Fair Market Value: 70 is the new 50

"The pony class line-up"
A photo I took at the Menlo Charity show.  How much is each little one worth?

I was talking with someone the other day about how amorphous equine sale values can be.  I had overheard a conversation in which one trainer selling a horse to another trainer said: "Well, she (the horse) was stopping at the jumps at the last show, so you know, I'd be happy to get $70 [thousand]."

Would you pay $70 thousand for a horse with a history of refusing?

It used to be that the standard price for a show-savvy, in the ribbons, well-trained, pretty high-level horse was at a justified price of $50,000, but in the past five years it seems that $70,000 is the new standard price for the same quality of horse.

It is likely that the most tangible elements of a horse's sale price are bloodlines and its proven show performance record, but it can be difficult to pin down what would cause a $1,000 price difference in a horse, or at times even a $20,000 price deviation in a horse.

So what really separates a $50,000 horse from a $70,000 horse?
Five more show championship blue ribbons?  Ten more horse shows?  Two years of age difference?  The barn where the horse has been boarded?  The success record of the trainer who is working with the horse?
It isn't unheard of for a horse listed at $75,000 to end up selling for a counter-offer of $60,000 within a few months or so.  That's a $15,000 price difference!  In comparison,  I have seen houses listed for half a million or more drop just $10,000 in price every couple months.

In general, fair market value (FMV) of a horse or of a house is based on what a willing and able buyer is willing to pay.  Therefore, one of the best methods in determining the initial listing price of a horse is to compare the horse's credentials to horses with similar credentials that have been recently sold.

FMV in the equine world is an important discussion because of its legal ramifications.
First, if a horse is wrongfully killed, typically only the FMV is available for recovery.  In a civil suit, a plaintiff has to request this amount as part of his or her damages; how does the plaintiff determine this amount, and how can a (non-equine savvy) court determine whether the amount is truly a fair representation of the horse's value?
Some horses are insured at FMV, but often that value is a mere presumption and not substantiated with tangible evidence.

Secondly, I work with riders and barns on their purchase and sale agreements; this can include the failure of the agreement, or an attack as to its enforceability (such as by a party declaring fraud in the inducement or fraud in the factum).  Factual misrepresentation of a horse to inflate its value would be fraudulent.  If you are buying or selling a horse it is important to consider the elements that create the horse's value, and to be honest in your representations.

Do you think horse sale prices have suffered from inflation, rightfully or not?  How do you calculate what your horse's sale value should be, or whether a prospective horse is worth its price?
How much below the asking price do you feel comfortable making an offer?