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Article from STERLING SILVER JEWELLERY (564 Articles), DIAMOND JEWELLERY (537 Articles), RINGS - GENERAL (528 Articles)

Coleby Nicholson
Coleby Nicholson
 

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Ban jewellery valuations!

How can a new diamond ring be purchased today for, say, $700 be valued tomorrow for $4,000? Valuations for new jewellery are nonsense, argues Coleby Nicholson.
I was once told that Australian men spend up to nine months researching and choosing a watch before they buy because they want a watch to last a long time. Obviously that’s when purchasing a quality watch rather than an everyday model, but I can relate to that.

Being a guy, I don’t care too much for shopping. It’s something I have to do, rather than something I enjoy doing and, for example, I would rather buy four pairs of pants at once than go shopping four separate times.

In recent weeks, I have found the time to make some purchases I had been planning for quite a while but hadn’t yet gotten around to making. I bought a car, some home entertainment equipment and a small piece of furniture.

The interesting thing is that I was not given a valuation certificate for any of these items. As a joke, I asked the car salesman if he could give me a valuation certificate for “retail replacement” purposes. Have you ever seen a car salesman lost for words?

Why is it that jewellery is the only everyday consumer product that is sold with a valuation certificate? I mean, a watch is not sold with a “val”, nor is a TV or furniture.

A house does not come with a valuation certificate – and on my last look, houses cost a lot of money. Presumably, houses do not need valuation certificates because the valuation is considered to be the price paid on the day. But that’s another issue.

For some reason, some (not all) jewellery is promoted and advertised with valuation certificates. It’s common to see vals for diamond rings but why do you never see a $400 opal sold with a valuation certificate saying, “Valued at $4,000”?

This practice should be banned. In fact, it should be outlawed – it’s a rort and a con.  Now, before my valuer-colleagues start jumping up-and-down and issuing fatwahs, let me say that I have no problem with valuation certificates. They serve a useful purpose when they are used legitimately – people need to be able to prove to an insurance company that they owned something and there needs to be a description of that item so it can be replaced – but how can something that was purchased for $400 have a value of $4,000?

Indeed, how can something be valued today for a loss some time in the future when the prices of gold and diamonds fluctuate? To try and value something today that might be lost in five years time is nonsense because some things appreciate in value and others don’t.

Of course, that’s not how and why many valuations are being used – they are often being illegitimately used to suggest that a consumer is getting a “steal” by purchasing a $10,000 diamond ring for $1,000. Unfortunately, the only thing being “stolen” is the industry’s reputation. If something sounds to good to be true ... !

I believe that valuations certificates should be banned at the point of purchase.

No jewellery should be promoted or sold with a val; it should be the responsibility of the person who purchases the item to obtain a certificate for proof of ownership.  Further, the certificate should be obtained from an independent, third party, not from the person who sold the item. The certificate should have an accurate description of the product and should not be recognised unless it has an attached receipt of sale showing the price when purchased.

It should be illegal for anyone to promote the sale of a product using a valuation certificate that identifies a price. And that’s another thing; have you ever seen a valuation certificate that shows a price less than the purchase price? That, alone,  should set the alarm bells ringing! Did I mention it’s a rort and a con?

It’s the retailer’s responsibility to offer and sell a product at a fair price. What happens after that has nothing to do with the retailer and that’s why valuation certificates should not be used at the point of sale and the practice should be outlawed.

More reading
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ABOUT THE AUTHOR
Coleby Nicholson
Editor • Jeweller Magazine

Coleby Nicholson is publisher of Jeweller magazine. He has covered the jewellery industry for nearly a decade and specialises in business to business aspects of the industry.





Your Say

Agreed
I inherited a Rolex, and the valuation certificate states the watch is worth FAR more than anyone is willing to pay for it. It just does not make sense. Not in the least. The valuation certificate means nothing then, other than serve the purpose of frustrating those who don't know how it works, like me. I might as well throw it in the bin.
posted by John Flower on January 08, 2011 18:16

VALUATIONS
Coleby, clearly you have never worked in the insurance replacement business if you had you would understand that most insurance companies use the "retail insurance value" as a starting place to establish the amount of money they will pay out.
They do not ask for as you have stated for "Market value" or "Realization value". Most often a valuation is the only document with a full list of stone sizes, ring weight and photo, the receipt may just say one diamond ring. You assume that the ring will be lost tomorrow but may be some time further into the future. Yes, I agree, the valuation should not be used to confuse the client but there is a valid place for there use.

EDITOR’S NOTE: John, you are absolutely correct, I have never worked in the insurance industry but that does not preclude me from making the observation that some of the activities are rorts and cons. You state that I “assume the ring will be lost tomorrow” and note that it could be lost some time in the future. Again you are correct, but it still does not alter the fact that it can be lost tomorrow! But, apart from all of that, I wonder if you, as someone employed in the insurance industry, have ever seen a jewellery valuation certificate for less than the purchase price? If not, surely that alone demonstrates that something smells fishy!
posted by john bourke on March 03, 2011 12:29

GW
YES HOUSES DO HAVE VALUATION CERTIFICATES,I HAD TO HAVE MY HOUSE VALUED FOR THE BANK.
DID YOUR BANK NOT WANT A VALUATION?
DIAMOND PRICES ARE RISING AT AN INCREASE NEVER SEEN BEFORE,OR ARE YOU IN ANOTHER WORLD,RIDICULOUS VALUATIONS BY SOME PEOPLE PUT A BAD SLANT ON THE INDUSTRY ,BUT THE INSURANEC COMPANIES ARE NOT STUPID THEY WILL WEED OUT THE THE BEST PRICES THESE DAYS SO FORGET THE THE VALUATIONS AS THEY STAND,BUT INSURANCE COMPANIES NEED ONE FOR THERE PAPER WORK,WHAT HAPPENS AFTER THAT IS UP TO THEM AND THE INSURER
posted by Gregory Ward on July 07, 2011 18:49

Agreed
If you want to see valuations being used as a scam look at online shopping sites like ebay, bogus valuations are used to over value jewellery to ridiculous amounts, you will always find small variations in valuations as they are "expression of opinion" the valuers council have been working hard over many years to try and get valuations more on realistic grounding, I am not a valuer but I have had many conversations with my valuer over this issue, there is a lot of variations that can go into valuations; stone costs, labour charges, metal charges, handmade vs cast vs cad, they have a tough job to get it right 100% of the time.

Another point you have raised is using valuations as a discount method I think you will find this has been banned by the ACCC.

You are right more needs to be done, but it needs to come from the valuers council, they need to start taking to dodgy valuers with a big stick, until they start doing this nothing will change.
posted by Rick Vela on October 06, 2011 11:32


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