, and a big issue, is that you bought the ring at a retail store. Keep in mind that the retailer cannot pay you what you paid him or he would be out of business. People are in business to make a profit. Jewelry has one of the highest mark-ups of any items sold in retail stores. The stone is dug out of the ground, then sold to a company to be cut and polished, then sold to a dealer who sells to a manufacturer who gets paid for his labor, who sells to a wholesaler, who sells to a retailer. Everybody along the chain has his or her own markup. Then the jeweler has to pay for rent, employees, electricity, etc. So, by the time it gets to the store it has been marked up a bunch of times.”
“Naturally, when we buy the diamond we are buying it to resell. What we pay you for is the diamond and the metal in the mounting. You won’t get back the cost of the labor to make the ring. The nice thing is that we pay you the full amount right away. You don’t have to wait; and you have the option whether or not to accept our offer. It is a big risk to us because if we make a mistake and pay too much, that is our loss because you have already gotten paid. If we buy it and its value drops like crazy the next day or it sits around for two years without selling, we are licking our wounds but you don’t need to worry about a thing. So, we bear all the risk and you have none."
“Well, does anything on the certificate effect the value? The color? The shape? “Jennifer asks.
“Actually,” our expert replies, “the shape is fine and the color, as well as the quality is actually pretty good. We like round stones of this size more than fancy cuts, such as emerald or princess cuts. It also helps that you have the certificate. I can pay you more. Because with all the high-tech equipment that GIA has they can give a more accurate grade. So I don’t have to pad my offer as much because there is less risk. But yeah, those jewelry store appraisals are not worth much because they can put down whatever price they want. But I've never seen any customer get paid the appraisal price.”
“I get it,” Jennifer replies. “They give you a high appraisal to help you with the insurance company and to make you feel good. But they would never really pay you that.”
“Exactly,” says our expert. "The appraisal price is an estimated replacement price at a retail store in case of fire or theft. But, believe me, it is not the value when you go to sell your ring.”
“Yeah, I see that,” says Jennifer.
The expert goes on, “A high-end pawn shop like this one can pay you more because we deal with high-end clientele. So, we have more room to give you a better price. Or, we can just give you a loan on your jewelry. Your choice.”
“Well, what about the platinum?”
“Well, fashions change, and this ring was popular 10 years ago but is not now. So what we do with that, Jennifer, is we pay you based on the type of metal and the weight. We melt it and sell it for its scrap value.”
“How much is it?” she asks.
“Let me weigh it and we’ll find out for you,” he replies.
The expert comes back with an offer on the diamond and the mounting. To her delight, it was much higher than the other places she’d gone. She accepts the offer. The expert completes some simple paperwork and writes her a very nice-sized check. She can take the check straight to the bank down the street and exchange it for cash or put it in her account.
“Thank you so, so much for taking the time to explain everything to me. I really appreciate it,” Jennifer exclaims.
“You are very welcome,” the expert replies. “We are glad we could take care of you. If you have any friends who need our help, let them know.”
“Believe me, I will,” Jennifer replies. |
