Guide for Preparing and Completing a Timber Sale

01
of 07

Avoiding Timber Sale Mistakes

Pole Logging Deck
Pole Logging Deck. Photo by Steve Nix, Licensed to About.com

No step in tree farming is more important than selling your timber correctly. A timber owner needs to study how to do it correctly and use the expert advice of a forester. These tips will help you do your tree sale right and with minimum confusion.

Common Timber Sale Mistakes

Timber owners often have stories about the mistakes they made when selling timber. Just one botched sale can cost you much of the value of decades-old timber and can negatively influence future harvests.

An easy way for a do-it-yourselfer to quickly get into trouble is selling timber using "lump sum" value with only a handshake and without a tree inventory. Don't sell lump sum without a timber inventory, a contract, and a payment check that won't bounce. Find a professional partner.

Another way to get into big trouble is selling your timber on a "pay-as-cut" basis while letting the buyer both grade and measure logs without you or a representative inspecting his work. Pay as cut is where the buyer pays you by the log load as they are harvested. Don't sell by the log load unless you are willing to check each load and can verify the scaling rules. Again, get professional help.

02
of 07

Find a Professional Forestry Partner

Pole trees with class mark
Pole trees with class mark. Photo by Steve Nix, Licensed to About.com

Selling timber requires expert advice. Find a forester and listen to him, as you would to a doctor or lawyer in their areas of expertise. You and the forester will ultimately have to determine what trees need to be cut or left, how they should be harvested, and their volumes and value. The language of tree volume and value can be very confusing.

Studies show that timber sellers using a professional forester get up to 50 percent more per sale. A forester who sells trees for a living and practices within your sale area is your best partner; he will know timber product grades and values; he will be familiar with local timber buyers and the general market. Private foresters usually offer their services on a fee basis. Timber owners often find this expense more than offset by the higher selling price received for their timber.

03
of 07

Timing a Sale Is Important—Try to Sell High

Poles at loading dock
Poles at loading dock. Photo by Steve Nix, Licensed to About.com

Timing is important in getting the best price for wood. The best time to sell, obviously, is when demand for timber is up and prices are at a peak. This is easier said than done but you do need to be aware of current stumpage prices and market conditions in your particular area. You forester partner will.

With the exception of a specific disaster (from pests, weather, fire), you should not be rushed into a sale. Trees, unlike other farm products, can be stored on the stump during poor markets. One constant that history always confirms is — timber values eventually go up.

04
of 07

Sizing Up the Timber Sale

Poles felled by John Deere Feller Buncher
Poles felled by John Deere Feller Buncher. Photo by Steve Nix, Licensed to About.com

As a timber grower, you need to have some reasonable idea about the kind of timber you are selling. Remember that each tree, even stands of trees, has its own unique marketable characteristic and associated volume. Your forester partner will inventory the timber for these characteristics and provide an estimate of volumes (along with estimated value) available for harvest. Potential buyers are more likely to be interested if they know what kind and how much timber is being offered for sale. This report can then be used to estimate a fair price you can expect for your sale.

Use these "know" factors when sizing up your sale. Ask you forester partner to help you with the following:

  • Know the type of timber forest products you are growing: Different prices are paid for different timber products.
  • Know the timber species you have for sale: Some tree species command higher prices than others due to high demand, limited or special qualities.
  • Know the quality of timber: Quality affects timber values just as it does any other product.
  • Know the volume for your timber sale: Logging requires the use of heavy equipment and numbers of men and large costs associated with this. Larger volumes for sale generally equate to higher stumpage prices because of the greater logging efficiency and reduced costs.
  • Know distance from market: Transportation of forest products is expensive. Local mills should be able to pay higher prices for your products than more distant mills.
  • Know size of trees: Generally, the larger trees bring the best prices. Large sawlogs and poles are worth more than small ones.

It is important to know as much about the trees you are selling as it is to know the value of the next house or car you sell. Attention to the above factors make for a better sale.

05
of 07

Identify Prospective Timber Buyers and Send Timber Prospectus

Poles being skidded
Poles being skidded. Photo by Steve Nix, Licensed to About.com

You should now identify prospective buyers. It would benefit you to prepare a list of buyers in the county of sale plus include buyers in surrounding counties. Your state forester's office or state forestry association can help with this. Call them for a list of buyers. Your forester partner most likely will have a list that he works from.

Mail every buyer a bid prospectus. Some say it is important to know what the buyer buys in terms of product. But for the price of a postage stamp just send a bid invitation to all buyers within your procurement region—they have a network. A sealed bid system should be used and generally results in higher selling prices as opposed to other sales methods.

  • A bid prospectus should be simple but informative and include the following:
  • Date, time, and location of the bid opening
  • Terms for payment
  • Timber product, species, and volume summary
  • Location map
  • Bid form
  • Information about the deposit/performance bond
  • Statement of seller's rights to reject bids
  • Notice of a "show-me" tour of sale area

The potential buyer should be given a look-and-see opportunity and probably insist on examining the timber for sale before making you an offer. A tour or "show-me" meeting on the timber sale allows all interested buyers to check the volume and quality of the timber and to estimate their logging costs. They should also be allowed to inspect and keep a copy of the contract or agreement you attach to the sale.

06
of 07

Understood Timber Contracts Reduce Misunderstandings

Pole tree mark
Pole tree mark. Photo by Steve Nix, Licensed to About.com

After the potential timber sale has been shown and all bids are received, you should notify the highest acceptable bidder and arrange to execute a written timber contract. Any deposit or performance bond agreed upon should be collected. Copies of the contract should be prepared for both buyer and seller.

Regardless of the size of the timber sale, a written contract prevents misunderstanding and protects both the buyer and seller.

The contract should contain, at a minimum, the following:

  • A description of the timber sale
  • The selling price
  • Terms of payment
  • Which timber will and will not be cut
  • Time allowed to cut and remove timber
  • Adherence to all forestry Best Management Practices

Other special provisions may include: cutting extensions, the location of log landings, roads, and skid trails; conditions under which logging will not be permitted; protection of residual timber and other property; a procedure for settling disputes; responsibility for wildfire suppression; disposal of litter; subcontracting of parts of the work; erosion and water quality control measures; contractor liability exclusions.

07
of 07

Timber Sale Not Over Until Final Inspection

To make sure terms of the timber sale contract are being met, either you or your agent should inspect the operation periodically through the harvest. It is best looked at several times during the harvest and finally upon completion. A satisfactory final inspection would indicate the full return of the deposit, if any, to the buyer.

Steps should be taken immediately after harvest to protect the land from erosion and to ensure the productivity of this future forest. Roads, skid-trails, and logging decks should be secured and reshaped if necessary. Bare areas should be seeded in grass to prevent erosion and provide food for wildlife.

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Your Citation
Nix, Steve. "Guide for Preparing and Completing a Timber Sale." ThoughtCo, Sep. 24, 2017, thoughtco.com/guide-for-preparing-completing-timber-sale-1343318. Nix, Steve. (2017, September 24). Guide for Preparing and Completing a Timber Sale. Retrieved from https://www.thoughtco.com/guide-for-preparing-completing-timber-sale-1343318 Nix, Steve. "Guide for Preparing and Completing a Timber Sale." ThoughtCo. https://www.thoughtco.com/guide-for-preparing-completing-timber-sale-1343318 (accessed November 22, 2017).