Diamond Ring Appraisals: Complete Guide

What Is a Diamond Ring/Jewelry Appraisal?

A diamond jewelry appraisal is an assessment of the value of a specific stone, along with the value of its setting or ring, if there is one. It is usually done by a professional appraiser who is trained in gemology and valuation.

After the appraisal is complete, the appraiser will issue a document stating the value of the diamond. If the stone is mounted in a piece of jewelry, the appraiser can assess the value of the entire item if this is what the customer wants.

How a Diamond Appraisal Differs from a Grading Report

Diamond appraisal is not the same thing as diamond grading. While grading a diamond involves measuring its quality characteristics, the grader does not assign a monetary value to the stone.

An appraisal, on the other hand, does exactly that – it quantifies how much a diamond is worth based on its quality and other factors (e.g., market demand).

What Diamond Appraisal Value Means

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.

Types of Diamond Appraisal Value

The appraisal value of a particular diamond is a subjective concept and depends on the purpose of the appraisal as well as the method used to estimate the value.

There are a number of possible ways to classify appraisal value.

Some of the most often used terms in diamond appraisals are “market value,” “replacement value,” and “resale value.”

Let’s see how each of these types of value is defined:

Diamond Fair Market Value

Fair market value is pretty general term, and it doesn’t have much meaning unless it is specified what market is used as a reference.

For example, a diamond’s value on the wholesale market is a fraction of its value on the retail market.

If the term “fair market value” is used in connection with an appraisal, make sure you know what context it is used in – at the very least, you should be aware what market is used in the research.

Diamond Replacement Value

Replacement value tells you how much money you would need to spend in order to purchase the same diamond as the one appraised. This value usually corresponds to the current retail price of diamonds of the same quality.

Note that replacement value is estimated at the time the appraisal is done – there is no guarantee that a couple of years later the price to buy the same stone will remain unchanged.

This type of appraisal value is often used when the diamond is appraised for the purpose of insurance.

Diamond Resale Value

Diamond resale value usually refers to the money you would get if you sold your stone to a diamond dealer, to a jewelry store, or to the public.

Resale value is typically lower than retail market value – usually, between 20% and 60% of it.

To understand why this is the case, consider that jewelry retailers mark up their diamonds to make a profit, but they won’t pay more than wholesale price if you sell your stone to them.

Looking to sell your engagement ring or other diamond jewelry? Check out Worthy, which is an online jewelry auction platform — you can mail in your jewelry and let Worthy organize the sale for you, sending you the money after the piece is sold.

Appraising the Value of Diamonds in Rings

The value of diamonds is determined by four major factors: color, clarity, cut, and carat weight. To appraise the value of a diamond in a ring, the appraiser needs to evaluate the stone along these four dimensions.

14k white gold solitaire diamond ring – 1 CTW

Diamond color, cut, and clarity can be graded using an established grading system, such as that of the GIA (Gemological Institute of America).

Diamond Color

Color is one of the most important value determinants for diamonds.

To establish the color grade of a particular diamond, appraisers look at how colorless it is. Stones that have visible yellow tints are graded lower, and the stronger the color, the less valuable the diamond is. Stones that lack such visible hues are considered of the highest quality.

In general, the less color can be seen in a stone, the more valuable it is.

There are different ways to determine the color grade of a diamond.

One of the most used 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.

Diamond Clarity

Appraisers determine the clarity level of diamonds by looking at how many natural flaws (inclusions) can be seen inside the stone and on its surface.

Diamonds in which such imperfections cannot be easily spotted even with a 10x loupe are deemed the most valuable.

Stones with inclusions readily visible under magnification are assigned a lower clarity grade.

The lowest-graded diamonds in terms of clarity have inclusions clearly visible with the naked eye and are the least valuable.

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.

Diamond Cut

Diamond cut quality is evaluated by measuring the proportions of the stone and determining how close they are to the ideal proportions used as benchmarks.

Diamonds cut with these ideal proportions have been found to have the greatest brilliance and sparkle (for brilliant cuts), and this is why their dimensions have been set as a standard.

Some of the most important characteristics used to evaluate the cut of a diamond are the width of its table (the stone’s top facet), the diamond’s total depth, the polish and symmetry of its facets, the thickness of the stone’s girdle (its edge), and the size of the diamond’s culet (its bottom facet, if there is one).

