Commission when buy and sell. 5X higher than real estate commission?

[OverandOnward]

@mika0116

My definition of wealth is truly what is upsetting folks (anyone with less than $3-5m outside of primary residence and who is not ACTIVELY contributing to their wealth through a job or lucrative investments beyond what their spend pattern is not “wealthy” and is “normal”).

…

I think folks over early 30s might have a tough time realizing that $1m isn’t enough for 20 year retirement. The new figure is $3m. Times have changed and that brings up at LOT of emotions and weird feelings of anxiety about money.

I understand that you are a financial advisor with considerable experience who is sharing what you know, and I think you are making very good points. I’m not sure why some posters are taking your thoughts so personally. Some people do seem to be extraordinarily sensitive about money.

Recently I heard a person of modest but happy means exclaim over a $1 million prize winner “they never have to work again!”. Good heavens. $1 million is a very very nice start. But no it is not all that at all, even for someone who lives an average middle class lifestyle, if it has to last from their 20’s or 30’s until the end.

Plus many people will spend away that million in a fairly short period of time anyway, before they even realize it. Nice stuff is very expensive these days. So I agree with the point that even people some of us consider wealthy are wise to think about how they spend.

You make a good point that this is a time where there is reason for anxiety about long-term finances. People are living longer and not always in great health. Retirement may well be 30 rather than 20 years. We have our own finite investments to provide lifetime income. Some of us aren’t sure what future expenses will look like after decades of an unknown level of inflation.

@mika0116

Here’s a reference if you’re curious why I think folks need to be smarter about $200k decisions if they cannot afford another $60k in related fees. https://www.nasdaq.com/articles/you-wont-believe-how-much-gen-z-and-millennials-will-need-saved-up-to-retire 2

But I think the point is that the OP wasn’t necessarily not able to afford the $60k. More that they didn’t expect it, just didn’t know things were at that level. As others have said, they are clearly out of the loop on higher-end horse transactions.

They were just asking. And fair enough, as people with money to spend are often confronted with other people who boldly try to get them to give it up on completely unreasonable terms, hoping they won’t know better.

And I’ll take a guess that the OP didn’t want to ask around about it in their own circle as the question would probably get back to the trainer. And maybe they just didn’t want other people to know that they knew so little. Also fair enough, imo.

The horse community is a small one! I’ve been in the situation where I wanted - needed - to know more about something or someone. But didn’t think I could ask a single person who would know without the risk of it getting back to the people who were better not knowing that I was asking.

[OverandOnward]

@Jealoushe

…and those $5 Mill in assets best not be in crypto or monkey pics

The younger generation’s 00’s dot-com bubble. 80’s Junk bond crash. And … tulip bulbs.

[candyappy]

@BigMama1

That work is worth whatever the market says it is worth, and the market says that’s currently 10-30% of the sale price. If you don’t like it nobody will ever force you to buy or sell a horse through an agent or trainer.

We will just have to disagree . Just because some trainers are charging and obviously getting inflated commissions doesn’t mean the work they are doing is really worth that. Just like the current horse market I hope it eventually comes back down to reality.

Also like current hay prices. Hay growers( some) are grossly overcharging and getting the price for their hay because people have no choice in some areas but to pay whatever the going rate is. Doesn’t mean that hay is worth the price they are charging.

What people do with their money is entirely their business but it doesn’t mean others can’t speak up when it seems prices are outrageous.

@BigMama1

People always quibble over what others get paid. I’m sure some out there would think it’s nuts to pay whatever the standard salary in your field is.

That is rich (and not likely) . We farm

[mika0116]

then be a normal person who can budget and not look to “trade 1 for 1”? Reduce your expenditure. common sense.

$200k cash - 15% of $30k leaves you with $170k cash - 15% commission to buy next horse. Is this calculation SO hard for people?

Back to - OP didn’t know 15% was normal for both sale and purchase. They got their info that this indeed is very normal. I am sure they are at home doing above calculation and telling kid that the budget for jumper is now $150k.

If kid is unhappy with $150k jumper vs $200k jumper, I’d recommend kid gets sponsors while they’re still a junior or start a lucrative job online that is age appropriate. OR go the Mavis Spencer way and become a groom for Kent & the like and work their asses off (perhaps without the safety net of famous actress / producer parents).

