Commissions to Multiple Agents

[Muggle Mom]

I've been contemplating selling a horse and have been told that it will likely take multiple agents to sell her, each receiving a 15% commission. Is this common and expected? I'm told that the horse is priced fairly at $50,000 to me, so could buyer possibly pay over $70,000? Almost 50% in total commissions? Would they even know they're paying so much in commissions? This is the first horse I've ever sold and I feel very naive ...

I want everyone to receive fair compensation for their work and want to be fair to the purchaser as well, so just seeking advice on what is standard.

[CHSatwork]

Luckily for you there are many people into horses that have way more money than they do brains. :yes: So the answer is yes there is someone out there that would spend that money. Will they know how much is commission? Maybe but they probably don't care.

[ToTheNines]

Sometimes I wonder if trainers buy the best horse for the client or the one that will make them more money.

[dags]

Multiple agents as in a buyers agent and sellers agent? Yes, each of them gets their own % but buyer should be covering their agent on top of the sale price. You should pay your agent out of the sale price.

If you're agreeing to paying 15% to two or more agents before even 1 agent has made an attempt to sell the horse? I think that is a bit premature.

[Muggle Mom]

Multiple agents as in a buyers agent and sellers agent? Yes, each of them gets their own % but buyer should be covering their agent on top of the sale price. You should pay your agent out of the sale price.

If you're agreeing to paying 15% to two or more agents before even 1 agent has made an attempt to sell the horse? I think that is a bit premature.

Luckily, I haven't agreed to anything yet. I've been told by the trainer that it's likely there would be a seller's agent (her), a buyer's agent and a "go-between," each expecting 15%. She told me that I should expect to receive $50,000 net, so I have no idea of the actual "sale price" that would be quoted to the buyer.

All speculation, as yet, but am curious as to whether this would be typical and fair to all involved.

[grandprixjump]

Should be like buying a house, one commission split between everyone. Not each tacking on a new commission for making 1 phone call..
Better for everyone buying or selling, and keep extra hands out..

[dags]

Luckily, I haven't agreed to anything yet. I've been told by the trainer that it's likely there would be a seller's agent (her), a buyer's agent and a "go-between," each expecting 15%. She told me that I should expect to receive $50,000 net, so I have no idea of the actual "sale price" that would be quoted to the buyer.

All speculation, as yet, but am curious as to whether this would be typical and fair to all involved.

If $50k is an exceptional price to get for your horse, and your trainer is going to need another trainer's network to make that happen, then it may be a good deal. What the buyer has to pay their agent should be none of your concern.

But it feels like we're mixing two different selling tactics. One is to say "I want 50k and whatever you need to price him at to make that happen is your concern", which means it doesn't matter to you what the buyer ends up paying, AND if they can't sell high enough to get their 30% you still get the 50k. The other is a commissioned sale, in which you agree to pay however many people 15% irregardless how much the horse sells for. In this market I would be very hesitant to agree to 30% commissions as a seller. You could very well end up paying that commission out of your $50k.

[Muggle Mom]

Should be like buying a house, one commission split between everyone. Not each tacking on a new commission for making 1 phone call..
Better for everyone buying or selling, and keep extra hands out..

I agree with this for the most part, though houses are typically more expensive so there is more to share in one commission. I'm most concerned with the fact that there is no transparency for the buyer, or for me for that matter, since I will only see the net amount that I agree to accept.

I guess what I'm asking is if this is typical and no big deal, as has been assured to me by the trainer.

I appreciate the feedback!

[Muggle Mom]

If $50k is an exceptional price to get for your horse, and your trainer is going to need another trainer's network to make that happen, then it may be a good deal. What the buyer has to pay their agent should be none of your concern.

But it feels like we're mixing two different selling tactics. One is to say "I want 50k and whatever you need to price him at to make that happen is your concern", which means it doesn't matter to you what the buyer ends up paying, AND if they can't sell high enough to get their 30% you still get the 50k. The other is a commissioned sale, in which you agree to pay however many people 15% irregardless how much the horse sells for. In this market I would be very hesitant to agree to 30% commissions as a seller. You could very well end up paying that commission out of your $50k.

The bolded sections reflect accurately what the trainer is telling me, so if this is common in horse sales, then I will feel more confident in moving forward. Thank you for the explanation.

[CHSatwork]

Simple solution. Insist the buyer make the check payable to you, then you dole out the commissions. That way you and the buyer both know what is being paid. If all involved are honest they won't have a problem with that at all. If anyone balks, grab your horse and run to another barn.:winkgrin:

[trail blazer]

Should be like buying a house, one commission split between everyone. Not each tacking on a new commission for making 1 phone call..
Better for everyone buying or selling, and keep extra hands out..

Absolutely! This is a buyers market, very much like selling real estate. Our last deal had complete disclosure. The check was made out to the seller who paid her trainer. We paid ours separately. Horse was priced similarly and the commission we paid our trainer to sell was 10%. I don't care what the buyer paid her trainer as it does not affect me. Without this understanding up front, my horse may not have been considered if he had been offered at a 30% mark up. I feel strongly, and with no disrespect, that many trainers need to get off their pedestal and come down in the real world....no where is it written that commissions must be 15%.

On the flip side, our trainer will only ask for a commission on the difference in the price of the new horse and the one we sold. She is of course, looking forward to more lessons and shows. I think she Is a smart businesswoman myself!

[BeeHoney]

Typically, as a seller, you should IMO reasonably expect to pay a single commission to your seller's agent (your trainer) in exchange for marketing and selling the animal. I personally would refuse to work with a trainer who expected me to pay more commissions on top of that. If my trainer used some "go between" I'd expect them to pay that person out of their share, but I admit I've never been in that situation where I've been asked for additional commissions from the people that regularly sell horses for me.

If the buyer is using a trainer (which most likely they will), then the buyer will most likely be paying some type of commission to their trainer, typically 10 or 15%, or some other prearranged amount. But, that is the buyer's business and is on top of the purchase price they are paying for a horse.

