Value elements are an absolute requisite. As Noted by Henry A. Babcock more than fifty years ago, without them, one cannot seek comparable items in the marketplace most appropriate for the property being appraised. 'A value element is any magnitude, attribute, quality, or characteristic of a property which contributes to or detracts from its market value.'¹ The appraiser-gemologist must state in the appraisal all value elements.

        Appraisal Software and Preprinted Forms

Although it is convenient to use appraisal software or preprinted forms, beware if they limit the ability to proclaim all value elements. But what are considered value elements? When the appraiser-gemologist examines an item of jewelry, there are a series of steps taken to determine what the item is and its attributes. That series of steps reveals the value elements.

        Weight of the Item

The weight of the item should be mentioned. The weight may not be a value element. However, in the event of a casualty loss, the weight may be the first element for matching the property to an appraisal by police checking recovered stolen property. One can use the troy weight system (pennyweights) but should translate that into grams (avoirdupois system) since police have gram scales but not pennyweight scales.

        Marked for Life

Quality marks and/or tests are used to identify metals. Mention the quality mark² if one is present. There may be a mark that reveals the country of origin. Artists' marks are also important. Some artists are collectable, which in turn affects the value. And trademarks, maker marks, etc., after researching who they belong to, will need to be mentioned. For example, if the item has an Italian maker mark 3499 AL, this reveals that the item was made by Andreoli, located in Alessandra, Italy. That can influence your value conclusion.

Once the appraiser-gemologist knows the maker, they can concentrate their value research on that company. An even more narrow band of research exists when a copyright is discovered. Legally, only the copyright holder or authorized agents can sell the item. What they sell the item for is the value.

        How Made

Is the item cast, fabricated, etc.? Values will vary depending on the method of manufacture. Is it mass produced or custom made? These are value elements.

What is missing here is a way to mention the grade (condition) of the mounting. Yes, you can mention that the item has normal wear and tear but is that sufficient? Coin collectors rely on a grading system for collectable coins. Yes, we have finetuned diamond grading but bypassed the mountings. If you use a term like "very good" to describe the condition of a ring, for example, then add a glossary to detail what "very good" means. In other words, avoid embellishment.

        Overwhelming Gemology

Volumes have been published on identification, authentication, and quality grading gemstones. Whether the gemstones are diamonds or colored gemstones, the value elements must be revealed in the appraisal.

        The Five C's³

The four C's, namely color, clarity, cut, and carat are rattled off by even the most untrained appraisers. The quality of cut, not just the type of cut is important. And some cuts are patented or copyrighted. And yes, they are all value elements.

        Provenance

Whenever an item has a history that adds to its value, called provenance, that must be included. Provenance can be, for example, ownership by a famous person. If a ring that would be considered commonplace was owned by Elvis Presley, then it has added value due to provenance.

        When?

Most of the above value elements involve deductive reasoning; a scientific process of eliminating possibilities until only one possibility is left. That remaining possibility is what the item is. Gemology is based on deductive reasoning. But as appraiser-gemologists we also apply inductive reasoning. We look at several attributes of an item to determine, for example, if the item is a period piece or antique. Seeking a value in contemporary retail markets is not possible and markets where such items commonly sell will result in a proper and defendable value. If the item is art jewelry, there is an active art jewelry market to research. Value elements also serve to reveal the prevailing market to investigate.

        Split Personality

Babcock in his definition of value elements included detractions. This not only applies to damage, poor quality stones, etc. It also includes to dissenting opinions. Most gemologist-appraisers are thinking of fellow team appraisers disagreeing with the results of a fellow valuator. Yes, but it also encompasses gemstones with a gemstone laboratory report with which the appraiser disagrees. This is a commonplace occurrence with the abundance of diamond "certs" from little known laboratories. Everyone who appraises has been confronted with a laboratory grading report that disagrees with their conclusions. Some of these laboratories are not very credible. How does one decide which are an which are not?

The usual approach with such reports that the gemologist-appraiser disagrees with is to (1) ignore the report, or (2) ask the client if they want a casualty loss to be based on the appraiser's opinion or the laboratory report. This is a classic situation for using the Broad Evidence Rule.⁴ Why make the client decide when they do not know the end results of their choice? Instead, let an authorized insurance agent explain the options, premiums, etc. Thus, you render an appraisal that provides two value determinations, one for your determined value elements and one for the laboratory results.

        Al Fin

The best methodology, and has been for more than fifty years, for rendering professional valuations is to report all the value elements, regardless of whether they enhance or detract from the value conclusion.

Written by Bill Hoefer