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Trainer commission fees in a purchase/sale?

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  • Trainer commission fees in a purchase/sale?

    Hi guys

    I'm writing a proposal and need to address commissions that trainers get in a sale. I haven't ever personally used trainers for a sale or purchase so I don't have a proper idea of any going percentages or fees.

    Is there a rule of thumb? What, if any, can I assume is a reasonable charge for trainers to help someone buy or sell a horse?

    Thanks for your input!
    GreenGate Stables
    http://ggstables.webs.com/

  • #2
    Standard is 10%, but I've seen everything from 10%-20%.

    Also you should specify whether or not stacked commissions are allowed.

    Another way that we've done it in the past is tell the trainer what you need to get back from a sale, and then they will price it accordingly and take anything on top. Whichever you think works best for your situation.
    Ryu Equestrian & Facebook Page
    Breeding Horses Today, for the Equestrian Sport of Tomorrow.
    Osteen & Gainesville, Florida.

    Comment

    • Original Poster

      #3
      Thanks v much. I also know it as 10%...What is a "stacked" commission?
      GreenGate Stables
      http://ggstables.webs.com/

      Comment


      • #4
        I think "stacked commission" is when the buyer and seller both use the same agent, and pay for it. So let's say you as seller use trainer A to sell horse, and he mentions to Trainer B, then TrainerB brings out a buyer.. each trainer would get the commission (lets say 10%) from there client. IF buyer and seller both use Trainer A, a stacked commission is where he gets the fee from both of them... At least that's how it was explained to me lol.

        Comment

        • Original Poster

          #5
          Ah! Thanks!
          GreenGate Stables
          http://ggstables.webs.com/

          Comment


          • #6
            Also know as double dipping and getting from both sides.

            I make my contracts state One (1) 10% commission is included in price of horse. Any commissions from that point on will come from buyer.

            Its not unheard off when the dust clears seller ends up with way less after greasing everyones skids....

            Comment


            • #7
              10% and 15% is fairly common... just depends on the trainer, really.

              Comment


              • #8
                "Stacking" also refers to the "food chain". For example, Perfect Pony is for sale for 20k (or so her owner, the seller, thinks) and the pony lives on one coast. The seller is represented by trainer A, who will receive a cut of the deal. Trainer B sees the pony at a slightly more centrally located winter circuit and forwards a video on to a friend, Trainer C, who is based slightly more towards the opposite coast. Trainer C doesn't have anyone looking for a Perfect Pony at the moment but his best bud Trainer D on the other coast does. Trainer D now has PP priced at around 30k, adding in the commission to all the "friends". Trainer D likes this process because it makes his own commission from his buyer higher, too.

                "Double dipping" instead refers to the practice of one agent obtaining a commission from both the buyer and seller, when said agent has only represented one of these people. In the example above, Trainer D would contact Trainer A or the seller, and say his client really likes Perfect Pony but he needs a commission from their side as well in order to make the deal happen. Depending on their desperation in selling Perfect Pony, they may or may not agree.

                Comment

                • Original Poster

                  #9
                  Great, thanks v much Anne & everyone, I appeciate it.
                  L
                  GreenGate Stables
                  http://ggstables.webs.com/

                  Comment


                  • #10
                    Originally posted by MCarverS View Post
                    Another way that we've done it in the past is tell the trainer what you need to get back from a sale, and then they will price it accordingly and take anything on top. Whichever you think works best for your situation.
                    If the trainer is working as your agent this is of course not ethical. If you said you need 10 and they get 20 they will be keeping the difference plus charging you a commission on top of that.
                    Your agent is supposed to be working for your best interests, not his.

                    Some states have laws on the books now to deal with this and it looks like a few more states will be on board in the near future.

                    Comment


                    • #11
                      Originally posted by S A McKee View Post
                      If the trainer is working as your agent this is of course not ethical. If you said you need 10 and they get 20 they will be keeping the difference plus charging you a commission on top of that.
                      Your agent is supposed to be working for your best interests, not his.

                      Some states have laws on the books now to deal with this and it looks like a few more states will be on board in the near future.
                      This is not the way it works. As an agent or broker, or broker/agent for the seller and buyer you will receive a commission, straight fee, or open fee on both sides. A combination of commission, straight fee, open fee is not received from the seller or buyer in such deals, one form of compensation only.

                      The process of receiving an open fee, or pricing a horse above the sellers required price, or purchasing a horse below the buyers price limit, is called brokering, and can be protected or not.

                      There are unethical brokers and agents but their is nothing unethical about any of the these practices.

                      I have had brokers purchase horses for me this way, and have sold them this way. It is a practical way of selling/buying horses.

                      The reality is that brokering works because it satisfies both parties requirements.

                      What you pay for in any commission or sales fee's is the expertise of the agent/broker, plain and simple.

                      Comment


                      • #12
                        One approach is to specify "no undisclosed agencies or commissions". I believe that the seller should know how much the buyer paid, and the buyer should know how much the seller got!

                        If I were a seller, I would definitely care how much the buyer paid. I would want my horse priced and represented for exactly as they are. This gives the best way to end up with an appropriate career and owner. I don't want some unknown trainer representing that my horse is something (more valuable) that it is not.
                        Last edited by ToTheNines; Sep. 18, 2010, 03:13 PM.
                        Rest in peace Claudius, we will miss you.

                        Comment


                        • #13
                          Originally posted by S A McKee View Post
                          If the trainer is working as your agent this is of course not ethical. If you said you need 10 and they get 20 they will be keeping the difference plus charging you a commission on top of that.
                          Your agent is supposed to be working for your best interests, not his.