I realize that other people may do things differently, but when I sell a horse I insist on a bill of sale that lists me as the seller, my agent as the agent, the actual sale price of the horse, the dollar amount of any commissions that I am paying and to whom I am paying them, and the signature and basic contact information of the new owner.

I absolutely have lost sales over my requirement for an honest, transparent bill of sale. I have had trainers call me about horses, but refuse to bring their client to see the horse when I refused to agree to quote an increased sale price to the buyer or refused to agree to pay an second commission to the buyer's trainer if the buyer bought the horse.

There's a lot of dirty business that goes on around horse sales. There are plenty of trainers that will tell their client who is buying a horse an inflated price and then they will pocket that extra "commission" on top of their regular commission. This is illegal.

There are also sellers agents who will take a horse and sell it for a client, and tell the seller that they were only able to get "$X" when they actually sold the horse for a lot more money than X and just put the extra in their own pocket. This is also illegal.

There are also sellers who will give the buyer's agent a monetary "gift" if they successfully convince the buyer to buy horses from them. Again, this is also illegal.

My advice would be this: your trainer should divulge to you up front what % their commission is. They should agree that they will disclose to you the actual selling price of the animal, and any commissions paid out in regard to the sale and to whom.

[dags]

The bolded sections reflect accurately what the trainer is telling me, so if this is common in horse sales, then I will feel more confident in moving forward. Thank you for the explanation.

Perfectly fine, legal and common enough. But I would eliminate any talk of percentages and clarify whose responsibility it is to pay the middle man should things not go as planned. You want 50k, the two selling agents can split whatever's left. If that's 10k then they get 5k a piece. If it's 40k then they've supplemented the past 3 years of a crappy market. All perfectly fine as long as you've agreed to it, but be sure to clarify what happens if things do not go as planned and you're looking at 55k offers with a 30% commission bill.

[Platinum Equestrian]

I've been contemplating selling a horse and have been told that it will likely take multiple agents to sell her, each receiving a 15% commission. Is this common and expected? I'm told that the horse is priced fairly at $50,000 to me, so could buyer possibly pay over $70,000? Almost 50% in total commissions? Would they even know they're paying so much in commissions? This is the first horse I've ever sold and I feel very naive ...

I want everyone to receive fair compensation for their work and want to be fair to the purchaser as well, so just seeking advice on what is standard.

I agree that people should be compensated for their work. Your responsibility is for your trainer. If your trainer wants or needs to get another professional involved then they should take care of them out of their own proceeds... Do you know the percentage your professional expects?

Get everything in writing! Make sure the terms state the price being asked, the commission that is agreed upon to your trainer, and that you will receive the sale funds and cut the trainer a check. If anyone else is involved, the trainer is to pay them out of their portion...

BeeHoney is exactly right. It can be costly to get into a deal that is dirty... Good luck to you...

[INoMrEd]

Simple solution. Insist the buyer make the check payable to you, then you dole out the commissions. That way you and the buyer both know what is being paid. If all involved are honest they won't have a problem with that at all. If anyone balks, grab your horse and run to another barn.:winkgrin:

Like!

I have heard of situations such as this happening: Trainer/Agent may tell seller that horse is worth $50K and then the price goes up and seller has no idea how much money was really paid. It's even worse when in our small horse world seller finds out that buyer paid double!

[Muggle Mom]

The lack of transparency bothers me, but the trainers' connections are key to getting the horse sold in this price range. She has also greatly improved the horse over time and deserves her full commission. The arrangement is as Dags said, all commissions are to be in excess of the $50K promised to me. I trust the trainer on my behalf. It's more my concern if the buyer feels cheated if large commissions are added to the sale price they would be paying. If this is common practice, then I'll assume the prospective buyer will suspect commissions have inflated the price, but will be willing to purchase the horse anyway.

[monique06]

Honestly this is beyond my knowledge...
but as to the business side...
there where certain cases that commissions are based into the percentage of a selling price. But i think you should give it separately...

[JazCreekInc.]

As a real estate broker I always die a little on the inside thinking about horse sales and the lack of transparency. It is so disturbing to realize there is NO REGULATION what so ever... although in CA apparently this is changing.

I could never sell a house without everyone knowing exactly how much everyone gets paid. It is so odd to me watching horse sales and how crazy the deals can get.

[Muggle Mom]

Like!

I have heard of situations such as this happening: Trainer/Agent may tell seller that horse is worth $50K and then the price goes up and seller has no idea how much money was really paid. It's even worse when in our small horse world seller finds out that buyer paid double!

If I agree to accept a certain amount, then I shouldn't be concerned with what others make on the horse IF this is common practice that the buyer is aware of and purchases the horse anyway. If selling a horse in this way is common and accepted, I won't worry so much. But if this isn't common and buyer feels he has bought a $70-$80K horse that is actually worth $50, then that doesn't seem fair.

[Linny]

I have no issue with fair compensation and know that when working on a pure commission basis, some sales are easy and some take forever and the % is the same.

That said, look at it this way. You list your horse for sale with your trainer as agent. She networks and does a good job making sure he's maintained show ready. She arranges showings and discusses the horse with potential buyers. She handles shipping, test rides, vetwork, all of it. She charges a 10% commission and you have to do nothing but wait for the "closing" date.
Now, a call comes in from X who trainer knows and has done some business with. Do you still have Dobbin for sale? Yes, I do! She arranges test ride only to find that the caller is NOT the agent for the potential buyer but a person with whom the buyers trainer has done business. (A go between, if you will.)
Person loves horse, vets him and makes acceptable (to you) offer. Your trainer has worked hard for you and gets her commission. Now, both buyers trainer and the go between are looking for 15% of the sale price! What????
Now, if the 2 trainers are considerate they might offer a kind reward to the go between, but it seems to me that the buyer's trainer should be paid by the buyer (and probably IS being paid thusly) and the only person YOU (the seller) owe is the person with whom you have a contract, the person who worked to sell your horse, your trainer.

