Suthenboy is not a credentialed expert. This is just his personal experience, not legal advice. Consult credentialed professionals before attempting any of this.

 

 

Some here have asked me about this subject so here it is.

Timber buyers, obviously, want to pay as little as possible for timber. Timber growers want to collect as much as they can for their timber. The nature of timber purchase is speculation. From the time of sale a tree may stand for months before harvest. It may stand for a couple of years. From there it can lay in a yard for a couple of years. From there it may still be a year or more before that lumber lands in The Hyperbole’s hot hands. The buyer is trying to arrive at a price that allows them to make money in a future market. They have to take a chance on, mostly housing starts, years into the future.

*If you want to get an fairly accurate prediction about the economy’s future performance, check the price of timber. Those guys aren’t screwing around, they know what they are doing and they aren’t political. BTW, timber prices on the stump are sky high right now. Must be those pesky Russians.

If you are selling timber you may want to have a professional forester evaluate your timber and give you and estimated value. However, it is hard to know how incestuous a relationship exists between foresters and various buyers. Here is the best way to go about it once you are certain you want to sell your timber. It is tried and true.

  1. Do some research. Find all of the potential buyers in your area. This will include all of the saw mills, pulp mills and plywood mills. You may also find some timber brokers. It is hard to say how large your area is. Because of fuel cost and highway usage fees the further from your timber a mill is the less they will be willing to pay. Out of courtesy I include everyone inside about 50 miles but I know the best offers will be from those half that far away. Write a letter to each one announcing that you intend to sell your timber in a closed bid auction on a given date and time. Include a survey of your property, directions to and legal description of the property. Include a title search confirming that you are in fact the owner. These can be found at your Clerk of Court’s office. Include a copy of your contract. Invite them to examine the timber at their leisure.
  2. Contract. You should be able to get a timber sale contract from your local clerk of court easily. Every state has different style and requirements. Get an example at your local courthouse of someone else’s completed sale from the clerk’s office. Just walk right in and tell them what you want, they are glad to help. The contract should include things like access, road building, time limits, damage repair and clean up. Use that contract as a template for your own and adjust the terms to your liking.

Consider things that will increase your price: clean up is expensive. If they have to spend 10K or 20K on labor and gasoline pushing tree tops around, it will be reflected in your price. Those tops will rot away in a couple of years on their own.

Remember, they are speculators. The longer you give them the better off they are. Here, most time limits are 6 months. I give ‘em two years. That will be reflected in your price. Most land will restore itself in a couple of years and bulldozers are damned expensive to operate. That will be reflected in your price. Don’t worry about minor things: Often the cutter will change oil several times and just dump the used oil on the ground. Don’t sweat it. That will be gone in a couple of years on its own.

Lastly, make certain that the contract places liability on either the cutter or the buyer if they cut over the line. Once they crank up the saws you have no control over them so you should have no liability.

If any of this makes you nervous, get a lawyer. There are a lot of good land guys around that will facilitate a sale for a modest fee.

  1. Clearly mark your lines with paint before the potential buyers inspect it. Most harvesters will not cut the trees with the paint on them. They are considered ‘line trees’ and will be left as future markers. Chose crooked trees, don’t mark veneer quality logs. The buyer wants those. If you are uncertain about those lines you may want to have a survey performed, but that can be expensive. If you are on good or neutral terms with your neighbors it is a good idea to have them accompany you to examine where the lines are before you paint so that you are in agreement.
  1. If you have any contact with any of the buyers do not discuss money. Do not discuss price. I cannot overemphasize this. If they try to bring it up inform them that you absolutely cannot discuss money until after the bid. If you are seen as someone who tries to manipulate a sealed bid auction no one will touch you. Word will spread and no one will show up at your bid. In fact, you may never be able to sell your timber. You will become persona non-grata. Not acting in good faith will burn you.
  1. Rent a small conference room at a mid-level hotel. Don’t go expensive, don’t go cheap. You don’t want cracked-out hookers accidentally wandering in while you are opening bids. Bring cinnamon rolls, doughnuts, etc and coffee. Lots of coffee. Most of the buyers that intend to place a bid will RSVP so you should have a good idea how many people you are serving. Hopefully you will be serving at least ten.
  1. You should have a check-list of everyone you sent an invitation to. Check them off as they arrive. If at the appointed time there are some that did not show ask the room politely if you can wait another few minutes. If you have anyone who cannot wait do not try to accommodate the person who is late.

*At least once the winning bidder showed up about ten minutes late, and they weren’t the winner by just a little bit.

  1. Collect all of the bids in plain sight of everyone. Open them and read them out loud so that everyone can hear. Just read the numbers and then place the bids out in plain sight on the table. When you have finished, pick the largest bid and announce it and the bidder. Thank everyone for coming. If there are any who don’t have to be anywhere try to engage them in conversation so that you can pick their brain. Ask questions. These guys know the business inside and out.
  1. The winning bidder will likely have the check on them, already filled out. They will present it to you and you both will sign the sale contract. You should have two copies of the contract to sign.
  1. Immediately after the sale you want to do two, maybe four things. First go to the bank and deposit the check. Find out how soon the money will be available.

Then go straight to the courthouse and record the contract with the Clerk of Court. Lastly, if the money is available go straight and pay any local, state, or federal tax you owe. Don’t feel flush and think you will do it later. Do it now.

I also recommend, while you are at the bank to open a separate account to reserve some of the money for future property tax, a personal ESCROW. Those taxes are going to come due like the sun will come up. Make sure you have the money when the time comes.

 

As it turns out maximizing the value of your timber is a lot of work. If you are only going to do it once in your life you want to get it right. I have included as many pointers as I can think of. My father wrote a detailed book on the subject, but I can’t seem to find my copy. It’s buried in a mountain of books. If it turns up I’ll let y’all know and anyone that wants a copy, just ask. I will be happy to share it.

Last bit of advice – There are timber companies and land management companies that purport to manage your timber for you. In return they want exclusive rights to your timber when it comes time to harvest. They will lock you into a contract and thus into a price. NEVER ENTER ONE OF THESE CONTRACTS. They are not crooks. They think it is fair because of the services they provide which might include a survey, but probably not, justifies reducing the sale price. You will end up with a minimum price just short of being legally actionable. DON’T DO IT.