Understanding The Sales Catalog
Buying horses through an auction is one of the most popular avenues of purchasing. It also is one of the most exhilarating aspects of the horse business. Imagine a horse race where bets are taken up to the finish line. A fictitious race of that type is similar to an auction where prospective bidders duel with one another over the horse of their choice.
Several thousand horses are sold each year through auctions. Various types of auctions are held, the most popular of which are yearling sales and mixed stock sales. Yearling sales are exclusively for horses which are one year of age, while mixed stock sales feature broodmares and other horses of various ages.
For individuals in the horse industry, particularly persons just entering the sport, an auction can be the best source from which to purchase. Normally the choices of horses are plentiful and are available for a wide range of prices. However, like any business venture, a sound game plan based on much research and preparation is essential. Some helpful guidelines are as follows:
Do Your Homework
Begin educating yourself about the horse business. Structured avenues exist in the industry through which to study husbandry, nutrition, genetics and breeding management, but the true aspects of this business are basically self-taught.
Various trade publications will provide you with much of the information you need to get started. These trade journals publish upcoming sale dates in their calendar of events. Various sale companies also advertise their upcoming sales in the publications, describing the type of sale and posting sale dates.
Check Out The Sale Company
Seek an auction company that holds a valued place in public trust. Industry advertisers and specialists can guide you to these reputable companies. Some of the companies include Heritage Place, Ruidoso Horse Sales, Pacific Coast Quarter Horse Racing Association, Louisiana Quarter Horse Breeders Association, Schvaneveldt/Andreini Sales and Texas Quarter Horse Association. These and a handful of other companies are the blue chip firms of the auction industry and set the standard for customer service.
Study The Catalog
The sales catalog is considered the “Bible” for all prospective bidders attending an auction. Contained in each catalog are the sale conditions, the legal terms that govern purchases. In addition, a page is published for each horse offered. This page is much like the provenance on a painting or a prospectus on a stock offering. It identifies the animal, the consignor and provides extensive details about the relatives of each horse offered.
Seek The Advice Of Experts
Choose an adviser who will focus on the goals you have established for your horse business. A reputable adviser will help to avoid costly mistakes that a novice often makes. A veterinarian with knowledge of the horse business as well as equine medical expertise is an ideal adviser. Depending on the size of your operation, having a team of advisers to help properly guide you may be beneficial.
Attend An Auction And Observe
It is essential to get a sense of how the market is behaving. The auction is in effect the most reliable barometer, charting the highs and lows of current conditions. Reading the price list will tell you the final results. However, it will not reflect the competition, interest and demand for a particular lot.
Get Familiar With Auction Terms And Conditions
The fever of a good auction can bring out the high roller lurking in all of us. Therefore, it is important to become familiar with the terms and conditions of an auction prior to bidding. These terms and conditions dictate the rule “you bid for it, you pay for it.” The successful bid is irrevocable and legally binding. So, if you are the first-time buyer whose arm seems to have a mind of its own, your purchases might be costly ones, if you have not done your homework. As all successful people in business realize, you must look before you leap.
What is surprising to most newcomers to the auction scene is not the astronomical sums that some people are willing and able to pay, but the extraordinary buys that are available. Many All American Futurity winners, such as Noblesse Six, A Classic Dash, Dash Thru Traffic, Royal Quick Dash, Refrigerator, Strawberry Silk, Teller Cartel, Ausual Suspect and Merganser were offered at public auction. When considering the price for which each could have been purchased, the margin of return on investment is astounding.
Many other shrewd investments have been purchased through the auction ring. Of course, there have been some lucky buys, but many of the best have been the result of thorough research and foresight. The broodmare Harems Choice, with her seven-day-old foal at side, proved to be an outstanding find for $20,000. Her foal, later named Royal Quick Dash, went on to win the 1991 All American Futurity, thus increasing Harems Choice’s value considerably. Another great buy was the broodmare Five Super Sounds, for $3,100.
Within six months following her purchase, she gained notoriety as the dam of stakes winner Sound Dash. The 1999 three-year-old champion Old Habits was purchased as a yearling for $18,500 and by the completion of his second year of racing he had earned more than $672,000. Perhaps the greatest return on investment was the mere $3,800 purchase price for Refrigerator, who retired with earnings in excess of $2.1 million.
Tax Tips
The American Horse Council can provide you with tax tips for horse owners. Contact the AHC for your copy or to purchase a copy of the Horse Owners and Breeders Tax Handbook.