[Linny]

If I agree to accept a certain amount, then I shouldn't be concerned with what others make on the horse IF this is common practice that the buyer is aware of and purchases the horse anyway. If selling a horse in this way is common and accepted, I won't worry so much. But if this isn't common and buyer feels he has bought a $70-$80K horse that is actually worth $50, then that doesn't seem fair.

if i may, fair is fair. Saying it's fair IF it's common practice but not otherwise is poor judgement. Either it's fair or it's not.
Also, your respresentative in the sale owes you best outcome under agency laws. If she CAN get (say) $70k she owes that to you, less any agreed upon commission percentage. If she CAN get $70k and does so and gives you $50k of it, you have NOT been represented well by your agent.
If she thinks she can sell for $70k then she should either buy the horse today for $50k and resll him for what ever profit she can (thus taking the risk of the investment herself) or she should get $70k on YOUR behalf and charge you her standard commission as stated in her sales contract.

[BeeHoney]

You are right to be concerned by the lack of transparency. Whichever type of commission agreement you make, you should expect your trainer to disclose to you the final sales price and all commissions paid. This has nothing to do with trust, it has to do with the fact that no ethical agent profits off their client (or helps others profit off their client) without disclosing it to the client. The profit part is fine, it just has to be disclosed. I think that commissions, even large ones, are often money well spent when it is with the knowledge and consent of the person paying it.

Yes, it is possible that a buyer would back away from a deal that involved large commissions, or that they would feel cheated if they found out about hidden commissions after the fact. It's also possible that they are indeed willing to accept paying significant commissions to get the right horse.

I'm glad that you trust your trainer, but I've seen way too many otherwise very smart people check their brains at the barn door because their trainer told them to :) So, go ahead and trust your trainer but keep your brain turned on and have the same amount of involvement and oversight you would have over any other significant financial transaction.

Here's some food for thought:
http://www.equinelegalsolutions.com/secretprofittaking.html

[Kryswyn]

If I agree to accept a certain amount, then I shouldn't be concerned with what others make on the horse IF this is common practice that the buyer is aware of and purchases the horse anyway. If selling a horse in this way is common and accepted, I won't worry so much. But if this isn't common and buyer feels he has bought a $70-$80K horse that is actually worth $50, then that doesn't seem fair.

Would you HONESTLY be happy to learn (after you received your $50K) that someone paid $90K for your horse? Wouldn't you think that maybe you'd been taken, or at least could've made an extra 10K?? Do you really think your trainer, the buyer's agent, and some 'go between' should split $40K??? REALLY??

If you want $50K, then the selling price of the horse is $60K and you can accept $57,500. The buyer's agent gets paid by the buyer, because as stated, some buyer's agent/trainer prefer a flat fee, or smaller amount because they'll be making their $$ from the client's lessoning/showing/boarding etc. If there is a 3d party facilitating the sale, I'd want to know EXACTLY what they did to earn their money AND it should come out of the seller's agent's $7500 because since WHEN has 15% become the norm? In all the years I sold horses/ponies it was 10%. If all they've done is make a phone call, $500 would be the MOST I think they're entitled to, however much the horse sold for, because all they did was make a phone call.

Bills of Sale SHOULD be transparent. This is one reason why 'horse dealers' got a bad name. If there wasn't anything shady going on, YOUR trainer and the Seller's trainer should be perfectly fine with transparency. If they are not, it's a red flag that something shady is being contemplated.

[dags]

15% is quickly becoming standard and has been common for awhile.

Here's the thing about horses, there is no blue book. A horse can be worth $50k at one barn and $75k at another, and typically the reason the horse is worth more in one program is because they've built a career and reputation upon successfully selling horses. So the commission to them is not to cover one phone call (a not unheard of though extreme example), but to "purchase" a slice of their experience, contacts and reputation to use towards your benefit.

In this situation, if the terms have been fully disclosed to the seller, then the onus is on the buyer to recognize that the 80k hunter they sat on in Wellington is really not that far removed from the $50k one they sat on in Minnesota.

This seller is purchasing assistance to help sell her horse, the cost of that assistance has been clearly outlined to her and she is going to try and cover it in the asking price of the horse, which may or may not work, but is perfectly acceptable.

[meupatdoes]

I agree with this for the most part, though houses are typically more expensive so there is more to share in one commission. I'm most concerned with the fact that there is no transparency for the buyer, or for me for that matter, since I will only see the net amount that I agree to accept.

I guess what I'm asking is if this is typical and no big deal, as has been assured to me by the trainer.

I appreciate the feedback!

Do not accept this.

If they are not willing to DISCLOSE where the money is going, to the seller or the buyer, what does that tell you?

It happens because trainers cow their clients into letting it.
Don't be one of those clients.


By the way, it is possible and has happened for trainers to get suspended by USEF for pricing a horse out at $50k, unbeknownst to the seller, who thinks they are only asking $25k. So for everyone who says "A horse is worth what someone is willing to pay for it" keep that in mind.

[dags]

Do not accept this.

By the way, it is possible and has happened for trainers to get suspended by USEF for pricing a horse out at $50k, unbeknownst to the seller, who thinks they are only asking $25k. So for everyone who says "A horse is worth what someone is willing to pay for it" keep that in mind.

That is a different situation. This seller is aware the horse will be priced above what she is asking. The agents have disclosed where the money will be going. She could even be copied the bill of sale with no surprises, as she is fully aware going in that she will receive less than the total sale price. Or, the bill of sale and check could go to her, she takes her 50K and doles out the rest. The key here is that the seller has been informed, so now it is up to the buyer to ensure they are getting the best value possible for their money.

[dags]

Just saw this part:


or for me for that matter, since I will only see the net amount that I agree to accept.

That is up to you. Just make sure everything is outlined on paper.

[meupatdoes]

In this situation, if the terms have been fully disclosed to the seller, then the onus is on the buyer to recognize that the 80k hunter they sat on in Wellington is really not that far removed from the $50k one they sat on in Minnesota.

The onus is not on the buyer.

The law has certain requirements for agents, and it includes disclosure of where their money is going.

