Many horses are auctioned because it's difficult to sell them privately. The ethics that govern a private sale dont apply to auctions. An experienced horseperson might be able to pick out a diamond in the rough, but an auction is not the place to go looking for your first horse.
1. Horses May Be DruggedIts sad but true, but some unscrupulous sellers will give horses calming drugs before an auction. A horse may appear bomb proof at the auction, but once the drugs wear off you may have a very difficult and dangerous horse on your hands. Private sellers can drug horses too, but if you suspect drugging this can easily be picked up in a pre-purchase veterinary exam.
2. Not as Well Broke as they AppearI recently saw a horse go through an auction that I knew had been broke a few days before. The horse was very quiet as it was ridden through. Why? Because horses are followers and in the confusing atmosphere of the auction it looked to the only place it knew for confidence--its rider. Anyone buying this horse might have thought it very well trained. In reality, it had been barely handled and needed a lot more training and a knowledgeable rider to turn it into a safe, well mannered horse.
3. May May Have Vices or Other IssuesVices such as cribbing, weaving, stall walking, refusing to load on a trailer, biting, kicking and a myriad of other undesirable behaviors may not be apparent in the sales pen of an auction. At an auction, the seller often does not have the same obligation to disclose vices as they would through private sale. Many vices are dangerous or destructive.
4. Horses May Have Health IssuesI know of a pony bought at auction that appeared healthy. After purchase the pony showed signs of heaves. It had been medicated to mask the symptoms. The pony required costly medication and during humid weather couldnt be ridden.
I also know of an OTTB sent to auction looking perfectly sound despite irreparable bone damage. It was bought by a young family. Imagine their despair on discovering the horse was permanently and painfully lame, with no chance of recovery.