I’ll stop dying on this hill @OverandOnward is correct that I am triggering some really tough feelings for folks and financial concepts. I don’t want to cause folks more discomfort with concepts that bring up some uncomfortable feelings about just how unfair this sport is to “normal” people. That’s why we cling to the Mavis Spencer stories, because we want to believe SO badly that “normal people CAN make it” and that is just not true most of the time.

[Tha_Ridge]

You’re not triggering anything here. A few of us, who may or may not have the level of wealth we’re discussing and who may or may not have industry experience that far exceeds yours just think you’ve made some very strange assumptions and stated many things about wealth and horses as fact, all based on some of your claimed knowledge that’s pretty easy disproven via your post history and some Googling. That is all.

[mika0116]

I’d love to engage on what I’ve said that is untrue with Google. Can you link me so I can perhaps learn and change my positions? Feel free to post here or DM. I’m also happy to provide my CPA license number and my series licenses - I have 0 issue doxing myself.

Also my post history is mostly about how sh!tty I ride - and we all know sh!tty AA’s are the ones who are buying up the expensive ass horses to make up for just how craptacular we ride. I need a seeing eye horse to jump more than 3’ - those are usually $80 - $100k+ and need to be in full training at $3,000/ mo + lease fee $2,000/mo!

[Jealoushe]

Do you think only those who aren’t super wealthy are normal, and those who are…are not?

[mika0116]

oh I think this is a phrasing issue. normal as in “reasonable” - everyone whether wealthy or not should try to be reasonable. Reasonable people assess situations. If you are ULTRA wealthy you have less incentive to be “reasonable” or your threshold of reasonable is very different than the mean or various standard deviations from the mean.

For example Elon Musk is uber wealthy and completely unreasonable as evidenced by his LBO of twitter and following insanity. His wealth often makes him “less reasonable or normal compared to most of the population of earth”.

It’s alll about perspective and this thread is officially grasping at straws.

[Jealoushe]

Elon Musk is an outlier. Money or not he’s a kook. I have known a few ultra wealthy people in my life and nothing about them made it obvious about their wealth. Most you wouldn’t even know. I fail to see how you can say ultra wealthy would have a different threshold of reasonable…every person would. Nothing to do with money.

[mika0116]

I think where we get lost is that my original perspective was that

if someone was buying a $200k horse, that in MY perspective they shouldn’t be up in arms about 15% on both sides commissions. Folks disagreed with me because my financial perspective is very conservative and I think that people who don’t have more than $200k + $60k to put into a paper bag and set on fire - probs shouldn’t be buying $200k horses.

Many folks here on COTH feel differently. Many feel comfortable stretching more modest budgets to make room for the “maximum horseyness available” to them.

This is such a circular conversation.

I said upthread I have learned that MY version of reasonable is incredibly financially conservative compared to MANY horse owners.

There was a thread about % of annual income spent on horses and I believe my comfort level is definitely less than the average response on that thread.

Also its just word choice “normal” would you prefer “middle class” or something more functional like “any single individual or couple with no dependents with net assets less than $5m excluding primary residence and has a compounding growth rate of investments 8 ppts above inflation and/or income of over $150,000 per person per year”?

I have 0 interest educating ANYONE on what the new “middle class” is nowadays. So I won’t entertain that thread.

[Jealoushe]

@mika0116

Also its just word choice “normal” would you prefer “middle class” or something more functional like “any single individual or couple with no dependents with net assets less than $5m excluding primary residence and has a compounding growth rate of investments 8 ppts above inflation and/or income of over $150,000 per person per year”?

I just find it super strange that your options to replace middle class would be “normal”. I would never consider any of the financial levels of income as “normal”.

oh, and you forgot to include that crypto and monkey pics don’t count towards net assets either in your schpeel. lol

[findeight]

You know, this is one of the weirdest threads in my memory…

[Impractical_Horsewoman]

@mika0116

I said upthread I have learned that MY version of reasonable is incredibly financially conservative compared to MANY horse owners.