When a buyer hands their trainer an $80k check to pay for a horse, if that trainer then keeps $30k and pays out $50 to the seller, that is illegal. Whatever agreement the seller made with her trainer and the buyer's trainer does not change the fact that it is ILLEGAL for the buyer's trainer to spend the buyer's money without disclosing to them that $30k out of $80k is commissions.

[howardh]

Would you HONESTLY be happy to learn (after you received your $50K) that someone paid $90K for your horse? Wouldn't you think that maybe you'd been taken, or at least could've made an extra 10K?? Do you really think your trainer, the buyer's agent, and some 'go between' should split $40K??? REALLY??

If you want $50K, then the selling price of the horse is $60K and you can accept $57,500. The buyer's agent gets paid by the buyer, because as stated, some buyer's agent/trainer prefer a flat fee, or smaller amount because they'll be making their $$ from the client's lessoning/showing/boarding etc. If there is a 3d party facilitating the sale, I'd want to know EXACTLY what they did to earn their money AND it should come out of the seller's agent's $7500 because since WHEN has 15% become the norm? In all the years I sold horses/ponies it was 10%. If all they've done is make a phone call, $500 would be the MOST I think they're entitled to, however much the horse sold for, because all they did was make a phone call.

Bills of Sale SHOULD be transparent. This is one reason why 'horse dealers' got a bad name. If there wasn't anything shady going on, YOUR trainer and the Seller's trainer should be perfectly fine with transparency. If they are not, it's a red flag that something shady is being contemplated.

This a million times over. The sales tactics and trainer agent deals that go on on this industry are astounding to me. I am in sales and if I got a great price for my client, I get a bigger commission. Period. The client needs to know what the horse sells for! If the trainer can market the horse for tons of dough, than she makes more on the sale by a bigger commission.

And c'mon folks. Yes, the trainer is most certainly entitled to a commission, but saying she is entitled to a huge secret payout because she got the horse to that point where it could be sold for that amount of money is somewhat ridiculous, as I am quite sure the trainer CHARGED the client for every show, training session and lesson!

Isn't that part of the game too? Finding a greener horse for a client and talking them into it, seeing the potential training fees but also knowing that once the client funds the training the horse is now worth a lot of money to sell?

I have seen a lot of angry folks over the years from these types of shady cloaked deals..........If I were a buyer and found out that the owner got 50K and I paid 80K for the horse I would be livid. Keep in mind that many buyers are people that are trusting their trainers and are unaware of how all of this works, could be fairly new to the sport etc. Talk about a sour taste in your mouth.

[meupatdoes]

That is a different situation. This seller is aware the horse will be priced above what she is asking. The agents have disclosed where the money will be going. She could even be copied the bill of sale with no surprises, as she is fully aware going in that she will receive less than the total sale price. Or, the bill of sale and check could go to her, she takes her 50K and doles out the rest. The key here is that the seller has been informed, so now it is up to the buyer to ensure they are getting the best value possible for their money.

I see what you're saying here, but my concerns regard the fact that

-the trainers in this situation evidently don't plan to disclose the total amount the horse sells for to the seller
and
-the trainers don't intend to disclose how much commission the buyer is paying to the buyer.

Disclosure and agreement makes everything ok, but "keeping it quiet so the buyer doesn't feel like they got hosed if they know how much commission they actually paid" is not ok. Yes, the seller can agree to, "sure, even if you get $200k I'll still happily take my $50k" and if they agreed to that, it is legal from the seller's side, but there are two sides to that transaction and that becomes illegal from the buyer's side of it, if those commissions are not disclosed to the buyer.

The fact that they are unwilling to disclose the actual financial terms of the deal to either the buyer or the seller really ought to speak volumes. I mean come on.

[meupatdoes]

And c'mon folks. Yes, the trainer is most certainly entitled to a commission, but saying she is entitled to a huge secret payout because she got the horse to that point where it could be sold for that amount of money is somewhat ridiculous, as I am quite sure the trainer CHARGED the client for every show, training session and lesson!

A commonly overlooked point that this training the trainer so generously "volunteered" to put on the horse has ALREADY BEEN PAID FOR.

[dags]

Disclosure and agreement makes everything ok, but "keeping it quiet so the buyer doesn't feel like they got hosed if they know how much commission they actually paid" is not ok. Yes, the seller can agree to, "sure, even if you get $200k I'll still happily take my $50k" and if they agreed to that, it is legal from the seller's side, but there are two sides to that transaction and that becomes illegal from the buyer's side of it, if those commissions are not disclosed to the buyer.


Hmmm, if they buyer's agent is receiving money from the seller's agent out of the purchase price, (and in some cases, also receiving a commission from the buyer on top of the purchase) we definitely have shadiness.

But I'm not sure the buyer has any right to know the commission agreements between the seller and the seller's agent (legally, I mean. morally is a different debate). The purchase price on the horse is 80K, what is done with that 80k - as long as it does not benefit her (the buyer's) agent - is of no concern to the buyer. Just as when someone sells a horse at 60K and pays some ridiculous 25% to their agent, it doesn't matter. The horse still costs 60K regardless if that seller sees 40K or 50K of the price in the end.

However I am no lawyer and, despite my occupation, have not had to sell my own and deal with contracts in a long time. Do the seller's commission arrangements need to be listed on the bill of sale?

[pds]

Should be like buying a house, one commission split between everyone. Not each tacking on a new commission for making 1 phone call..
Better for everyone buying or selling, and keep extra hands out..

It should work this way. But with the exception of Florida, I don't think any other state regulate horse sales and require disclosure of agents, comissions and selling price.

[howardh]

15% is quickly becoming standard and has been common for awhile.

Here's the thing about horses, there is no blue book. A horse can be worth $50k at one barn and $75k at another, and typically the reason the horse is worth more in one program is because they've built a career and reputation upon successfully selling horses. So the commission to them is not to cover one phone call (a not unheard of though extreme example), but to "purchase" a slice of their experience, contacts and reputation to use towards your benefit.

