A diamond appraisal involves determining the value of a stone after a thorough inspection of its characteristics and producing an official document that contains the results of the appraisal.
Diamonds are appraised for a variety of purposes, one of the most common being to determine their value when purchasing a diamond insurance policy.
A diamond should be appraised by an appraiser who is trained in gemology and valuation.
There are several characteristics jewelry appraisers focus on when evaluating diamonds: their color, clarity, cut quality, and carat weight.
Evaluating Diamond Color
Color is one of the most important value determinants for diamonds.
In general, the less color can be seen in a stone, the more valuable it is.
The most expensive diamonds are those that are colorless, whereas stones that have yellowish hues are worth less, and the more intense these tints, the greater the reduction in appraised value.
There are different ways to determine the color quality of a diamond.
One of the most popular methods is by comparing it with a set of master stones of different color grades – the evaluated diamond is assigned the color grade of the master stone that comes closest to the diamond in terms of color.
There are a number of color grading scales, and one of the most often used is that of the GIA (Gemological Institute of America). This system assigns letter grades depending on how colorless the stone is.
The highest grade is D and the lowest is Z. Diamonds graded D, E or F are practically colorless. Grades from G to J are nearly as colorless as the top grades, and grades from K to Z have visible yellow tints.
It should be noted that if a diamond is appraised when set in a mounting, the stone’s color evaluation might not be accurate, especially if the mounting has a color other than white.
In such cases, it is likely that the original color of the diamond will be “tainted” by reflections from the setting. This is why it is best for diamonds to be appraised loose.
Evaluating Diamond Clarity
Clarity refers to how clear a diamond is of natural flaws – or inclusions – such as lines or black carbon spots.
Diamonds that look flawless are more valuable than those that have visible imperfections, and the more noticeable they are, the lower the quality and appraised value of the stone.
When appraisers evaluate diamond clarity, they check how visible the stone’s inclusions are.
Flaws that cannot be seen even under 10x magnification are not considered visible inclusions for the purposes of diamond grading.
At the other end of the clarity spectrum are the “included” diamonds – i.e., with inclusions visible to the naked eye – those stones are the least valuable.
In the middle of the clarity scale are diamonds that have flaws visible only with a 10x loupe but not visible with the unaided eye – they are less valuable than flawless stones but are worth more than included diamonds.
The scale used by the GIA to grade clarity contains the following grades, from highest to lowest: IF, FL, VVS1, VVS2, VS1, VS2, SI1, SI2, I1, I2, and I3. This is one of the standards that are most often used by appraisers as a reference when evaluating diamond clarity.
As is the case with diamond color, clarity is also best assessed when the diamond is loose. Mounted diamonds are trickier to grade, as the setting may make some of their flaws harder to notice.
Evaluating Diamond Cut
Diamond cut is evaluated by comparing the proportions of a particular stone with ratios that are considered most desirable.
Stones whose proportions are closer to these values display stronger brilliance and have a better overall appearance compared with diamonds that deviate further from these proportions.
Some of the cut characteristics appraisers look at are table percentage, depth percentage, and girdle thickness.
Table percentage is calculated by dividing the diameter or width of the stone’s top facet by the width or diameter of the girdle (the edge of the stone).
Depth percentage is calculated by expressing the total depth (or height) of the stone as a percentage of the girdle’s width.
The appraised value of a diamond depends not only on the proportions of its cut, but also on its shape. Some cut shapes are in greater demand than others and are therefore considered more valuable.
Determining Diamond Carat
Diamond carat is determined by weighing the stone and expressing its weight in carats, with one carat being equal to 0.2 grams.
Carat weight is positively correlated with price per carat – the bigger a diamond, the higher its appraised value will be, not only in absolute terms, but also per carat.
Like clarity and color, carat is also best measured when the diamond is loose, not mounted. If the stone is in a setting, an appraiser cannot weigh the diamond accurately without removing it from the mounting.
In such cases, the weight of mounted stones is estimated by their dimensions, but you should be aware that this results in a carat value that is approximate.
Diamond Appraised Value
The value an appraiser assigns to a particular diamond is usually meant to be as close as possible to its current market value. However, you should make sure you understand exactly what the number in the appraisal report means.
Very often, the appraised value of a diamond (as well as its value on the retail market) is not the price you can sell it for.
For example, if the appraiser has determined that diamonds like yours sell for a retail price of $5,000, this doesn’t mean that your stone can fetch the same amount if you decide to sell it.
In reality, you’d be able to get about 20%-30% of the retail price of your diamond if you sold it to a diamond dealer or a jeweler, as these buyers purchase at wholesale prices.
Usually, the appraised value of a diamond reflects the amount that would need to be paid if the stone were to be replaced.
For example, if the diamond were stolen or lost, you would need to pay an amount approximately equal to its retail price (or appraised value) to buy a new one.
In some cases, the appraised value of diamonds does not reflect their replacement value but rather the estimated market price that someone would pay to buy the stone.
This is often the case with unique or antique diamonds, for which it is hard to find similar stones whose retail prices can be used as a basis for a market value estimate.
In sum, since appraised value can mean different things depending on the purpose of the appraisal, understanding the rationale behind the calculation is crucial in interpreting the value assigned to the diamond.