                          Some states have laws on the books now to deal with this and it looks like a few more states will be on board in the near future.
                          Well that may be true of some agents, but you know, there are many ethical and above board agents around. In sales where my own horses are not involved I work for both the buyer and the seller. My commission runs at 10% and the seller tells me what she wants and I get it for her. I only get one lot of 10% on the sale price ... *NOT* 10% from both parties. My buyers and sellers know exactly how I work and are perfectly happy with this way. Yes I'm sure I could easily make more money if I was that way inclined, but that isn't my way of working. I have a good reputation in my area and I'm not willing to lose that just for the sake of a few measly bucks.

                          With respect, please don't make statements tarring every agent/broker with the same brush.

                          Comment


                          • #14
                            Last horse I sold thru a trainer, her commission was 12%.
                            I named the price I needed to have in my hand after sale.
                            Amazing, that's exactly what I got.

                            I know the "buyer" was another trainer and re-sold my horse for double. Didn't ask what commissions were exchanged between them - didn't want to know.
                            You're entitled to your own opinion, not your own facts!

                            Comment


                            • #15
                              The above post is a good example of why you need to specify in the contract that the check from the buyer be made out TO YOU and not to the trainer. Then you pay them their commission. Unless you don't care and only want a specific amount from the sale, and let them take whatever they get over that (even if it's double the price you want)....

                              Caitlin
                              Caitlin
                              *OMGiH I Loff my Mare* and *My Saddlebred Can Do Anything Your Horse Can Do*
                              http://community.webshots.com/user/redmare01

                              Comment


                              • #16
                                Originally posted by Hauwse View Post
                                This is not the way it works. As an agent or broker, or broker/agent for the seller and buyer you will receive a commission, straight fee, or open fee on both sides. A combination of commission, straight fee, open fee is not received from the seller or buyer in such deals, one form of compensation only.

                                The process of receiving an open fee, or pricing a horse above the sellers required price, or purchasing a horse below the buyers price limit, is called brokering, and can be protected or not.

                                There are unethical brokers and agents but their is nothing unethical about any of the these practices.

                                I have had brokers purchase horses for me this way, and have sold them this way. It is a practical way of selling/buying horses.

                                The reality is that brokering works because it satisfies both parties requirements.

                                What you pay for in any commission or sales fee's is the expertise of the agent/broker, plain and simple.
                                No. Brokering is arranging a sale.
                                Not selling a horse for double what you paid to the seller and retaining the difference.

                                Not a problem if you buy the horse and flip it.

                                It appears that you use this practice. So I guess you don't disclose sales prices to the seller?

                                Best way to avoid this type of dealing is have the buyer pay you directly, you pay your agent and the buyer pays their agent.

                                And Cloverbarley, nobody said YOU were doing this. But it does appear that at least one agent thin ks this practice is OK.

                                Comment


                                • #17
                                  Originally posted by S A McKee View Post
                                  And Cloverbarley, nobody said YOU were doing this.
                                  I was merely clarifying that there *are* ethical agents out there ... a great many of us . I don't want people to think that *all* agents are out to rip people off because hopefully the majority of us are not and do not.

                                  Comment


                                  • #18
                                    Personally I would be very uncomfortable working with an agent who was also representing the seller--I think there is an inherent conflict of interest. How can someone be helping me get the best price and the seller get the best price at the same time?

                                    If the agent is secretly representing the seller as well as the buyer (i.e. receiving a commission/gift/kickback from the seller after the sale) I think most people would consider that unethical, if not illegal.

                                    I think 10-15% is considered a normal commission. I have also seen people pay a flat fee per horse shopping outing (similar to a lesson with something extra depending on travel). Typically when selling a horse I advertise them at a set price that would include any commissions to my agent (if I'm using one). Any other commissions would have to be paid by the buyer to their own agent.

                                    On my sales contract the purchase price and all commissions are listed. The sales contract must be signed by the actual purchaser of the horse, not just the trainer/agent. I've been doing it this way for a while, and it has cost me at least one sale I know of where the trainer was telling her client the horse cost much more (about twice as much) than what I was actually asking, so in the end she didn't want to risk her client finding out. I also have had outside trainers ask if I would pay their commission if their client buys the horse and I have refused to do that...IME the agent should be paid by the person they work for, much clearer that way.

                                    Comment


                                    • #19
                                      Originally posted by BeeHoney View Post
                                      Personally I would be very uncomfortable working with an agent who was also representing the seller--I think there is an inherent conflict of interest. How can someone be helping me get the best price and the seller get the best price at the same time?
                                      It all depends on what is important to you. In my sellers cases they are very interested in their horses finding the best homes possible in exchange for a fair price. My buyers on the other hand want me to find the best horse possible within their budget. I generally know both buyers and sellers well and I always know the horses very well as I have generally trained them at some point in time, hence it's easy when you know all parties involved and you can match buyers and horses.

                                      In my case, I have the contacts and it's simply a case of matching up people with budgets to those horses within their budgets. All of my sellers are professional people who either don't have the time or inclination to show their horses to possible timewasters, and the buyers don't want to waste their time viewing multiple horses who may prove unsuitable.

                                      Yes, maybe others have different criteria so don't want this type of personal interaction however it works for me, my customers and the horses. The horses being the most important part of the equation to all of us involved in the transaction.

                                      Comment


                                      • #20
                                        If you haven't figured it out yet, there is no set standard. Depending on the level of the market you are selling into there may be only a few super-connected trainers. In such cases they set the terms of the transaction.

                                        Many horse sales don't get made because by the time the commissions get added together the horse is way over-priced. I priced a horse at $25,000 and by the time it was presented to an overseas buyer the price was $40,000. No sale.

                                        I know one trainer who owns the farm... any horse that sells through other resident trainers must include $500 for him whether he sees the horse or not.

                                        So the answer is, "It all depends."

                                        Construct your own deal in the way that best suits your ethics and your horse program.

                                        Comment

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