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.

In general, the closer a diamond’s proportions are to the ideal standard for its particular cut, the more valuable the diamond is.

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. For example, round-cut diamonds are usually more expensive than similar-quality stones of other cuts.

Diamond Carat Weight and Appraisal Value

Carat weight is simply the mass of a diamond expressed in carats. One carat is equal to 200 mg, or 0.2 g.

The relationship between carat and value is not linear – bigger diamonds are much more valuable than smaller ones.

For example, a diamond weighing 2 carats will be more than twice as expensive as another weighing 1 carat, assuming they are equal on all other characteristics such as color, clarity, and cut.

As you can see, all else being equal, the value per carat of diamonds increases as they increase in weight. The reason for this is that bigger stones are rarer.

When an appraiser evaluates a diamond, he or she will take into account how the weight of the stone affects its price, given the stone’s cut, clarity, and color grades.

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.

Appraising Diamonds: Loose vs. Mounted Stones

As already mentioned, whether the appraiser will evaluate the quality of a diamond as it is mounted in the setting or when the stone is loose can affect significantly the appraised value of the diamond.

Mounted diamonds are harder to appraise because the mounting can hide some of their characteristics, making the evaluation less precise.

For example, a yellow gold setting can make the stone look yellower than it actually is, thus potentially distorting its estimated color grade.

The setting can also hide some flaws in the diamond, potentially inflating its clarity grade.

Also, unless the diamond is removed from the mounting, the stone’s carat weight will have to be estimated by looking at its measurements.

So, evaluating a diamond loose is likely to yield a more accurate appraisal – something to keep in mind when having a diamond ring appraised.

Appraising the Value of the Ring

The value of a ring, excluding any stones, is closely linked to the market price of the metals that make it up.

The appraiser will take into account whether the ring is made primarily of yellow gold, white gold, platinum, or another metal. The purity of the metal (expressed in karats for gold jewelry) will also be considered.

Other factors that can affect the value of the ring are its setting, design, brand, and condition.

For example, some settings are more complex to make and are worth more because of the additional labor involved in creating them. Similarly, some designs or brands are more popular and command higher prices.

The condition of the piece is also very important. Worn-out prongs and shanks, broken or bent parts, and other signs of wear will reduce the ring’s value.

Putting It All Together

The appraisal of a diamond ring will incorporate the results of the evaluations of its stones and metal parts, and the final value will indicate how much the item is worth as a complete piece of jewelry.

A ring’s appraised value is usually based on the market value of the piece – i.e., how much it would cost to buy the same or a similar item.

Very often, an appraiser will value a ring according to how much it would cost to buy a new one with similar characteristics. This number will be different from the price you could sell your current ring for and reflects its replacement value.

You should always make sure that you understand how the appraised value of your diamond ring is calculated and what it means.

If you are looking to sell your diamond jewelry, you can offer it for sale online — for example, you can send your engagement ring or other diamond jewelry to Worthy, which is a service that organizes online jewelry auctions, and they will sell your jewelry for you and send you the money when it is sold.

Estimating Diamond Appraisal Value

You can also estimate the appraisal value of a diamond yourself. Of course, this will not yield a value that you’d be able to use for official purposes.

First, you need to decide what kind of value you are interested in – is it retail market value, wholesale market value, or resale value?

Then you need to find out the prices of diamonds with the same quality characteristics in the respective market.

To find out the retail value of your diamond, look up the prices of stones with the same clarity, color, and cut grades, and of similar carat weight. This will give you an idea of the approximate replacement value an appraiser is likely to assign to your diamond.

The resale value of your stone can be calculated from its retail value. Typically, you can expect to get 20%-30% to 50%-60% of a diamond’s retail price if you resell the stone.

Where the actual price will fall within that range depends on whom you sell to – wholesale dealers and jewelers will pay you a price at the lower end, while individual retail buyers are likely to pay more.

When to Have a Diamond Appraised

The most common instances in which an appraisal would be particularly useful are when shopping for a diamond (especially online) and when you need to insure it after the purchase.

Appraisal values depend on the purpose of the appraisal as well as the party doing the evaluation.

Insurance

Appraising a diamond to determine its value for insurance purposes is one of the most common reasons appraisals are issued.

