Buying a luxury watch often involves feeling of success, accomplishment, even tinged feelings finding a treasure long sought after. That said, life is full of changes and seasons. Rarely do things stay constant decade after decade. And, sometimes a luxury watch then becomes more than a personal belonging, it becomes an investment.
However, understanding just how much an investment a luxury watch may be doesn’t mean that someone suddenly can liquidate it in a moment. The age-old practice of appraisal is required, especially when a watch is to potentially be sold from a private owner versus a retailer. So it’s significantly important for a person considering turning his or her watch into a salable investment to first understand how the appraisal process actually works. This knowledge serves two benefits: 1) a watch owner has a detailed understanding of how an appraisal is calculated, and 2) the owner also have a fair market valuation of the watch in the current market.
The typical appraisal of a valuable piece of jewelry occurs when an owner decides to insure the item. Known as a rider policy, these valuations are intended to protect the owner in case the jewelry item listed gets lost, damaged, or is stolen. However, the process doesn’t give an owner the necessary detail to understand how an insurance provider determined the rider policy value in the first place. Ironically, the process is very much the same as an independent appraisal, but the results can differ by as much as 20 to 40 percent.
First off, some terms need to be understood. There are two descriptions that are very important to distinguish. The primary one associated with an appraisal is “replacement value.” This is the dollar figure that represents the cost one would have to pay to replace the given luxury watch if it is indeed lost or stolen. It is the figure that an appraisal report will provide when the analysis is complete, including the latest information about the given watch and what its worth if bought at that moment.
The second term is “cash value.” This is the worth of a luxury watch that it will provide an owner if sold to another party. It represents the actual dollar value received in the form of a payment when the watch is transferred to another party in a sale.
The two terms are very, very different in value. The best way to test this theory is to ask the appraiser if he will purchase the luxury watch for the appraisal price at the moment the report is completed and provided. 9 out of 10 appraisers will decline. There’s always an exception, but almost all know they can obtain the same watch for less at a cash value price. The unique situations that differ are usually where the watch is so unique and such a collector’s item that the one analyzed might be the only one an appraiser may ever see in his life. At that moment he might very well change perspective and become a collector. However, that’s not the norm in the appraisal business.
Understanding the two terms above, a luxury watch owner will realize very quickly that the implication doesn’t work in his favor. In fact, while a watch may receive a very, very good appraisal estimate, in most cases an owner will not receive anything close to that figure in a resale. Many are shocked by this fact, especially when they find that their jewelry piece can be as low as 10 to 50 percent of the appraisal value. Why? Let’s understand how the appraisal calculation works.
An appraiser not only figures out what it costs to produce a luxury watch at current expense, his calculations also include the markup in price that a retailer would charge, which can as much as triple the expense of production. In addition to these figures, an appraiser will add in any other factor that may be market driven over the near future, at least in terms of known influences. They can include market changes in the spot value of gold and other precious metals, supply and demand influences on diamonds, and collectible demand on specific jewelry names and models. Then the appraiser includes the negative figures such as wear and tear and age. While gold and diamonds will hold onto value, at least what the market will provide for spot value, the assembly of a jewelry piece will be discounted for time. Again, only specific collectibles such as famous limited run pieces will actually go up in appraisal price versus down due to age and time.
For owners, everything that came with the luxury watch is just as important as the watch itself. These include the original product box, the display case, the included paperwork and title, and accessories. Even the warranty card matters. The more of the complete watch package that is still retained, the higher the appraiser can mark a luxury watch being reviewed. This is particularly important for famous brand name watches.
Of course, the performance of the watch is a factor as well. A completely working watch in perfect order earns the highest marks. However, over time even the best quality watches begin to have issues from mechanical wear. An appraiser will mark down these condition features accordingly.
If you’re looking for a proper and professional appraisal in the Boca Raton area, just like anywhere else, it’s important to work with a firm that has a strong, well-earned reputation at providing accurate evaluations of jewelry pieces. The appraising staff should be trained and experienced, with years under their belt understanding the nuances of particular jewelry pieces and their worth. Since 1983 Raymond Lee Jewelers is South Florida’s most trusted Jewelry Sales and Service Center. We regularly provide customers professional jewelry and watch appraisal services, including evaluations of watches that are decades old or have been customized. Our services are referenced on a long-standing reputation of giving customers our best service and knowledge, especially in cases of investment appraisals, transfers, and estate sales. So if you’re interested in determining the potential of a luxury watch’s value or you just want to know the investment value of a watch in today’s market, Raymond Lee can help.
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