What do equine appraisers do and why would I need one?
Equine appraisers are personal property appraisers who specialize in valuing a horse’s current worth. Banks, attorneys, nonprofits, accountants, horse owners/trainers, and estate planners, are among those who may use equine appraisal documents. Determining the Fair Market Value of a specific equine can be tricky. No sales regulations exist within the equine industry, and finding sales prices of comparable horses is necessary to comply with the Uniform Standards of Professional Appraisal Practice (USPAP).
Each appraisal is different depending on circumstances and its intended use. It may be needed for litigation, insurance fraud, or even a donation to a non-profit; consequently, required documents will vary. Basic factors to consider when appraising a horse are age, health, pedigree, lameness/ injury history, competition records, training, and any attitude issues. Also included and factored in may be the horse’s purchase price and costs invested in training. If available, I also evaluate the horse overall in person while matching up registration paperwork. When available, competition videos are also reviewed.
How do appraisers determine the value of a horse?
When conducting an equine appraisal, the important factors to focus on may vary. Horses must be appraised as they are current day. Let’s say a top Grand Prix jumper worth $500,000 is being donated to a nonprofit because of its advanced age and inability to be competitive any longer at that higher jumping level. The horse may, however, still be comfortable jumping at a lower three-foot level. The horse would then be evaluated and appraised as the lower three-foot level jumper that he/she is currently. In this particular case, I would include the horse’s Grand Prix record in the appraisal, taking into consideration the level the horse has accomplished; however, his value would be based at the lower three-foot level of jumping, the requirement of his donation.
As required by USPAP regulations, comparable sold horses with the attributes closest to those of the subject horse on the day of donation would need to be found. In order to accomplish this, appraisers may need to reach out to breeders, private sales, and auctions. Once comparable horses are found, a grid system is used to determine the subject horse’s value. I assign a sliding scale of numbers to each attribute that I feel is important in each case. Next, a dollar value per point is determined. The sale prices of all comparable horses are added up and the total is divided by their cumulative scores - yielding an average value per point. That number is then multiplied by the points scored by the subject horse. This will then give a rough estimate of the subject horse’s worth. Appraisers may adjust from here to determine the educated estimate of value based on supporting facts.
What are the most common scenarios you would use an appraiser?
The most common reasons equine appraisals may be conducted are for the sales of horses, valuation for insurance purposes, and the donation of horses to nonprofit organizations. Appraisers may also be called as “expert witnesses” on the valuation of a horse in a lawsuit or contract dispute. The criteria used to assess the value of a horse may include: age, health, show records, pedigree, lameness history, and training issues. In addition, evaluators conduct extensive research on appraisals of similar horses.
Occasionally, appraisers may have to evaluate a stolen or deceased horse, in which case certain facts are assumed based upon documentation and information acquired from trainers, veterinarians, and others who have been familiar with the animal.
Is there a tax benefit or requirement if donating a horse?
There are many good reasons for acquiring a certified appraisal. The IRS requires a certified equine appraisal for any tax deduction greater than $5,000 on a donated horse. Moreover, courts, judges, insurance agents, the IRS, and other professionals are now requiring an independent appraisal by a certified appraiser who has no connection to the animal being appraised. A trainer or unlicensed appraiser may be persuaded to give an unsubstantiated value to an animal, and this bias can result in litigation. Certified appraisers are trained and take an oath to follow the USPAP guidelines for developing and writing appraisals that are ethical, objective, unbiased, and based on diligent research
Do you choose a horse's value based on their purchase price?
Many factors are used in valuing horses such as lineage, health, soundness, performance records, awards, and the horse’s character. A qualified appraiser must identify key characteristics of different breeds and riding disciplines as well as possess the knowledge to follow the Uniform Standards of Professional Appraisal Practices.
When would you need an appraiser outside of donating a horse?
Equitable distributions for divorce, estate, and probate dispositions.
Equitable distributions for bankruptcy, fraud, and contract disputes.
Insurance valuation for underwriting and claims.
Valuation for FDIC loans.
Equine acquisition valuation.
Comprehensive retrospective and prospective valuation.
How do you Choose the right non-profit to donate your horse to?
Be sure to ask the non-profit as many detailed questions as possible when determining the best fit for your horse. Some programs may offer more or less turnout than another, some may have an in-house vet and farrier (which could be an important factor to some donors), and some facilities offer more amenities than the next. All these are important to consider, along with what the non-profit specializes in and how that may mesh with your horse.