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The Truth Behind Equine Auctions and Appraising
By Liz Arnold
We’ve all been there, standing along the fence at a major show, watching a standout horse make its way down the rail. Who among us hasn’t thought, “I’d give anything to own that one,” or “I wonder how they found that horse?” The answer to those questions may rest in a lesser-known field of the horse industry—equine appraisals and auctions.
The Equine Chronicle spoke with Mike Jennings who, together with his wife Stephanie, own and operate Professional Horse Services, LLC. Jennings shares that equine appraisals work a bit differently than typical appraisals outside of the horse industry. “Because a majority of horses are sold in private sales, it can be difficult to gather data about accurate prices,” he says. “Part of what we do is find comparable sales and develop formulas to assess a horse’s value.” Since it can be problematic to accurately identify prices in private treaty sales, most equine appraisal values are based on thousands of verifiable auction results.
For Jennings, determining a horse’s value is often the first of many steps. “We have an auction database of over 50,000 horses, which covers different age groups and sales. That information allows us to analyze sale results for performance horses,” he says.
Analyzing sale results allows industry professionals like Jennings to arrive at a horse’s approximate value. Rather than placing a specific value on a horse, Jennings says it’s usually most realistic to place a horse within a price range based on the sale of comparable horses.
“In the appraisal industry, we arrive at a price range for a horse in one of two ways,” he says. “We ask the seller a number of specific questions about the horse including the age, record, pedigree, type of horse, etc. Sometimes we’re able to look at videos or photos if the horse doesn’t have a record. We can then compare that horse to other comparable horses we’ve sold in a very impartial way.”
He adds, “When dealing with the seller, it’s important that they know what price range the horse may potentially fall into. Buyers often want to know what we think a horse will bring. Most times, we’re able to give them an estimate of where we think a horse’s value will fall.”
Analyzing auction sale results allows appraisers to estimate a horse’s value, but Jennings emphasizes that valuing horses isn’t a hard and fast science. “A horse is worth what you can convince someone to pay for it,” Jennings says. This principle is why he believes that auctions are often the best tool for putting horses in the hands of their ideal owners. Rather than placing a value on a horse that may be influenced by the owner’s desire to recoup their investment, an auction deals solely in the horse’s merits and the market’s desires.
“An auction will place the horse in the price range of what the public is willing to pay. The seller must then decide if they will accept the highest bid, or wait longer and allow the horse to develop more value,” Jennings says. Those new to the auction format may feel apprehensive about listing a horse with an auction service in favor of a more traditional, private sale. But, Jennings says there are more similarities between auctions and private sales than one might initially think.
He says, “With an auction, you aggressively market to get the client’s horse sold in a specific time frame. The average owner or trainer has enough other responsibilities that they aren’t able to hustle the sale of a horse and create opportunities in the same way an auction company, whose sole purpose is to sell horses, can do.” Jennings adds that this sense of urgency can prove a real benefit to sellers. He urges both parties to keep in mind that any horse sale, no matter the format, employs the same basic principles.
“I try to tell people that the urgency created by an auction is meant to draw people to the sale. We’re creating activity to get the horse sold. So, whether it’s online or live, private or not, it’s just a negotiation. In a traditional sale scenario, many people aren’t comfortable making an offer. The nature of an auction gives people a place where they can make an offer and see if they can get one bought,” Jennings says.
In Jennings’ opinion, there are a multitude of reasons why sellers choose to market their horses through a professional company. He says, “We all know examples of the horse that ‘didn’t quite make it’ in one arena or another. Maybe it didn’t make a Western Pleasure horse, but the trainer has a specific clientele and therefore doesn’t have the market to get the horse sold. Or, someone might have a broodmare or stallion prospect for sale. Many trainers don’t deal in breeding stock, and so a professional sales company will have the contacts necessary to place that horse in the right hands.”
Jennings adds, “Many trainers will tell you it’s easier to sell horses for $25,000 and above. Auctions offer a broad-based marketing program and deal with a lot of horses in the more moderate price ranges. An auction gives sellers a much wider customer base to draw from when attempting to market their horse.”
Marketing is one of the primary differences between selling a horse privately and using a professional company, or agent, according to Jennings. “Depending on the type of horse, we target emails to certain groups. Our company uses social media a lot. Most of our information is done with specific events and markets for that event in mind. Jennings’ company has experience with many of the top equine auctions in the industry including the World Show Sale, Congress Super Sale, and online auctions held regularly at prohorseservices.com,” Jennings says.
One reason Jennings believes auctions are so successful at matching the ideal horse and owner is because of strategic marketing. He says, “It’s the responsibility of the seller to put that horse under the right people’s noses. Buyers won’t come hunt for it.” Another major benefit of an auction company is that they can reach top tier buyers and expose horses easily to a specific, target market. One of the common misconceptions about auctions is that horses often bring less than their value. “Some people think auctions are wholesale, but that’s not true,” he says. “They deal in actual values. A horse in an auction is worth what someone wants to buy it for right now.”
