Valuation, appraisal or offer: which one you actually need

01

The four things people mean by valued

Ask where to get a ring valued and you may get four different answers, each from somebody who produces one of the four documents. They differ because each is written on a different basis, for a different reader, to answer a different question. The table adds a fifth row for the reply this site gives from photographs, which is not a valuation and is set beside the others so you can see where it falls short.

What each document states, who writes it, and what it cannot be used for. The last row is not a valuation

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The National Association of Jewellers tells its members to value only items they have physically examined at the time the valuation is completed, so no opinion from photographs is a valuation. It also tells them that for insurance the replacement basis must be discussed and agreed with the client, because new for old, second-hand replacement, antique replacement and facsimile are four different numbers for the same ring.

02

Why an insurance figure will not do for an estate

Executors often find an insurance schedule in the file, with figures on it, and it looks authoritative. For an estate it is the wrong basis.

HMRC's Inheritance Tax manual sets out the test as the price the property might reasonably be expected to fetch if sold in the open market at that time. It says a valuation prepared on any other basis may not meet that test, because the value could be more or less than open market value, and gives the example that an insurance valuation using replacement values may include too high a value. It also suggests its staff confirm that a valuation described as being for probate did use open market value.

The National Association of Jewellers' consumer guidance describes the insurance basis from the other end: the figures in an insurance valuation represent average UK retail prices to replace items, whether new, new-for-old, second-hand or antique. A retail replacement figure and an open market figure for a used piece are different quantities, and are meant to be.

Where an estate does have to send HMRC full details, the probate valuation guide goes through form IHT407 box by box: which pieces are listed one at a time, where coins and medals go, and what the form asks about a piece already sold.

03

When you need to pay a professional, and when you do not

Some people pay for a valuation they did not need, and a few skip one they did. The line usually falls in the same places.

• Pay for a valuation when an insurer requires one, when an estate's possessions are valuable or the figure may be questioned, when items are being divided between beneficiaries who need an agreed figure, or when a piece is important enough that you want it described by somebody qualified before anything happens to it.
• Do not pay for a valuation when what you want to know is what a thing is, whether a mark is a hallmark or who made it. Those are identification questions, and they have unpaid answers. For a first view of what something might fetch, a saleroom's free pre-sale opinion is the usual step.
• Ask a specialist instead when the question is about one object rather than a collection: a coin dealer on a coin, a watch specialist on a watch, an auction house's department on anything signed. A general valuer covering a whole estate will usually say so themselves.

Where a document is needed, instruct a qualified independent valuer. The National Association of Jewellers keeps a register of Institute of Registered Valuers members, who hold recognised valuation, gemmology and diamond grading qualifications, have at least five years' experience in the jewellery trade, and have their valuation work monitored at least every five years. A saleroom will usually give a pre-sale opinion without charge on items it might sell for you, and that opinion is an estimate rather than a valuation. A specialist dealer will tell you what they would pay, which is an offer, and a good one will also tell you when a piece belongs at auction instead. An assay office will research a mark for a fee and tell you what an item is made of, which is the right service when the question is simply what this is.

Getting more than one of these is normal, and nobody involved expects otherwise. An estate in particular benefits from having its valuation and any offer come from different people, because that shows a beneficiary the sale was independent.

04

How valuers charge, and what to agree before you hand anything over

No fee figure appears on this site, because fees vary by valuer, by the number of items and by how much research a piece needs. What can be said is what to ask, before you instruct rather than after.

1. Ask what the fee is based onIs it charged for the valuer's time, as a percentage of the total they assess, or as a fixed fee with a minimum? All three are used. A percentage basis gives the valuer an interest in a higher total, which is worth knowing before you agree to it.
2. Ask which basis the valuation will be onReplacement for insurance, or open market value for probate. Say which you need, in those words, and have the answer confirmed in writing. HMRC's staff may check this, and so should you.
3. Ask what happens to the itemsWhether the valuer works at your home, at their premises, or takes the items away; who insures them while they are out of your hands; and how long they will be gone.
4. Ask what the document will containA valuation should identify and describe each item individually, with weights, marks and stone details, and be signed and dated by the person who did the work. A list of lump sums against vague descriptions is of little use to an insurer and less to HMRC.
5. Get it all in writing firstBasis, fee, timescale and what is being valued, agreed before anything is handed over. A professional valuer will expect this.

05

What a rough idea from photographs is, and what it is not

This site offers a written reply to photographs before anything is posted, called a rough idea. It is narrower than many people assume.

• It is a reading of the marks and form. It says what the pieces appear to be: this looks like sterling, this looks like electroplate, this reads as a British hallmark for 18ct, this is not precious metal at all. A photograph cannot prove what anything is made of.
• It helps you sort. It tells you which items look worth putting in a parcel and which do not, which saves a wasted parcel.
• It is a flag. Where something looks as though it may be worth more than its metal, it says so and suggests what sort of specialist to take it to. We may miss things a specialist would not, so if you already suspect a piece matters, ask a specialist first.
• It is not a valuation. Nobody has held the item, weighed it or tested it, and no opinion from photographs is a valuation.
• It is not for the estate's figures. It is not on the open market basis, not as at the date of death and not prepared by a valuer instructed by the estate, so it must not be used for an estate's figures, an inventory value or sharing things out between beneficiaries.
• It is not an offer. An offer is made after the items have arrived and been listed, weighed and checked, and it covers the lot as one amount. The offers page explains how that works and what happens if you decline.

No professional membership, accreditation or valuation qualification is claimed for this business. What is offered is that a person looks at your photographs and tells you what the marks and the form suggest.

06

Seller risks and exceptions

• Using an insurance schedule as an estate figure. It is the wrong basis, it can be too high, and HMRC's manual says a valuation on another basis may not meet the open market test.
• Using a buyer's offer as a probate figure. An offer is what one buyer will pay now, not open market value at the date of death, so it should not be reported as the probate value.
• Reading an auction estimate as a price. It is a range and an opinion. The seller's commission and other charges, with VAT on them, come off whatever the lot makes, and a lot that does not reach its reserve does not sell.
• Paying for a full valuation when you needed an identification. If the question is what this is, an assay office's mark research answers it, and a free rough idea from photographs can give a first indication.
• Instructing a valuer without agreeing the basis. A document that does not state its basis is of limited use to anybody, and you may not find out until it matters.
• Letting one firm produce both the valuation and the offer. Keep them separate where an estate is involved; it answers the question a beneficiary will eventually ask.

07

When not to use the postal route

The postal route is for pieces being sold for their metal by somebody who has decided that is what they want, including mixed lots nobody has identified yet; the photographs and the checks do the identifying. Selling gold by post and selling silver by post describe that route from start to finish. If you are not sure which pieces belong where, what to keep back helps you sort them, and the executor's guide covers the estate case in full.