Part 2 of 4
By Mark T. Cartwright
In previous columns, we’ve discussed scope-of-work issues, so we’ll focus primarily on the third step in the process, that is, creating the report.
The various elements that go into providing your client with the best appraisal possible are pretty straightforward and will come as no surprise to most professional appraisers. Some retail organizations such as the Canadian Jewellers Association (CJA) and the American Gem Society (AGS) have general guidelines as well as some very specific requirements for members who perform appraisal services. Every appraisal organization, such as the International Society of Appraisers (ISA), the American Society of Appraisers (ASA), and the National Association of Jewelry Appraisers (NAJA), has its own minimum report standards to which members must adhere. In addition, there are broader standards such as the Uniform Standards of Professional Appraisal Practice (USPAP) that may be incorporated into the organizational requirements or even required by some agencies and jurisdictions.
Appraisal of foreign-made jewellery is often challenging, but the skill of the craftsman is a key detail to include in the report. Photo courtesy Mark T. Cartwright
The first question to ask is, “Why bother with appraisal report standards?” Many jewellers in the United States have no valuation training at all, and yet they claim to provide that service to their clients. It’s my understanding the situation is not significantly different north of the border. This creates chaos in the market and confusion in the minds of consumers, degrading the credibility of all appraisals. So, one answer to the question is that by complying with specific standards, an appraiser has a roadmap to help her or him create a professional quality report that is truly a service to their client. Of course, simple compliance with a standard doesn’t necessarily guarantee the value opinion is correct or even believable. However, if the other details of the report are present, a third party might at least understand how the value was determined.
A few years ago, I was discussing the topic of one-page appraisals with a ‘vintage’ member of one of the organizations to which I belong. He stated that anything more than one page for a single item report was ‘padding’ and intended only to justify exorbitant fees. He had no response when I asked how he was able to include all our organization’s required elements on just a single page. Apparently, compliance with the minimum standard hadn’t figured into his calculation.
Many ‘old school’ members of the trade still believe a couple of sentences and a price are all that needs to be included in an appraisal. Sadly, some insurance companies allow them to continue the practice even though it leaves the client at serious risk of loss if a claim is filed. Insurance policies leave it up to the client to provide the company with sufficient information to allow for indemnity and the client trusts the valuer to provide that level documentation. The insurance company is liable to replace only what is described in the appraisal. Therefore, a few sentences and a value don’t provide much protection for the client.
More to come of this story in Part 3.