In this situation, if the terms have been fully disclosed to the seller, then the onus is on the buyer to recognize that the 80k hunter they sat on in Wellington is really not that far removed from the $50k one they sat on in Minnesota.

This seller is purchasing assistance to help sell her horse, the cost of that assistance has been clearly outlined to her and she is going to try and cover it in the asking price of the horse, which may or may not work, but is perfectly acceptable.


I would assume that paying a stated commission IS compensating a trainer for their years of contacts and experience. This situation sounds like "I will tell my client her horse will sell for X when we know I can bring it to your barn and sell it for Y and we will split the difference." This is exactly the kind of situation that seems very dishonest to me. What the horse sells for is the amount that the buyer receives and pays commission on. I can't think of any other industry where buyers and sellers would accept this crazy method of buying and selling!

[ToTheNines]

Although a trainer is not legally a fudiciary, the ethics of the relationship can certainly be defined that way.

The seller is placing their trust in their trainer to tell them what the horse is worth and price the horse accordingly. What a willing buyer would pay a willing seller in today's market. The trainer is in the position of superior knowledge upon which the seller should be able to rely.

For a trainer to say it is "worth" X, but maybe Y or maybe Z depending on other trainers' involvement, etc, is not carrying out that trust.

[LucyShow]

Not that I think that people shouldn´t get paid for their efforts and connections to sell a horse but sometimes it is ridiculous.

Friend had eventhorse that did ok in 3*. She wanted to sell. In came agent that said "I have a client for you!". Good! Client shows up, agent nowhere to be seen. Client is perfect for horse, ask price, friend says asking price (expecting agent to get a 10% deal of that) friend is very happy. Agent calls back. Wants 10%+ 10% to irish gobetween + 10% to german agent (client german)a total of 30%. None of them was present at trial or promoted horse, client searched herself for results etc., my friend even had to get client from airport (2 hr trip). Horse did not sell thru that agent...

[dags]

I definitely want to clarify my position that yes, some of it is over-the-top gregarious ridiculous greediness. Which does not seem to be singularly unique to the horse world.



For a trainer to say it is "worth" X, but maybe Y or maybe Z depending on other trainers' involvement, etc, is not carrying out that trust.

But that's the way it is. I say it to clients all the time. Sure, you can ask $75k, if you get it out of Oklahoma first. Or, if you take advantage of that big show circuit near you and do really well. Or, if you can get him into one of those places that has $75k buyers walking in the door on a rotating basis every week. Or, your trainer better be awesome enough to get people to buy plane tickets to go see 1 horse in a midwest state. Otherwise, you'll need to reduce your price just to provide that incentive.

And then I will remind them that horsey better pass the vet to get that number too. And it's going to need to find a buyer that clicks. And it's going to need to not be an ass on trials, or kill itself, or have the buyer's mother suddenly turn ill...

Sometimes it's unbelievable what it can take to sell a perfectly good horse. The instability of the product usually takes a toll on sellers over time. That is some of the reason you see the commission rise to 15%, it's a risky and very insecure way to make a living and the last four years have been rough.

That is not to say there aren't complete a$$es out there you need to watch out for. I have no idea who the OPs connections are that can sell a buyer a 30% inflated horse, but the above are reasons why it might make sense to her.

Pretty much any horse goes up 30% by crossing the Palm Beach county line. Same concept, there are no set prices on horses.

[meupatdoes]

Hmmm, if they buyer's agent is receiving money from the seller's agent out of the purchase price, (and in some cases, also receiving a commission from the buyer on top of the purchase) we definitely have shadiness.

But I'm not sure the buyer has any right to know the commission agreements between the seller and the seller's agent (legally, I mean. morally is a different debate). The purchase price on the horse is 80K, what is done with that 80k - as long as it does not benefit her (the buyer's) agent - is of no concern to the buyer. Just as when someone sells a horse at 60K and pays some ridiculous 25% to their agent, it doesn't matter. The horse still costs 60K regardless if that seller sees 40K or 50K of the price in the end.

However I am no lawyer and, despite my occupation, have not had to sell my own and deal with contracts in a long time. Do the seller's commission arrangements need to be listed on the bill of sale?

I think you're right again in that if I sell a horse for $80k and am so thankful to my trainer that I give them a $79k commission, there is no obligation to tell the buyer.

It is when the buyer's trainer somehow gets a cut of that money and the buyer doesn't know about it that it becomes a problem.

Now, nothing has been specifically mentioned about whether the buyer’s trainer is getting a cut of this undisclosed pool of money, but generally when somebody wants a pool of money where they don’t have to tell everyone where it’s going, it’s because they want to cut someone else in on the deal.

Otherwise why wouldn’t OP’s trainer just as easily say, “OK, OP, I sold your horse, please accept this check from the buyer and then pay me everything that is over $50k out of that, as we agreed." Simple enough and perfectly fine.

There is obviously some money being contemplated there that OP's trainer does NOT want her to know where it's going. People do not refuse to tell you where they are spending your money because they love you so much and have your best interests at heart. It usually means they plan something shady with it.



And to whoever said a trainer is not a fiduciary: if they are your agent in a a horse deal, they are, at least as far as selling your horse is concerned.

[Linny]

OP, I hate to say it but it's attitudes like yours (I am happy to take $50k, I don't care what the buyer pays or who else makes money) that has driven the price of horses at many levels through the roof. More and more trainers assume that they owe no fiduciary responsibility to get the BEST result for the client, not themselves or other trainers with whom they do business. The assumption that the agent can get whatever they can without any more money landing in the hands of their client is becoming more widespread.
I'm not in favor of "a new law for every situation" and there are agency laws in every state. I wish more people would recognize when they have be dealt with wrongly and step up and take action. People saying "Oh, well, I got what I hoped for, who cares if another 2 or 3 parties also got the same amount" sets a dangerous precedent.

What they can do is hand you $50k and buy the horse today and thus assume all the costs/expenses of it until it's sold but most BNT's won't do that. That way you are free and clear and owe no more board or training fees.

As for trainers being entitled to high commissions for "making the horse sellable at that price" I believe that all that training was paid for by the client. If the client had wanted a 15% partner in the horse they'd have gotten one at the start.

