Private Transactions
While auctions and claims are the two most popular methods of
acquiring horses, they may also be purchased privately. Private
transactions offer the buyer value and opportunity as well as the
option of a pre-purchase exam. Furthermore, the purchaser is not
restricted to only those horses offered for sale, but may make an
offer on any horse considered desirable, including those which are
not necessarily advertised for sale. Again, consultants play a vital
role in finding, selecting and inspecting prospects.
As with other purchase options, proper pre-purchase arrangements
must be made and various factors should be considered.
1. Make an inquiry regarding purchase opportunities.
If you are interested in purchasing a particular horse, contact the
horse's owner, trainer or owner's agent and inquire if the horse is
for sale.
2. Inspect the horse.
After ascertaining that the horse is for sale, a thorough physical
examination should be conducted. Follow the same guidelines as those
associated with inspecting horses at public auction. If you are
serious about the purchase, employ a veterinarian to perform a
physical examination evaluating the soundness, general health, wind
capacity and reproductive ability of the animal.
3. Negotiate price.
The sale price should reflect the quality of the horse's pedigree,
conformation and race record. To determine an offering price,
evaluate the following factors in addition to the three previously
mentioned:
-
The level at which the horse has been competing: If the horse
competed in claiming races, what was the claiming price?
-
The future earning potential: How much longer will the horse be
able to race and at what level?
-
The residual value: Will the horse be of value as breeding
stock?
When a purchase price has been determined, make a formal offer.
4. Present a Written Agreement of Sale or Purchase and a Bill of
Sale.
A written Agreement of Sale or Purchase should be prepared and
should include the names of the parties, identification of the
horse, terms of sale, warranties of sale, contingencies and
deadlines and site of the transaction, as sales tax may be a factor.
It may be prudent to also include a procedure for resolving
disputes, as well as a provision acknowledging the right for a
complete veterinary examination. In most cases a veterinary
examination is required by insurance providers before a policy will
be issued. Where questions or suspicions exist, good business
practice suggests that a title search should be made to ascertain
that the seller's title is free of liens.
Upon acceptance of the offer, the purchaser should request a
Bill of Sale.
A Security Agreement may be imposed by the seller to secure payment
if the seller finances any portion of the purchase price. At the
closing, the purchaser should receive the horse's Jockey Club
Certificate, as well as copies of its health records.