I don’t think this has to do with being financially conservative. I think it’s the implication that “if you need to ask about $60K in commission, you can’t afford it,” when many posters note there are good reasons to ask if various dealings in the horse world are “the norm,” regardless if they can afford it or not.

To use a less financially inflammatory example, if someone was thinking of adopting a dog from a rescue and posted, “I’m looking at a senior chihuahua with a heart murmur and the rehoming fee is $500, is this standard,” they’re not necessarily saying they don’t have $500 in the bank, but rather if this is SOP or if this should raise a potential red flag in dealing with the organization.

[findeight]

Yeah, this derailed from the original track pretty dramatically into an assumption filled discussion of personal wealth and attitudes revolving around it. Things that should stay private.

The answer to the original question is yes but much negotiation is possible and doesn’t involve wealth statements.

[mika0116]

https://www.itl.nist.gov/div898/handbook/pmc/section5/pmc51.htm

Definition of normal in statistics - normal distribution of a population (humans who have income), bell curve, not at the tails.

Wow, I need to crawl back into my hole of engineers for real…

[endlessclimb]

I just wanna hear the word github or whatever the hell it was the poster was trying to get people to PM her a few years ago.

This is a flashback of a previous thread with the same poster but different topic, and I’m laughing my ass off over here.

[CBoylen]

I’ve typed and deleted about five replies to this thread as it took a million turns and I decided they weren’t fully necessary. But I think it may be necessary, or at least make me feel better, to offer this advice to the OP.
Please have a talk with your trainer about how far your budget will get you in the jumper ring before you sell that eq horse, particularly if the kid hasn’t aged out. It’s not far. It’s not 1.40-1.45 and leave the jumps up, and it’s most certainly not move aspiring pro to GP. Make sure that the kid has realistic goals and that the trainer knows this is not just a stepping stone to you on your way to higher caliber horsepower.
I got stuck in that “the next step is actually out of reach” spot as a junior, and no one was up front with anyone and it was not great from the viewpoint of the kid.

[Halternatively]

Yes, precisely.

I don’t recall anyone asking for advice on how to spend money. Is the 15% commission standard in hunters/jumpers/eq? Sure is. OP seems to have gotten that answer and moved on. Probably to buy their child a $200,000 jumper. Good for them!

Do people have issues with this? Seems so. But … no one asked. Live & let live, people. Carry on before I overdose on guac.

[Peggy]

Back to the original query, I paid 10% to two different trainers (six years ago and 20 years ago) as the buyer on two different horses. In the more recent case, the trainer said that I would be responsible for a commission as soon as she looked at one video or one horse. This trainer’s website still states 10%. I’ve seen websites with 15% commissions and also scenarios where the trainer charges a day fee for looking at horses, and then takes some or all of that money off the commission.

Roughly ten years ago I bought a horse, assuming I was paying 10% and then the trainer asked for more money because the horse was so cheap. Seriously. I did all the legwork and then picked her up to go look at the horse. So I probably paid 15% on that one. Annoying, and the first of several reasons why I ultimately left.

Friends who have bought horses via auctions have paid a commission to their trainers.

Trainers also typically get a commission on leases. When I was the lessee on an in-barn lease, the lessor paid a fee to the trainer while I didn’t. On the other hand, I’m pretty sure that lessees of outside horses do pay a commission.

I have zero experience paying commission on sales because I never seem to sell anything.

I’ve always thought that the difference in percentage between real estate and horses is that, on average, real estate is more expensive than horses. Yes, there are horses that are more expensive than some people’s houses, but I said on average. And the person who buys that expensive horse probably lives in a house with a current value higher than the horse they’re buying.

The whole commission thing is interesting because a trainer could earn the same commission on two different horses with the same purchase price, but have it be the first horse one person looked at while the other client looked for six months. That evens out for the trainer but not the client. On the other hand, I know of situations where the trainer looked for a horse for a client who vetted several and didn’t buy, and then switched trainers so trainer #1 got nada. I suppose that’s why some trainers now charge the day fee up front.

[Fiesta01]

You’re very probably an exception. You have decades of experience, plus an extremely talented daughter. (I’m sure there is also other talent in the family, but I’ve only seen pictures of your daughter and her lovely horses).