[Hauwse]

There is a bit of a difference in the scenarios being discussed here.

An Agent generally works for a commission of the sale price, IE: Horse sells for $50K the agent gets 15%($7,500).

A Broker on the other hand works to achieve a specific sales price. Buyer wants to get $50,000, Broker sells for $50,0000.00 and adds his commission on top of the price, perhaps the buyer pays $55,000.00.

Contradictory to what a lot of people are saying here, not every brokered sale is a cash cow. I have been working as an agent/broker for a long time and broker sales on average bring in less commission then Agent sales. Because a brokered sale is based entirely on what the buyer requires from the sale, often the broker has to adjust the lump sum to make the sale happen. Simple logic, on a $50,000 sale the buyer is already in for $55,000 -$57,500 for the horse, bumping the price up to $65,000 could be a deal killer, so frequently the broker will take less of a lump sum to make the deal happen.

The scenario many are talking about where a broker makes a large amount on a sale tends to happen with purchases. Buyer says they have a budget of $50,000 and the broker finds the desired horse for $40,000, and thus makes a $10,000 profit. This however this is understood by the buyer.

The reality is that regardless of what anyone says, you are paying for the agent/brokers expertise.

I have more times than I want to think about convinced buyers to pass on over priced horse, horses that are too much for the buyer, found horses for much less than they anticipated paying and on and on, all to the detriment of the overall commission.

The best deals for me are those that are with trainer owners. There is never a question about the commission or flat fee, never any concern about anyone getting the better of the other, simply this is what I need and this is the price, get it done.

[grandprixjump]

I definitely want to clarify my position that yes, some of it is over-the-top gregarious ridiculous greediness. Which does not seem to be singularly unique to the horse world.



But that's the way it is. I say it to clients all the time. Sure, you can ask $75k, if you get it out of Oklahoma first. Or, if you take advantage of that big show circuit near you and do really well. Or, if you can get him into one of those places that has $75k buyers walking in the door on a rotating basis every week. Or, your trainer better be awesome enough to get people to buy plane tickets to go see 1 horse in a midwest state. Otherwise, you'll need to reduce your price just to provide that incentive.

And then I will remind them that horsey better pass the vet to get that number too. And it's going to need to find a buyer that clicks. And it's going to need to not be an ass on trials, or kill itself, or have the buyer's mother suddenly turn ill...

Sometimes it's unbelievable what it can take to sell a perfectly good horse. The instability of the product usually takes a toll on sellers over time. That is some of the reason you see the commission rise to 15%, it's a risky and very insecure way to make a living and the last four years have been rough.

That is not to say there aren't complete a$$es out there you need to watch out for. I have no idea who the OPs connections are that can sell a buyer a 30% inflated horse, but the above are reasons why it might make sense to her.

Pretty much any horse goes up 30% by crossing the Palm Beach county line. Same concept, there are no set prices on horses.


This isn't the problem. The problem is when they take a 50k horse out of the Midwest, to NY, for example, sell him for 200k the go back to owner and say here's your 50k minus my 15%. Never telling them about the 200k and splitting it with the NY- trainer.

[LeeB10]

Simple solution. Insist the buyer make the check payable to you, then you dole out the commissions. That way you and the buyer both know what is being paid. If all involved are honest they won't have a problem with that at all. If anyone balks, grab your horse and run to another barn.:winkgrin:


I agree. Insist that the check is payable to you and then you pay commissions as agreed upon.

[LeeB10]

In any financial deal there is the obligation that both the buyer and seller know what is going on. There does not have to be laws to regulate selling horses because business and finance law come in to play when dealings are done in secret or under the table. This is called financial fraud and serious penalties can be attached if proven. It is ridiculous that this happens so often in the horse world - that trainers would be so under handed and think that it is okay. I would never sell a horse without a written signed contract by both seller and buyer. There are tax consequences as well as liability consequences. My husband is a lawyer and it irks him to no end that the horse world works in such a naive and greedy fashion.

[FineAlready]

OP - I have not read through all of the comments, but I have this to say:

The deal your trainer is proposing just *reeks* of dishonesty and the potential for you and the buyer of your horse to get completely and utterly screwed.

Also, if getting $50,000 in pocket for you requires such miracle working, how do your trainer and his or her cohorts think that they are going to get enough in *addition* to $50,000 to cover the 15% commission for at least three people? I mean, if all of the "agents" get 15% of $50,000...the horse would have to be sold for at least $72,500 for this to work out for the agents as you seem to indicate they believe it will.

Unsolicited outside observation from someone who has not seen your horse? The horse is worth a LOT more than your trainer is letting on and/or these trainers already have someone in mind to buy the horse for an inflated price.

Either way, it is the smelliest of transactions. Get the heck out of Dodge with your horse and find someone more ethical and transparent to help you sell him.

[BeeHoney]

There is obviously some money being contemplated there that OP's trainer does NOT want her to know where it's going. People do not refuse to tell you where they are spending your money because they love you so much and have your best interests at heart. It usually means they plan something shady with it.


Exactly.
Secrecy is very easy to identify red flag for shady/illegal dealings. There is no appropriate reason for secrecy in a horse deal.

LeeB10's post does a great job of pointing out why an owner should be concerned if a trainer is engaging in illegal dealings on their behalf.

[SGray]

I've been contemplating selling a horse and have been told that it will likely take multiple agents to sell her, each receiving a 15% commission. Is this common and expected? I'm told that the horse is priced fairly at $50,000 to me, so could buyer possibly pay over $70,000? Almost 50% in total commissions? Would they even know they're paying so much in commissions? This is the first horse I've ever sold and I feel very naive ...

I want everyone to receive fair compensation for their work and want to be fair to the purchaser as well, so just seeking advice on what is standard.

are you to pay your trainer + go-between + xxx each 15%?
are you to pay each 15% of $50,000 or 15% of actual sales amount?

