Three Common ways to Structure Buyer's Agent Commissions in a Horse Purchase

There are so many tools available online to help us find our next dream horse.  On top of old-fashioned word of mouth, we can likely find a suitable horse within a fair amount of time.

However, if you are an amateur and need a professional eye to help you identify a smart purchase, or if you are training to meet specific show goals, you may ask a trainer to help you find the right horse to buy.  Horses are expensive to buy and to maintain, and aren't always easy to sell if they don't work out.  It can be wise to seek the help of an expert to assist you in identifying the right mount.

Some trainers are happy to help for free.  They may talk to their colleagues at a show, inquire about particular horses they like, or find you a horse within the barn.  But some trainers go to great lengths to help you find the perfect equine partner.  They may travel across the country or across the globe in search of your next horse, they may go and try a horse before they have you invest your time and emotions in going to see and ride it, or they may simply take the burden from your busy schedule and use any number of time-consuming tactics in helping you find the perfect horse.

If your trainer requires that you pay him or her for the horse search, there are three common ways to structure the trainer's commission.  The trainer would be acting as your agent and would be inquiring on your behalf about the purchase of a horse.  The trainer is allowed to not disclose your identity to Sellers, but you must have a written agency agreement with your trainer to avoid dispute, to communicate the exchange of services and money, and to ensure compliance with strict agency laws.

Image Source

Three Common Methods to Pay a Buyer's Agent Commission
1. The agent receives a commission based on the purchase price of the horse.  Ten percent is the industry standard for agency for both a seller and for a buyer.  While you likely trust your trainer, to play devil's advocate, the downside of this method is that your trainer has a financial incentive to find you a more expensive horse or to not bargain the price of a horse down.  10% of $50,000 is better than 10% of a $40,000 horse.  You could negotiate with your trainer an inverse commission based on the purchase price of the horse.  If the horse is under $20,000 you will pay a 15% commission to your trainer, and the commission will drop 5% for each increment of $10,000 over $20,000, and in no event will the commission drop below 5% of the purchase price (the numbers are just for clarity, import your own numbers into the formula).

2. More commonly, the trainer charges a flat fee for the horse search.  The trainer likely has a rationale for the amount of time that will be invested in the search, and the time the search for your horse will take away from her lessons, her show schedule, business marketing time, or just the cost of personal inconvenience.  This fee may be open to negotiation.  I have seen a trainer charge a $10,000 flat fee for a horse search, which would include the trainers travel time to go alone or with you to see and ride horses (the Buyer pays for all expenses such as hotel and rental car).

3. A combination of the above two, balanced so that both parties feel they are receiving a fair deal and so incentives are balanced.  For example, the flat fee commission is $3,000 for any horse purchased for under $30,000, but the commission will be 5% for any horse purchased over $30,000.  Again, use your own numbers with the intent of adequately compensating the agent, but also encouraging the agent to find the optimum price for you.

Agency Negotiating Tips
Trainers can often feel undervalued, and clients can often feel like an open wallet at the barn, so negotiating carefully and fairly is important.  Whichever party you are in the transaction, be sure to affirm the value you see in the other party
"You are a wonderful trainer and I know your time is valuable, I appreciate your help in finding me the perfect horse."  Or, "You are a great client and I'm so glad you are part of my Stable's team.  I want to help you find the perfect horse at a price that is right for you, so why don't we sit down and go over the numbers together?"
If you are a trainer and the Buyer is negotiating too heavily in her own favor, consider the value the Buyer will bring to your training program with a new horse, and perhaps a compromise on commission would be worth it.  Or if you cannot find a compromise tell the Buyer, "I would love to help you find your next horse, but right now I am busy preparing for the summer show season and unfortunately I cannot take time away to search for your horse at the dollar amounts you are proposing.  Let's work together to find a temporary horse for you for the next show, and we will re-address a potential agency after the next show."

Buying a horse should be an exciting venture, though often frustrating.  Trainers or other equine experts can help make the process enjoyable from both a time and financial position.
Negotiate fairly to find an agency commission agreement (in writing!) that works for both of you.

Have you ever paid someone to help you find a horse?  If so, did you use one of these methods or a different one altogether?