Valuation, appraisal or offer: which one you actually need

01

The four things people mean by valued

Someone asks where they can get a ring valued and gets four different answers, each from somebody who sells one of the four. The difference is not a matter of accuracy or of who is more generous. Each document is written to a different basis, for a different reader, and answers a different question. The table adds a fifth row for the document this site produces, which is not a valuation at all and is set beside them 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 own members that a valuer must only value items they have physically examined at the time the valuation is completed, which is why no photograph, however good, produces a valuation. It also tells them that with valuations 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

This is the mistake that costs executors the most time, and it happens because the family already has a document. There is an insurance schedule in the file, it has figures on it, and it looks authoritative. It is the wrong basis.

HMRC's Inheritance Tax manual sets out the statutory test as the price which the property might reasonably be expected to fetch if sold in the open market at that time. It then says that a valuation prepared on any other basis may not satisfy the terms of section 160, because the value could be more or less than open market value, and it gives the example directly: a valuation for insurance purposes using replacement values may include too high a value. It also suggests its staff confirm that a valuation described as being for probate purposes 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 replacement, new-for-old, second-hand or antique level. A retail replacement figure and an open market figure for a used piece are different quantities, and they are supposed to be.

03

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

Plenty of people pay for a valuation they did not need, and a few skip one they did. The line falls in a fairly predictable place.

• Pay for a valuation when an insurer requires one, when an estate has to report household goods and personal possessions to HMRC, when the items are being divided between beneficiaries who need an agreed figure, or when a piece is important enough that you want its description recorded by somebody qualified before anything happens to it.
• Do not pay for a valuation when what you actually want to know is what a thing is, whether a mark is a hallmark, whether a watch runs, or roughly where a piece sits. Those are identification questions and they have unpaid answers.
• Pay 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.

The routes, named plainly. A qualified independent valuer is the one to instruct where a document is needed; the National Association of Jewellers keeps a register of Institute of Registered Valuers members, who must pass recognised qualifications over five years and whose work is regularly assessed. A saleroom will usually give a pre-sale opinion without charge on items it might sell, in the hope of getting the consignment, 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 a different service again and the right one when the question is simply what is this.

Getting more than one of those is not disloyal and nobody involved expects otherwise. An estate in particular benefits from a valuation and an offer being separate documents from separate people, because that is what shows a beneficiary that the sale was at arm's length.

04

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

Fees are not published on this page and no figure for one appears anywhere on this site, because they vary by valuer, by the number of items and by how much research a piece needs. What can be said is what to ask, and to ask it 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 rather than afterwards.
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 it must 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 the whole of that in writing firstBasis, fee, timescale and what is being valued, agreed before anything is handed over. This is ordinary practice and a professional valuer will offer it without being asked.

05

What a written photo opinion is, and what it is not

This site offers a written opinion from photographs before anything is posted, and it is worth being exact about what that document is, because it is narrower than most people assume.

• It is identification. It says what the pieces appear to be from their marks and their form: this is sterling, this is electroplate, this reads as a British hallmark for 18ct, this is a filled handle, this is not precious metal at all.
• It is a sorting decision. It tells you which items are worth putting in a parcel and which are not, which is the question that saves a seller a wasted parcel.
• It is a flag. Where something looks as though it may be worth more than its metal, it says so, and says what sort of specialist to take it to.
• It is not a valuation. Nobody has held the item, weighed it or tested it. A valuer may not value what they have not physically examined, and neither may anybody else.
• It cannot go in an estate file. It is not on the open market basis, it is not as at the date of death, and it is not prepared by a valuer instructed by the estate.
• It is not an offer. An offer is made after the items have arrived, been listed, weighed and tested, and it covers the lot as one amount. The offers page sets out how that works and what happens if you decline.

No professional membership, accreditation or valuation qualification is claimed for this business, and nothing on the about page says otherwise. What is offered is that a person will look at your photographs and tell 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 is usually far too high, and HMRC's manual says in terms that a valuation on another basis may not satisfy section 160.
• 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, and it cannot be put in an estate account as one.
• Reading an auction estimate as a price. It is a range, it is an opinion, and commission, lotting and photography charges come off whatever the lot makes.
• Paying for a full valuation when you needed an identification. If the question is what is this, an assay office's mark research or a photo opinion answers it for a fraction of the effort.
• Instructing a valuer without agreeing the basis. A document that does not state the basis it was prepared on is of limited use to anybody, and you will 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 costs nothing extra and it answers the question a beneficiary will eventually ask.

07

When not to use the postal route

The postal route is for the case it was built for: items that have been identified as gold, silver, platinum or palladium, that are being sold for their metal, by somebody who has decided that is what they want to do. Everything before that decision belongs to somebody else, and saying so is cheaper for you than finding out afterwards. If you are not sure which group you are in, what to keep back sorts the pieces, and the executor's guide covers the estate case in full.