How Commissions Stack Up
Imagine you would like to purchase a horse and tell your trainer that you are willing to spend up to $100,000. Your trainer charges a 10% commission on the purchase price. Your trainer finds a horse that is suitable, and states that the price is $100,000. You wire funds to your trainer, amounting to $100,000 to give to the seller, plus a commission of $10,000. You later learn the seller received only $60,000 for the horse; the seller’s trainer received $20,000 and your trainer received $20,000. Your trainer did not disclose receipt of the $20,000, nor that another trainer received $20,000 from the transaction, nor that the seller’s actual price was only $60,000.
Your Impression of the Sale
- $100,000 Horse
- $10,000 Commission
- $110,000 Total
What Really Happened
- $60,000 Horse
- $30,000 Your Trainer’s Commission
- $20,000 Seller’s Trainer’s Commission
- $110,000 Total
Your trainer acted as an undisclosed dual agent, which is a violation of the law.
Equine Exchange protects you financially and legally. With a clear flow of funds and legally-binding agreements that clearly define the role of any agent acting on your behalf, you can sleep tonight.
The Ugly Truth
Having a professional assist you in the purchase of a horse is the only way to go unless you are highly experienced yourself, but you should be aware that agents may act in their own best interests rather than their clients’, taking advantage of their “insider” information and the highly subjective pricing of horses.
Secret profits are taken through collusion or “dual agency” – taking a kickback from the Seller or Seller’s Agent, “shearing” the sale – inflating the price of a horse in order to take a cut out of funds paid by the client, or through other undisclosed conflicts of interest. There are many ways to skin a cat, but the result is the same: one or more parties induce the Buyer into paying a higher price than necessary to buy a horse, and personally profit.
These problems persist despite the illegality of such practices. Even honest professionals can succumb to the temptation of easy money; those who object may suffer retribution and personal financial loss.
Without Equine Exchange, you’re vulnerable. With Equine Exchange, you can rest assured that you’ve taken all possible steps to reduce your personal and financial risks in purchasing a horse.
Through Equine Exchange, you’ll insist on transparency, with all parties at the table, and promises backed by legally binding contracts. The purchase price for the horse must be paid directly by Buyer to Seller, and Buyer and Seller each pay their agent directly and separately.