[QUOTE=EventerAJ;8173329]
Gumtree will correct me if I’m wrong.
The reason you might not start at the reserve is the seller must pay a commission to the sales company (Keeneland, Fasig, etc) for the hammer price, regardless if that is RNA or sold. This is why the seller may have agents bidding on their behalf…to go to a certain point and judge the action on the horse. If there is no live money and no interest whatsoever in the horse, the sale will likely quit well below the reserve. If there is a bit of live money, the agent(s) may aggressively bid up to the reserve, and then let the first live bid buy the horse.
It’s a calculated plan that depends on a variety of factors-- the individual horse, the owner’s desires (keep to race, or sell at all costs), and the current market of available buyers.
To an outsider, it may seem dishonest but if you know how the game is played, there is some structure, rules, and logical reasoning. I would not advise John Doe to walk in off the street and jump in bidding with both feet…there is a lot to learn and the water is deeper than it appears. It’s not all in the seller/agent’s favor, either… I’m sure Gumtree can share a story where he got a bit burned and was stuck with a horse, or let one go cheap who later turned a hefty profit for someone else. ;)[/QUOTE]
Well, I am trying to get some boring office work done. I would get a lot more done a lot more quickly if I had a “time lock” on my internet connection. So as to focus without “distractions” on what I am supposed to be doing instead on things that are more fun and interesting. My comments, post are most likely time consuming to read for most. But even more time consuming to “compose” and check for accuracy. Most are composed from memory, I have found “accuracy, fact checking” is done by those that read them. And “calling me out”
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Aj, we are on the same page here. When a seller sets a reserve with the sales company they give a number at which the horse to be sold at. The “bidding procedure” meaning the minimum amount a buyer can bid and or a bid that will be accepted by the auctioneer is “set” by the level of money in the ring, the amount bid which is posted on the “bid board”. It can be as little as $100 per bid, than $1,000, $5,000, $10,000 etc. as the price of the horse goes up. The exact “numbers” are explained in the conditions of sale under “bidding procedure”. Each sale is different and this should be reviewed as outlined in of the sale catalogue. “Select, high dollar” sales generally start at $5,000. “Open” sales as little as $100.
So the reserve price is set according to the bidding procedure of the sale. If the set bid is say $5,000 and you want to sell the horse for $100,000 you write set the reserve at $95,000 meaning you will sell for over that amount, $100,000, by back at $95,000.
Then the seller is asked “all the way” or “live money”. For some of the reasons you have given. A commission is paid on the hammer price, sold or not. “All the Way” means the auctioneers will “take” the horse all the way up to the reserve regardless if anyone is bidding at any given point. “Live Money” means the auctioneers will “hammer” the horse when “live money” people who have been bidding on the horse, bidding against the reserve stops. Which saves paying higher commissions.
Keep in mind that both the sales company and the consignor are paid a commission. Generally 5% of the “hammer” price. Sold or not. Depending on the sale, sales company, consignor and sometimes the "strength "of the seller, the sales commission can be “structured”.
5% from 0 to $100,000, 4-3 over that, 2 ½ for horses over $500,000 etc. It’s negotiable to a certain extent and or is set out in the consignment contract. There is always a minimum set and paid to the sales company. Even if the horse is a “no bid”. The “upset price” is stated in the front of the catalog. Which means no bid under that amount will be taken. In “open” sales the upset price is generally twice what the “kill buyers” would pay.
The value of any horse, anything is set by what another person is willing to give. At auction the seller would always what more than 2 people bidding on their horse. In other words not just the “seller” and 1 interested buyer. Nothing dishonest about the process at all.
Many a “new buyer” has paid more than they had to. It’s the sales company or sellers fault they didn’t know what they were doing. I have worked for some very wealthy people who had bought at auction by themselves before hiring an advisor. I would tell them to stop bidding, “we are being run” and or have “backed down” the bid by “calling out” the auctioneer when being “run”. In other words they got caught with their pants down. The auctioneer knows it and they generally blame the “mix up” on one of the bid spotters and chastise them. The bid spotters don’t take it personally they know the drill.
I have had clients say, “what do you mean we/I are being run”. It amazes me, these were not people that had never been to a TB auction before. Just too cheap to pay for advice. The sales company works for the seller. It is their job to get the most money possible for the horse in the ring. Know the rules and regs.
In the early 90’s there was a “new player” with DEEP pockets at the Saratoga sale. His trainer and “adviser” is extremely well known and excellent judge of a horse and a top trainer. But he was known to those in “the know” to be greedy and expect to be paid from “both sides”. Especially with very high dollar horses.
I was at one of the sales barns working my “list” we all knew who the “new guy” was and the kind of money he had to work with. We also knew which horses were most likely going to be the “stars” of the sale. Well, the “new guy” was looking at one of the “stars” and proceeded to announce in an egotistical, " I am going to buy this horse no matter the cost" for all to hear.
I almost burst out laughing. Not at they way he said it but for saying it. He basically announced to the seller put what ever price you want on the horse I am going to buy it. I can pretty much guarantee you his “adviser” when back to the seller without him and “cut a deal”. We/he will pay this amount and I expect this much “kicked back”. Totally against the “rules” but done never the less. Pretty had to prove. Though the late Jess Jackson (Stonestreet Stables) took his agent/s to task and some consignors. He sued and won. A lot of “dirty laundry” was aired in public.
The “new guy” finally figured things out but paid for a VERY expensive lesson. To be fair to the industry the vast majority of consignors will not “double deal” with an agent/adviser.
But plenty have said to me over the years, Larry if you buy this horse I will “look after you”. I ALWAYS said “thanks” but my client pays me well. Which was not always the case. I got screwed by number of so called “clients”.
I also got caught up unbeknownst to me in a “3 sided deal”. And I thought I knew all the “tricks”. Very embarrassing and I was really "f**king pissed. I take great pride in being on the “up and up”. I went to “court” for the buyer of my horse, and a couple of “high profile names” had to “leave town” when the dust settled. But my name was dragged through the mud for a little while. The “buyer” was one of the biggest in the industry at the time and his agent a very good friend of mine. The “buyer” thanked me, knowing full well that if I had kept my “mouth closed” they couldn’t prove anything. I did a fair bit of business with him and his wife in later years.
In years past, basically on page “1” of every catalog in bold type you would see; “Caveat Emptor” and were expected to know and understand the meaning. For those who are not;
“A Latin phrase for “let the buyer beware.” The term is primarily used in real property transactions. Essentially it proclaims that the buyer must perform their due diligence when purchasing an item or service”.
In this country every horses is announced as “sold” regardless if it did or not. The auctioneer will say sold, and give a bid spotter’s name, the section of the pavilion they are working. If the horse “did” sell you will see a sales company’s representative go to that section and have the buyer “sign” for the. It may be an “actual” sale, most are, or it could be a buy back by a seller. There is usually a “code name” of a “spotter” associated with an RNA when nobody has to “sign” for the horse. The auctioneer may say, “Sold to Woody in the back”. Seasoned buyers know and or figure out what the “code word” is.
“I’m sure Gumtree can share a story where he got a bit burned and was stuck with a horse, or let one go cheap who later turned a hefty profit for someone else”
LOL, oh yea! Sometimes to my benefit and a lot of times to others. It’s all part of the game. As I have said to whiners, “put on the long paints if you want play with the big boys/girls”.
