ArticleTraditionally, equine appraisals are used in the process of private sales, bankruptcies, and loans and charitable contributions. However, within the legal industry, it is also common to see appraisals performed in the process of divorce proceedings, insurance claims, or other legal disputes. While the process and deliverable is not fundamentally different, clients within the legal industry are typically less familiar with equine appraisals and the equine industry in general.
In this article, Qualified Equine Appraiser, Dr. J. Tim Potter, provides an overview of equine appraisals, including some of the key terms of art.
Qualification as an equine appraiser is administered by the American Society of Equine Appraisers (ASEA). The initial application establishes the primary education, training, and experience of the applicant, and those who are approved are invited to participate in the ASEA training courses. Individuals who possess a sound working knowledge of the equine industry and have extensive experience in the equine industry are identified in the initial application process.
The initial process of appraising horses involves determining the purpose of the appraisal, the intended users and the scope of work that will be required to complete the assignment. Three types of reports can be generated at the conclusion of the appraisal:
- Summary Appraisal Report: This report is the most commonly used in equine appraisals. The appraisal method used, general information, description and value of the subject, and certification and qualifications of the appraiser are included in this report. In addition, addenda such as registration certificates, pedigrees, photographs, and descriptions of comparables are included.
- Self-Contained Appraisal Report: This report is the most extensive of those generated. In addition to the information included in the Summary report, this report requires a detailed explanation of methodologies and calculations that were used to derive the appraised value.
- Restricted Use Appraisal Report: This report is for the exclusive use of the client and precludes the appraiser from testifying at a deposition or in court based on the information within the Restricted Use report.
The two most common methods for equine appraisals are the sales comparison approach and the income approach. In the sales comparison approach, horses are evaluated on factors such as:
- Bloodline: Sire, Dam, evaluation and analysis of several generations in the pedigree. Championships and earnings throughout the pedigree are evaluated.
- Earnings: Money won in show competition or racing by the subject horse.
- Age: Determination of age can be a factor in establishing value. The discipline within the industry will determine value related to age (examples: younger horses involved in racing vs. older horses in the hunter/jumper industry).
- Sex: Stallion, Mare or Gelding will be determined and can play a role. Will the stallion or mare be potentially used for breeding? What is the intended use of the gelding?
- Training: Amount of training (young horse just entering training vs. a horse with extensive training) is evaluated and considered when establishing value. More data is available with horses that have been extensively trained with regards to prediction of performance.
- Conformation: Evaluation of balance, structural correctness, muscling, quality, sex and/or breed character, and way of going are evaluated. These factors are important in being able to relate form to function and predict the longevity of the subject horse.
- Condition: Determination of body condition can be an indicator of management and nutritional programs. Analysis of the current feeding program is a part of this section and can provide the appraiser with information that will help to establish value.
- Soundness: Horses should be sound and free of lameness. In the case of lameness, determination of causative factors will be established (example, genetic vs. injury), and will play a role in establishing value of the subject horse.
- Eye appeal: In some cases, the bright, alert, “pretty” horse is a factor in establishing value. For example, a pretty horse may be more valuable to the parent who desires to buy a show horse for their child.
The subject horse will be scored on each of these items, and compared to 3-5 similar (comparable) horses. Once adjustments are made to equalize the comparable horses, the established (appraised) value is determined.
The income approach can be used in the case of horses that are designated for breeding purposes; factors such as:
- Breeding history: In the case of stallions, how many foal crops has he produced? How have those foals performed in the arena or at the track? In the case of mares, how many foals has she produced and how have they performed?
- Breeding fees: Does the stallion have a history of breeding fees? Have they remained consistent, or gone up or down? Is the stallion registered with any Incentive Funds? What type of fees do his siblings or half-siblings command?
The subject horse as well as comparable breeding horses can be used to establish value.
Equine appraisals through ASEA comply with The Uniform Standards of Professional Appraisal Practice (USPAP). These standards ensure competency in conducting appraisals, ethics and impartiality of the appraiser, and credibility of the report.
EQUINE APPRAISALS FOR LEGAL DISPUTES
While the approach taken to perform an appraisal may not be fundamentally different when performed within the scope of a legal dispute, it may be beneficial to work with an appraisal professional who is familiar with the rigors of the legal industry.
For more information, submit an inquiry or contact Dr. Potter
Equine Scientist & Qualified Equine Appraiser
Dr. J. Tim Potter is a Qualified Equine Appraiser with the American Society of Equine Appraisers, and is a Certified Professional Animal Scientist with the American Registry of Professional Animal Scientists. Dr. Potter received his B.S. (Animal Science), M.S. (Physiology of Reproduction), and Ph.D. (Physiology of Reproduction) degrees from Texas A&M University in 1983, 1986 and 1990, respectively.