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A horse bill of sale is a formal document that records the purchase of a horse, including the purchase price, relevant details of the sale, and signatures from both the buyer and seller. This document finalizes the transfer of ownership in writing. The video tutorial covers essential information about horse bill of sale forms and provides guidance on obtaining a free official template. It also emphasizes the importance of following best practices when purchasing a horse. Key steps in the buying process include finding a suitable seller, setting a budget that considers ongoing care, testing the horse through handling, and negotiating the terms of the sale.