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Author Topic:   How is this possible?
Bobby B.
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iconnumber posted 10-19-1999 10:49 AM           Edit/Delete Message   Reply w/Quote
Hello,

I realize that everyone at this site is generally interested in silver...

I assume that the principles of appraisals are the same whether it is silver, fine art, personal property, etc. So ....

If you live in the NY, NJ, CT area, you have probably heard the commercials for the big jewelry store in Fort Lee, NJ. The store is "pitching" high quality, low cost diamond jewelry. They "guarantee that the diamonds will appraise for twice what you pay". How can this be? Since this is not a limited special sale and since anyone can walk in and purchase something at the advertised price; how can the same item be appraised for twice the amount paid?

Thanks.

Bobby B.


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Gayle M. Skluzacek

Posts: 20
Registered: Jun 99

iconnumber posted 10-21-1999 11:52 AM     Click Here to See the Profile for Gayle M. Skluzacek     Edit/Delete Message   Reply w/Quote
There are several different value levels for appraisals. If this store is selling jewelry at wholesale and the appraisal is written at a retail value level, there is going to be a considerable difference in value.
By the way, it is unethical for an appraiser to write the appraisal for an item in which he/she was involved in the sale. Buyer beware.

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Bobby B.
unregistered
iconnumber posted 10-21-1999 02:21 PM           Edit/Delete Message   Reply w/Quote
The advertiser is an store front and is selling to anyone. In my book this would make it a retail store. It is not a club nor does it require membership. Just walk in and make your purchase and walk out with their guarantee that your jewelry will appraise for double.

Clearly this is a retail operation; their appeal is that they are selling quality merchandise for a lot less than the other guys. Both are selling to the same customer. Because the price is so much less than the other guys do you call it wholesale or do you say that the other guys are charging too much? I guess my first real question is, what constitutes a retail price?

I haven't heard the radio ad for a few weeks.... but I believe that their guarantee seem to indicate that the customers purchase would appraise anywhere (i.e., they were not doing the appraisal) for double.

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Gayle M. Skluzacek

Posts: 20
Registered: Jun 99

iconnumber posted 10-23-1999 01:45 PM     Click Here to See the Profile for Gayle M. Skluzacek     Edit/Delete Message   Reply w/Quote
As previously posted, following are official definitions of the various value structures:

Retail Replacement Value (RRV) - Highest value (usually for insurance purposes) is defined as "The highest price in terms of cash or other precisely revealed terms that would be required to replace a property with another of similar age, quality, origin, appearance, provenance, and condition, within a reasonable length of time in an appropriate and relevant market." (1989 ASA handbook, p. 76)


Fair Market Value (FMV) - Middle "secondary market" value (usually for IRS purposes) as defined by IRS Section 1.170 and 20.2031 (b) is "the price at which the property would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or to sell and both having reasonable knowledge of relevant facts." According to Technical Advisory Memorandum 9235005 (May 27, 1992), fair market value should include the buyer's premium.

20.2031 (b) continues "the fair market value of an item of property includible in the decedents's gross estate is not to be determined by a forced sale price. Nor is the fair market value of an item of property to be determined by the sale price of that item in a market other than that in which such item is commonly sold to the public, taking into account the location of the item wherever appropriate. Thus, in the case of an item of property includible in the decedent's gross estate, which is generally obtained by the public in the retail market, the fair market value of such an item of property is the price at which the item or a comparable item would be sold at retail."
(Treasury Regulation Section 1.170A-13(c)(3)(1988)


Marketable Cash Value (MCV) - Middle/low "NET" value (usually for resale purposes) is defined as the net value a willing seller realizes after disposing of property in a competitive and open market to a willing buyer. Both the buyer and seller must be reasonably knowledgeable of all relevant facts, and neither being under constraint to buy or sell. Marketable cash value takes into consideration insurance, dealer commissions, advertising, travel, and shipping expenses that may be involved in the sale.


Orderly Liquidation Value (OLV) - Low range "NET" value (usually for quick sale purposes) is defined as "the most probable price in terms of cash, or other precisely revealed terms, for which the property would change hands under required and limiting conditions in an orderly manner, generally advertised, with reasonable time constraints, in an appropriate and relevant marketplace, with knowledgeable buyers." (ASA 1994 Handbook, p. 2)


Forced Liquidation Value (FLV) - Lowest range "NET" value (usually for a quick and forced sale purposes) is defined as "the most probable price in terms of cash, or other precisely revealed terms, for which the property would change hands if sold immediately, without regard to relevant market place." (ASA 1994 Handbook, p. 2)

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Gayle M. Skluzacek

Posts: 20
Registered: Jun 99

iconnumber posted 10-23-1999 01:48 PM     Click Here to See the Profile for Gayle M. Skluzacek     Edit/Delete Message   Reply w/Quote
What type of an appraisal is given? Who writes the appraisal? What are their qualifications?

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