[SGray]

don't forget to get the taxpayer identification number for all recepients for the 1099 form

[busylady]

I agree with LeeB10. I am a lawyer and I find it astounding the number of horse sales that occur without a contract. People, protect yourselves! There are good tax and liability reasons for doing so. Also, that great flyer your trainer posted around the showgrounds, the one that says your horse is not a stopper and doesn't have a spook, well you better be darn sure that is true because that may be considered a warranty.

As far as the OP, and this IS NOT legal advice, I don't think it is customary for a seller to say "I want $50k, you keep the rest." I think the normal scenario is for seller to pay their agent a 10-15% commission, based on the sale price, and for the buyer to similarly pay their agent.

[SnicklefritzG]

What BeeHoney said: "If my trainer used some "go between" I'd expect them to pay that person out of their share, but I admit I've never been in that situation where I've been asked for additional commissions from the people that regularly sell horses for me."

That makes a lot of sense.

If I took responsibility for doing a job for someone, whatever it may be, and *I* needed help, I should expect to pay out of my share...

[chunky munky]

As far as the OP, and this IS NOT legal advice, I don't think it is customary for a seller to say "I want $50k, you keep the rest." I think the normal scenario is for seller to pay their agent a 10-15% commission, based on the sale price, and for the buyer to similarly pay their agent.[/QUOTE]

Though it is not the most common way of conducting a sale transaction, it is not all that unuaual. It usually occurs with savvy multiple owners that just want to lose one for various reasons. I have been involved numerous times with this type of transaction and it has never been unpleasant. The seller is motivated and is experienced enough to know that this may really motivate a buyers agent/trainer to try their horse. I am sure that this may surprise many on this COTH board, but there are some sellers that do not care how much money any of the agents made, they just want the amount they want. Of course like any other sales agreement it all needs to be outlined that seller agrees to this on paper.
No, I am not an attorney and am not necessarily recommending this as a way that you should conduct your sale, just saying that it is not all that unusual.

[ToTheNines]

chunky munky has a good point. I have one for sale that is really nice, but I have six horses, there is a drought-hay crisis, and he is the one least my type. I have him way underpriced, with a set commission to my own trainer, with the expectation that a go-between may help sell my horse because there is some room to make some money.

[Prime Time Rider]

The state of Florida passed a law that requires full disclosure of all commissions paid on a horse sale. I believe this legislation ought to be enacted nationally, adn that USEF should adopt a similar rule requiring full disclosure.

The OP says she's happy if she get $50k for the horse, but who told her that the horse was worth $50k? Most likely her trainer. So, what if the trainer really believes based on her knowledge of the market that the horse is worth $80K, tells the owner it's worth $50k, and plans to pocket the difference? Is that OK? No, it's fraud. How is that any different than a realtor telling you that your house is worth $200k and selling it for $300k, pocketing her 6% comission on the $200k PLUS the $100k difference?

I have no isue paying my trainer a commission (10% or 15%) to successfully sell my horse, and likewise, as a buyer, I have no problem paying my trainer an agreed upon commission when I buy a horse. Typically, most buyers with a trainer pay a commission when purchasing a horse, and most buyers undrestand that the commission they pay is on top of the sales price.

If your trainer enlists the assistance of another agent/trainer in the sale of your horse (other than the buyer's trainer/agent), then it is up to them to pay the other trainer/agent out of their commission, NOT OUT OF THE SALES PRICE. If your trainer agrees to pay BNT for a phone call to another BNT regarding your horse, it is your trainer's decision and agreement to pay the BNT a referral fee.

Speaking as both a seller and a buyer , I would never agree to pay in essence two sales commissions. If you want to incent your trainer to sell your horse for the highest price, offer to pay them 20% sales commission if the horse sells for over $x.

[Muggle Mom]

I want to thank everyone for their replies. I've been traveling today so I've just now quickly read through the thread.

I want to clarify that there is no deal currently in the works. When we spoke of a sale price, the trainer said that I should be able to clear $50K. I was surprised that the horse would sell for so much, twice of what I paid not quite two years ago. I'm not sure if it's realistic, but if the trainer can get it done, I'll be very pleased. If other agents have to be involved to get it done, I'm fine with that and for them to receive a commission, as long as it is over and above the amount I had agreed to accept. What I would not be fine with is if the buyer is not aware of the additional commissions he/she would be paying. If this kind of transaction is common and the buyer has an agent representing his/her interests, then I feel it's a case of "buyer beware." But if the horse is sold at an inflated price and the buyer is under the impression that the additional $20,000+ is horse value, not commission costs, then I'd feel terrible.

I have a lot to think about. Dag's posts echo almost verbatim what the trainer has told me. I have seen first hand how hard it is to sell horses in this market and taking on selling one is a risk and time investment that should be compensated, whether it takes one, two or three agents. My concern is that the transaction is transparent so that the buyer doesn't feel cheated.

When I bought the horse, it was much more clear-cut. I paid the trainer 10% commission and I suppose the seller paid her trainer a commission. I had a contract for the "sale price" and the contract was signed by the seller, the seller's agent and me. I thought this was how all sales worked - I'm so naive.

Thanks to everyone for taking their time to respond!

[Muggle Mom]

The state of Florida passed a law that requires full disclosure of all commissions paid on a horse sale. I believe this legislation ought to be enacted nationally, adn that USEF should adopt a similar rule requiring full disclosure.

The OP says she's happy if she get $50k for the horse, but who told her that the horse was worth $50k? Most likely her trainer. So, what if the trainer really believes based on her knowledge of the market that the horse is worth $80K, tells the owner it's worth $50k, and plans to pocket the difference? Is that OK? No, it's fraud. How is that any different than a realtor telling you that your house is worth $200k and selling it for $300k, pocketing her 6% comission on the $200k PLUS the $100k difference?

I have no isue paying my trainer a commission (10% or 15%) to successfully sell my horse, and likewise, as a buyer, I have no problem paying my trainer an agreed upon commission when I buy a horse. Typically, most buyers with a trainer pay a commission when purchasing a horse, and most buyers undrestand that the commission they pay is on top of the sales price.

