Dogs may not be vocal communicators like people are, but they have a highly developed sense of smell that helps them understand each other. While dogs learn about each other by sniffing -- particularly around the rear end, where odorous glands are located -- not all dogs appreciate being sniffed out. If your dog hesitates when another animal comes in nose-first, it may be for one of several reasons.
Puppyhood is when a dog learns how to socialize with other dogs, and if she never practices in her youth, it creates setbacks later in life. Without socializing as a pup, she may grow up fearful and hesitant around other dogs, especially when they try to get familiar with a sniff-centric greeting. While you can reverse this hesitance with training, she's likely to be shy at first -- practice meeting calm, well-trained dogs in neutral territory a few times per week.
Though sniffing is a normal part of a canine's greeting, too much of a good thing leads to trouble. When dogs sniff each other for more than a few seconds, it can create tensions between the two, like if you shook someone's hand and they refused to let go. If one dog is predisposed to aggression, then it can make the other hesitant to engage in sniffing. When your dog perceives from another animal's body language that he is aggressive, she may resist any attempts of his to sniff her.
When a dog has a bad experience, she remembers, and she'll avoid similar situations in the future. This includes situations that are typically harmless, like sniffing upon greeting. If your dog has been attacked by a dog who turned aggressive after sniffing her, for example, she may hesitate to allow other dogs to sniff her from that point on. Hesitance like this that starts small can escalate over time, so practice resocializing your dog with others to overcome her fear.
Dogs sniff each other not just as general information-gathering, but also as part of the mating process. Male dogs sniff the rear ends of female dogs to determine whether or not they are suitable mates. Your female dog isn't always in the mood, though, particularly at the start of her heat cycle -- the proestrus stage. When she is in this stage, which typically includes swelling of her vulva and the leaking of a bloody discharge, she isn't yet ready to mate, and may refuse attempts at sniffing as a way of warding off potential suitors.
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