The value in the appraisal document is used by the insurance company to calculate the premium you will need to pay for a particular policy.

Insurance appraisal values are based on how much it would cost to replace the diamond at the time of the appraisal. Usually, this amount is equal to the retail price of the stone or is slightly higher.

Shopping

You can also use an appraisal when shopping for diamonds to see if there is a significant disparity between the appraised value and the price the stone is sold at.

One way to do this is to have the diamond appraised after you have purchased it but before the return period expires so that you can get a refund if you are not satisfied with the stone.

Some vendors may also agree to send the diamond for an appraisal by an independent professional before you pay for the stone.

Appraisals by Jewelry Retailers

Some sellers offer an appraisal for the jewelry you purchase from them, and the service is often free. Such appraisals can be biased, however, especially if the appraisal value is significantly higher than the purchase price.

You should not assume that the value in such a document represents the market value of the diamond before checking other sources of price information.

Appraising Online Purchases

Keep in mind that if you need an appraisal of a diamond that you are going to buy online, the appraiser will still have to examine the stone physically as just looking at the stone’s photo or grading certificate is not enough for an accurate valuation.

A professional appraiser will usually decline to provide you with a value for a diamond he or she has not examined physically.

Important: When you use the services of an appraiser, make sure he or she knows why you need the appraisal. Depending on whether the assessment is made for insurance or shopping, appraisers may use different methods to arrive at the diamond’s value, which is likely to vary depending on the purpose of the appraisal.

How to Choose a Diamond Jewelry Appraiser

So, what should you be looking for when choosing an appraiser to value your diamonds?

The most important information you need to pay attention to is whether the appraiser is independent, how he or she calculates the appraisal fees, and what credentials he or she has in the fields of gemology and jewelry appraisal.

Independence

One of the most important characteristics to consider when selecting an appraiser is independence.

It stands to reason that whoever is determining the value of your jewelry, he or she should not have a vested interest in how much it is appraised for.

For example, if an appraisal is done by the vendor selling you the jewelry, or by a related party, it will most likely be biased. The first thing you should do when deciding on an appraiser is make sure that he or she is independent.

Fees

An issue related to the appraiser’s independence is how the appraisal fee is calculated.

Generally, to eliminate potential bias, an appraiser should not be paid based on the value of the appraisal (i.e., do not hire appraisers that charge a percentage of the appraised value).

The fees charged should be tied to the complexity of the appraisal and the time it takes to complete it.

In some cases, you may find that the pay depends on the size of the diamond evaluated, but this is also related to time and complexity – bigger stones usually take longer to appraise.

Gemology Qualifications

It goes without saying that the appraiser should be qualified to make a judgment on the value of a diamond.

Look for certifications proving that the person has been trained in gemology. One such qualification is Graduate Gemologist, denoted by the initials “G.G.” after the appraiser’s name (the British equivalent is “F.G.A.”).

Appraisal and Valuation Credentials

Although knowledge of gemology is necessary, it is not enough as such training is focused on examining a stone’s physical characteristics, not on assigning a value to them.

To make sure that an appraiser is qualified to assess how much a diamond is worth, make sure he or she is also trained in valuation.

Look for qualifications showing that the professional has been certified by a reputable appraisal organization such as National Association of Jewelry Appraisers (N.A.J.A.), the American Society of Appraisers (A.S.A.), or the International Society of Appraisers (I.S.A.).

Updating Appraisals: Diamond Value Changes over Time

The value of diamonds is not constant – it fluctuates over time depending on supply and demand. This is why you should not assume that the number written in a diamond’s appraisal will reflect the value of the stone years later.

Because of the changing nature of diamond value, it is recommended that you update the appraisal of your stone after a certain period. Generally, unless you need the appraisal for insurance purposes, there is no need to get a new one in less than 5-7 years.

Insurance appraisals should be updated more frequently, and it is a good idea to do so every couple of years. For example, if the market price of your diamond falls, you will keep paying insurance premiums calculated on an appraisal value that is higher than the current one unless you reappraise the stone.

To figure out whether the appraised value of your diamond is likely to differ significantly from its current value, you can check the retail prices of stones of the same quality and carat, and compare them with the original purchase price of your stone. If there is a big discrepancy, then the appraisal value is also likely to have changed, and it might be a good idea to update the appraisal.