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Originally Posted by oracle80
One more thing about buying privately, an agent may call a guy up and say how much? The seller might say 100 grand. The agent may send in a signed contract that gives him 5 days to pay the money and have the horse vetted. In the meantime someone else may think the horse is worth 200 grand. If he contacts the agent who has the horse under contract, the agent can commit arbitrage and sell his contract for cash. Meaning he can sell the contract for a chunk of cash to the guy who thinks hes worth 200 grand.
very often, after buying privately, the guy who bought the horse will sell pieces of the horse at a higher value than he bought the horse for.
I know for a fact that this happens often. Guy may buy one for 250 and sell half the horse to a partner for 175 before it runs.
Although that may seem unethical, its really not. You are simply telling someone what they have to pay to get what they want.
At a sale, its quite different. Auction means auction. Its supposed to mean that people bid against one another and that the guy with the highets bid gets the horse. If someone is planted in the crowd to run up the price who isn't really bidding, then thats wrong.
What I don't understand is why guys do it the way that they do it and risk this.
If the same guys just went to an owner before the sale and said "hey, we love this horse and can buy it before the sale for x amount" and the client does so, they can then get a legal commission from the seller(so long as they dont bill the buyer as well). If someone wanted to, they could pay a 50% commission on a private sale, its their money and they can do what they want with it.
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Unless an owner is offered a really pretty penny before the auction it is in his best interest to set a high reserve and put it through the ring...you never know what sort of bids you could get and if those prospective buyers who offered to buy before the sale were truly interested in the horse they will call you up after the horse has RNA'd and purchase privately.
Another evil of auctions is the horse entered who that was a foal share...certain farms will really run up a price to make their stallion look good.