If your trainer enlists the assistance of another agent/trainer in the sale of your horse (other than the buyer's trainer/agent), then it is up to them to pay the other trainer/agent out of their commission, NOT OUT OF THE SALES PRICE. If your trainer agrees to pay BNT for a phone call to another BNT regarding your horse, it is your trainer's decision and agreement to pay the BNT a referral fee.

Speaking as both a seller and a buyer , I would never agree to pay in essence two sales commissions. If you want to incent your trainer to sell your horse for the highest price, offer to pay them 20% sales commission if the horse sells for over $x.

Thank you - very good advice. I've got a lot to learn. :yes:

[Lucassb]

I want to thank everyone for their replies. I've been traveling today so I've just now quickly read through the thread.

I want to clarify that there is no deal currently in the works. When we spoke of a sale price, the trainer said that I should be able to clear $50K. I was surprised that the horse would sell for so much, twice of what I paid not quite two years ago. I'm not sure if it's realistic, but if the trainer can get it done, I'll be very pleased. If other agents have to be involved to get it done, I'm fine with that and for them to receive a commission, as long as it is over and above the amount I had agreed to accept. What I would not be fine with is if the buyer is not aware of the additional commissions he/she would be paying. If this kind of transaction is common and the buyer has an agent representing his/her interests, then I feel it's a case of "buyer beware." But if the horse is sold at an inflated price and the buyer is under the impression that the additional $20,000+ is horse value, not commission costs, then I'd feel terrible.

I have a lot to think about. Dag's posts echo almost verbatim what the trainer has told me. I have seen first hand how hard it is to sell horses in this market and taking on selling one is a risk and time investment that should be compensated, whether it takes one, two or three agents. My concern is that the transaction is transparent so that the buyer doesn't feel cheated.

When I bought the horse, it was much more clear-cut. I paid the trainer 10% commission and I suppose the seller paid her trainer a commission. I had a contract for the "sale price" and the contract was signed by the seller, the seller's agent and me. I thought this was how all sales worked - I'm so naive.

Thanks to everyone for taking their time to respond!

Having a contract for the sales price, signed by all involved parties, IS the proper and accepted way to handle this sort of deal.

I bolded the portion of your quote that is concerning.

It is certainly up to you how you compensate your agents, and if you feel that they are worth 15%, then certainly that is a common amount.

However, if you really believe that a buyer will knowingly pay their own agent 15% PLUS additional 15% commissions to a bunch of middlemen - you are basically saying that the buyer is knowingly, willingly overpaying for the horse to the tune of 15-30%? Sorry, that's neither common nor reasonable.

In that sort of scenario, the buyer will be convinced, by their agent(s) that the horse is worth the purchase price - and they will pay their commissions on top of that amount. If they eventually learn that the horse's ACTUAL sale price (amount paid to you) was $50K, they are going to be very unhappy campers.

The one scenario where it IS ok is where the trainer believes he can sell the horse for more, but strikes a deal with you to buy the horse himself for $50k. He can then resell the horse for whatever amount he likes, and the additional profit is his reward for taking on the risk of the sale.

[BeeHoney]

I think it's great that you do not want to participate in the cheating of a buyer of your horse. Frankly, though, it isn't your responsibility to protect the buyer, only to be sure that you and your agents act in an ethical and legal manner. I have sold many horses where I did not know--or care about--the commissions being paid by the buyer to their trainer.

BUT, since I have always insisted on the actual BUYER (not the buyer's agent) signing the sales contract with the sales price and any commissions I am paying listed, I have peace of mind that the buyer knows the exact sale price of the horse and was not told by their trainer that the horse's sale price was $X more than what it really was. They also know what I am paying my trainer, and that I am signing my name to the fact that I'm NOT paying their trainer a kickback commission.

Also, since I know who the buyer is and the buyer knows who I am since we've both seen the sales contract with each other's names and contact information on it, both trainers could assume that if the seller (or I) could easily fact check with one another if there was a question of duplicity.

FYI, a buyer might not necessarily mind seeing that of the sales price of $70K, $20K is going to the agent in commissions. Perhaps your trainer had provided some training/showing/board in exchange for a larger commission instead of being paid up front. But yes, I think a buyer could easily be turned off by seeing multiple other "hand-reaching-into-the-pot" type commissions...I certainly would be.

Sometimes a trainer will buy a horse directly, and then very shortly thereafter resell the horse to a client at an inflated price, and at that point it is no longer any of your business. It is that person's responsibility to do their research and make sure they are getting a good value.

[Linny]

Bee Honey, I have no issue with a trainer buying a horse and reselling it for more because they have taken on the risk and responsibility. The seller no longer has to pay board or training fees or vet or farriers and no longer has to worry that their valuable but delicate asset might break before the sale. They have an acceptable amount of money in the bank and peace of mind.

What does concern me is sellers who really don't mind upwards of 100% of the sale price being divided amongst "trainers and agents" who had little to do with the transaction. Certainly as a matter of course (if I were a pro) I'd be happy to pay finders fees to third parties who may have facilitated a sale buy why should they be eligible to make as much off the sale as the person who designed the ads, spent hours marketing the horse, fielded calls, assured the horse was perfectly shown to clients etc?
Having worked in fields where commission is the sole income I can attest to how easy it can be to try to inflate commissions but in the long run it only costs you clients. It is well worth it to set up a network of people who can and will help you and establish a level referral fee.

[eclipse]

Luckily, I haven't agreed to anything yet. I've been told by the trainer that it's likely there would be a seller's agent (her), a buyer's agent and a "go-between," each expecting 15%. She told me that I should expect to receive $50,000 net, so I have no idea of the actual "sale price" that would be quoted to the buyer.

All speculation, as yet, but am curious as to whether this would be typical and fair to all involved.

Why on earth would YOU be responsible for paying commission to the BUYER'S agent? The buyer should pay her own agent not you! (or maybe she is and they are all double dipping...which sounds like it could be happening)

Don't accept the "you can expect $50,000 net", get the cheque made out to you and then pay your own agents the commissions owed!