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As horse traders know, the best determination of the value of a horse is
what a willing seller will sell it for and what a willing buyer will pay for it.
Horse appraisals are generally employed where a case or controversy has
occurred or it is likely to occur.
What are some of the circumstances when appraisal of a horse is needed?
Litigation involving valuation of assets in practically any form,
including but not limited to family law, criminal proceedings, bankruptcy,
secured transactions and insurance claims for death or loss of use.
Value is a tricky issue. If
the horse died and is insured the policy may well provide for “market value”
or “replacement value”. The
insurance company has taken a premium based on some asserted value of the horse
by the owner; it is rare that a insurance company conducts an independent
appraisal prior to the issuance of a policy. However it is not unusual for the
company to question value at the time a loss occurs, which may require the owner
to prove the claimed value in order to collect the face amount of the policy.
Example. Owner purchases a horse
for $35,000.00. The horse is insured for the value of the sale. The horse is a
two-year-old stallion. A year later the horse is entered in several horse shows,
it does well and is qualified to be exhibited in the breed’s National Show.
The owner sells a couple of breedings to the stallion for the following year at
$2,000.00 per breeding. The owner asks the insurance company to increase the
policy to $100,000. The insurance company issues a new policy for mortality
coverage with a face value of $100,000. The horse dies. The policy has language
providing that it will pay replacement value not to exceed the amount of
$100,000. Insurance company contests the value at the time of death.
Selecting
the appraiser is the first and most critical step. The fact that one is well
qualified in the area of horse conformation, including physiology of the horse,
in this authors opinion, will not carry the day if the appraiser is not familiar
with the particular breed of horse and that breed’s relative value in the
current market economy. Trends in horses change, to say nothing of the changes
within breed organizations themselves. Therefore the appraiser must understand
consumer market trends of the breed he or she is appraising.
When
responsible parties are attempting to fix the market or replacement value of a
particular horse, there are many factors; as each animal is a unique individual,
the notion of value may differ. The horse owner may have an opinion much
different than the employed expert.
Establishing a criterion is critical to sort out potential differences in
the opinions of appraisers. The following list should be considered.
1. Breed / registration certificate
2.
Age
3.
Sex
4.
Pedigree
5.
Pertinent data: show record; racing
record; training history
6.
If the horse competes in endurance,
competitive trail, a full history of the competition record.
7.
Breeding history if a mare or stallion.
8.
If a stallion, what was its stud fee
and how many breedings have been sold in the past and at what price.
9.
If a brood mare, the sales record, show
record and or race record of its foals.
10.
Color
11.
Veterinary records.
12.
Conformation to the degree it can be
determined from pictures and or video.
13.
Examination of Horse: If available
a.
Markings
b.
Height
(hands)
c.
Pictures
d.
Video
1.
At
rest
2.
Trotting
3.
Under
saddle, if applicable
e.
Veterinary
Examination
1.
Soundness
for performance
2.
Soundness
for breeding
3.
Blood
typing/DNA
4.
Blood
work
Should the report from the appraiser be in writing?
While lawyers may not want initial reports reduced to writing, if the appraisal
is to be submitted as evidence in a court proceeding then it will need to be
reduced to writing.
The final report should include the following:
1. A
description of the horse appraised, including photographs.
2. The
purpose of the appraisal,
3. Market value defined.
4.
Assumption
made and any limiting conditions.
5.
Copy
of the registration certificate.
6.
Copy
of the pedigree.
7.
Description
of the individual markings of the horses.
8.
Show
record or race record.
9.
Veterinary
report together with results of all blood analysis and reports
10.
Resume
of the person offering the appraisal.
It
is imperative to find someone who is knowledgeable about the particular breed in
question. Normally a horse that is unregistered will have a lesser value than a
horse that has "papers” from a recognized breed association.
Age is a
factor in either very young animals or in those who have passed their peak and
in the twilight of their years, generally horses over the age of 16. Weanling
and yearlings are sold and bought on conformation, looks and pedigree. Looks!
What is that? It may be in the eye of the beholder, sometimes observable to the
uneducated eye, but it is often that indefinable quality of an individual that
makes it special.
If the horse
is a mare and or stallion that has not reproduced, value as a breeding animal
cannot be established. If the mare or stallion has produced significant off
spring, such information will be of importance in establishing value. While the
laws in most jurisdiction do not permit speculation for lost of future revenue
from the sale of foals or stud fees the information is relevant in determining
market value at the time of lost. If the appraisal is of a living animal the
data is important for determining market value of a living producing mare or
stallion. If the horse is a gelding its value is going to be confined to its
highest and best use.
Pedigree can
be a major factor in determining value. If the horse comes from a valued sire or
dam line and has performed well in the breeding shed, the show ring, the track
or made some other recognized contribution, the pedigree may receive greater
emphasis.
Conformation
cannot be ignored. However, if the horse is dead or unavailable and the
appraisal is conducted from photographs and or videotape, caution is advised in
placing too much reliance on such reproduced images. If the horse is alive, the
appraiser should personally examine the individual. Pictures and video should be
used to record the then impressions of the appraiser and to document color and
markings.
The show or
performance record of the individual speaks volumes and should, when available
be attached to the appraisal.
Breeding
records should also be included whenever available. These records should include
the stud fee and sale price of the resulting foals. The stallion’s service fee
should be documented. The best evidence would be a copy of his stallion service
contract. Stallions can continue to produce well into their teens. Some breeds
permit the stallion’s sperm to be kept frozen for later use. The appraiser
should provide all such data if it is permitted by the breed association.
Records of the stallion’s registered foals should be obtained from the breed
organization as supporting evidence.
Why color? In
part it is verification of the registration records. In some cases it is a
significant factor. Color breeds such a Dun, Palomino, Paint or Pinto horses are
evaluated in part on their color or colors.
Veterinary
records are of great value in providing insight about the horse and may confirm
or not questions of conformation, or general health. Radiographic studies should
be included if available. If the horse is a stallion, semen analysis should be
included whenever such records are obtainable. If the stallion is alive,
providing such semen analysis is critical. If the stallion is deceased and the
breed permits the use of frozen semen, testing the semen will be very important
to determine the value at the time of death. If the horse is deceased a copy of
a necropsy may be significant if one was performed.
When asking for or reviewing an appraisal the above factors may be helpful in determining the quality of the effort and perhaps the qualifications of the one offering the opinion. While certainly it is not an exact science, it is a practiced trade based upon knowledge, training and experience. Current knowledge of market conditions is critical in obtaining a fair evaluation of the horse or horses.