What people are willing to pay right now depends largely on the horse’s characteristics and the buyer’s intended purpose. “People looking to buy a Western Pleasure futurity prospect aren’t going to buy a late foal. They’ll go with a bigger, stouter, more mature colt that will be strong enough to make a futurity horse. Lots of late babies make nice horses down the road. But, when people wait to start riding that horse, they’ve lost their present value because the horse is so late in training that they won’t catch up,” he says.
In terms of breeding stock and young horses, Jennings says, “People look at pedigree. Leading sires are what people shop first. Their foals are winning big shows and people want a chance to do the same. Next, people want to see if the mare, or her family, is competing and winning. If so, it moves people closer to shopping that horse. Finally, a buyer looks to see if the conformation, movement, and looks measure up.”
When it comes to selling prospects, Jennings says the pressure is on the seller to show buyers they have a product worth owning. He offers a common scenario. “Someone might have a Western Pleasure-bred horse by a not-so-famous stud. That person will have to put more into developing that horse and proving to people that it will be a winner. Your average buyer won’t have the comfort level if the horse’s family hasn’t won at big shows. That doesn’t mean that horse isn’t marketable, just that the person who raised that horse needs to make sure it looks the part and has the quality to be a standout show horse in their event. Then, they need to get the horse to an outlet where the right people for that horse will shop,” he says.
A popular joke in the horse industry goes like this… How does one make a small fortune in the horse business? Start with a large fortune! All joking aside, Jennings believes that being honest and realistic about one’s goals within the industry is the key to both satisfaction and success. He says, “I tell people that it’s important to know your purpose in the industry. Are you in this to make a profit, or is this something you do for enjoyment and recreation?”
Jennings says, “We begin most of our seller’s meetings by asking what they hope to get for their horse. Most people have an idea in mind of what they’d like to get for one. The next question is always, ‘what is your purpose for selling the horse?’ Many people respond by telling us what they paid for the horse and what they’ve invested into it. While everyone wants to recoup the full value of their investment, particularly for a nice show or trail horse, that’s not always realistic.
“This is because many people fail to realize that a horse’s value can depreciate over time. If that person has done nothing to improve the animal’s value, it may be worth less. The same is true for boats, golf clubs, and cars—they can all lose value over time. So, if a person has kept a horse for several years and has not significantly improved their show record, or invested in training, then all the horse has done is age and their value has depreciated.”
To avoid falling into that trap, Jennings suggests that people evaluate their purpose for horse ownership. “If you’re in the horse business to make money, then you have to buy a horse at a price that allows you to invest money into it and sell at a profit. But, if you go out and buy exactly the horse you want and spend a lot of money in the process, then you bought that horse as a recreational item, not as an investment for turnover,” he says.
In Jennings’ view, working with an auction company allows both buyers and sellers to arrive at their purpose in a more streamlined manner than they might if going it alone. Sellers need to know and understand their goals, and buyers should be honest and realistic about their desires and expectations. “What’s important in a horse will vary from one person to the next. So, before looking for a horse, people really ought to allow themselves to think about what they want their horse to do for them,” Jennings says.
He adds, “Everyone has different priorities, and that’s okay. If a person’s number one goal is to win the horse show, they need a high quality performer. For that person, stall manners might not be as important. Some people absolutely won’t buy a cribber. Others don’t care as long as the horse will win. These priorities vary from person to person.”
“People tend to get in trouble buying horses when they don’t know what they need from a horse. Many people will buy a horse because it’s beautiful and then be surprised when it doesn’t do the things they need it to do. I tell people to make a list and prioritize. Whether you’re shopping online or in person, stick to the list, and whatever you do, don’t get caught up in a video.
“Think about the practical questions. For example, are the horse’s cues in the right place for a short person? Does the horse’s personality match the rider’s style? We have to remember that we’re dealing with animals with different personalities and experiences. Sometimes, one person can get along with a horse and the next won’t. The horse business is always a gamble in that way,” says Jennings.
Jennings adds that maintaining realistic expectations about a horse’s abilities can lead to a more harmonious transition. He says, “As riders and owners, we have to learn to live with certain things about horses and accept there are often major issues we won’t change. When you’re buying an established show horse, you have to learn to ride that horse the way it’s trained. I think people should know they can make some adjustments, but they won’t completely retrain that horse. Accepting that fact helps people get a little closer to finding a horse that will serve their purpose.”
A horse that will serve a purpose, no matter what that may look like, is exactly what every horse owner wants. It should be comforting for hopeful horse owners to know that the right partner is out there, and it may be just a click or high bid away.