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Commissions to Multiple Agents

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  • Commissions to Multiple Agents

    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.

  • #2
    Luckily for you there are many people into horses that have way more money than they do brains. 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.

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    • #3
      Sometimes I wonder if trainers buy the best horse for the client or the one that will make them more money.
      Rest in peace Claudius, we will miss you.

      Comment


      • #4
        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.
        EHJ | FB | #140 | watch | #insta

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        • Original Poster

          #5
          Originally posted by dags View Post
          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.

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          • #6
            This is one of the things that needs fixed...

            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..
            " iCOTH " window/bumper stickers. Wood Routed Stall and Farm Signs
            http://www.bluemooncustomsigns.com

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            • #7
              Originally posted by Muggle Mom View Post
              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.
              EHJ | FB | #140 | watch | #insta

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              • Original Poster

                #8
                Originally posted by grandprixjump View Post
                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!

                Comment

                • Original Poster

                  #9
                  Originally posted by dags View Post
                  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.

                  Comment


                  • #10
                    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.

                    Comment


                    • #11
                      Originally posted by grandprixjump View Post
                      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!

                      Comment


                      • #12
                        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.

                        Comment


                        • #13
                          Originally posted by Muggle Mom View Post
                          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.
                          EHJ | FB | #140 | watch | #insta

                          Comment


                          • #14
                            Originally posted by Muggle Mom View Post
                            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...
                            Platinum Equestrian - Florida, USA

                            Comment


                            • #15
                              Originally posted by CHSatwork View Post
                              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.
                              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!
                              Libby

                              There is a fine line between "hobby" and "mental illness". - Dave Barry

                              Comment

                              • Original Poster

                                #16
                                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.

                                Comment


                                • #17
                                  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...
                                  Public Land

                                  Comment


                                  • #18
                                    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.
                                    www.jazcreek.com
                                    Specialized Equine Rehabilitation, Reproduction, and Fitness in the Wine Country of Northern California

                                    Comment

                                    • Original Poster

                                      #19
                                      Originally posted by INoMrEd View Post
                                      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.

                                      Comment


                                      • #20
                                        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.
                                        F O.B
                                        Resident racing historian ~~~ Re-riders Clique
                                        Founder of the Mighty Thoroughbred Clique

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