Types of Timber Sales & Making Your Sale a Success

The more information you have to process, the better advice you can render. Timber inventories should show the volumes of the various products and the date the inventory was completed. It is also very important to know who conducted the inventory. In many instances, the stand type map is developed from the cruise map drawn in the field while taking the data for the inventory. Information like where to put log decks, locating ridges to put roads, location for wildlife areas and mapping out streamside management zones can be obtained while inventorying the timber. From the inventory, the forester can apply the current market prices of the timber. If it has been several years since the inventory, the stand can be grown and current volumes can be projected. This same method can be applied to determine the tax basis by discounting the growth back to the time of acquisition. Timber inventories can be used for financial projections and applied to estate planning and a world of other analysis. Management plans are developed with this type of data as it provides the information necessary to plan with.

Landowners can be a very good source of information and some may have never seen the property. However, the less the landowner knows, the more help we can be. I like to have the landowner show me the property. This helps me get to know the person and understand what their objectives are. GHLT can help set special goals or plans for the landowner. You begin building a relationship and, hopefully, a trust that is very important. The feedback received from the landowner is important. They may know little things, like exactly where the corner markers are, which could save a half day’s work of finding corners.

Types of Timber Sales

Clear-cut sales are when all of the timber on the tract is harvested. There is no timber left standing. Typically there is a fair amount of smaller, scattered, non-merchantable stems left. For management purposes, it would be best to cut all of the trees down, for it reduces the cost of site preparation and is more aesthetically pleasing. If the stand is a seed tree cut and there is an abundance of natural regeneration throughout the stand, it may be the management objective not to destroy the small trees or seedlings. Steps should be taken to ensure the residual stems per acre be adequate.

Another important aspect that needs mentioning about clear-cutting is that there should be some consideration to wildlife. For wildlife purposes, clear-cuts should not be extremely large and it is best to stagger the harvest. Harvest one block of 50 to 200 acres, skip a block and harvest another. The harvest should have irregular boundaries to create edges for the wildlife. Clusters of hardwoods of 1 to 5 acres scattered through the clear-cut is also beneficial to the wildlife as food and cover and provides another place to hunt. Biodiversity is the key factor for a healthy wildlife population. There are many small things we can do as foresters to create and enhance a diverse environment for the wildlife. Just remember that a managed forest is much better than an unmanaged forest.

Thinning sales are when only some of the trees are removed. This may be management motivated or financially motivated. The trees may need more room to grow properly or the landowner may need more money. The thinning may be to release the residual stand by taking out the less desirable crooked, diseased, or smaller trees, leaving the best and fastest growing trees. In northern high value hardwood stands, diameter cuts are common, taking out the largest and best trees, while leaving the pulpwood trees to grow and provide the next crop. Hardwood pulpwood is often not valuable enough to harvest, so it is best to leave the hardwood pulpwood to grow. Usually the trees are individually marked with paint, differentiating what is to be cut or what is to be left standing. The trees are individually tallied or inventoried to determine the value of the stand. In the south, the trend is to do more clear-cutting hardwood stands and letting them regenerate themselves. This is primarily because of the better growing seasons and it is more cost effective to log in the south. Clear-cut hardwood stands provide the most tons of high protein forage material for wildlife than any other habitat until the crowns begin to shade the forest floor.

After meeting the landowner and the initial inspection, it is now time to inventory and sell the timber. There are several different methods of selling timber. The types of timber sales are per unit sales and lump sum sales. These sales can be either thinning sales or clear-cut sales. The sales can be negotiated with different timber buyers or sold as a sealed bid lump sum sale. As you can see, there are a variety of ways to market a stand of timber. We have used them all, but prefer the lump sum sealed bid sale on good high value stands of timber. The size of the tract and type and value of the product will usually dictate how we prefer to market the stand of timber. It is GHLT’s goal to provide the seller different alternatives of merchandising the stand with our recommendation. In the end, though, the landowner’s wants and needs determine how we handle the sale.

Per unit sales are based on a price for each product per unit; the products being pine pulpwood, pine saw timber, pine poles, pine chip-n-saw, hardwood pulpwood and hardwood saw timber with different size specifications for each of the products. Hardwood saw timber can be subdivided into an enormous variety of products itself. The unit can be cords, tons, thousand board feet (MBF), cunits, etc. Most wood in the south is traded on by the ton. It is possible to have a blended price for all the products on a per unit price. The sale can be a negotiated sale or a sealed bid sale. Theoretically, per unit sales may seem like the best way to sell, as you get paid for exactly what is harvested. There are so many ways to scale the wood or merchandise the product because of different size variations for top size, but size, length, etc. that there is quite a bit of difference in the way the wood is sorted. Product utilization practices vary considerably in all timber markets. We also need to mention the possibility of wood theft. Any time you have a sale when the wood is counted by the unit, there is a chance of a mistake or theft. GHLT deals with reputable timber buyers and has never had an incident such as this. We also implement a measure of checks and balances to keep people honest and check for mistakes.

A lump sum cash-in-advance sale is when you have your forester inventory the timber and apply the current market value to the different products. A total lump sum price is placed on all the wood on the tract or wood to be sold, with one price for all the different products. The seller does not have to worry about sorting various wood products because the forester has already done the sorting in the inventory. The buyer does not even have to cut the wood if he does not wish to. The buyer has paid the landowner a fair price acceptable to the landowner, based on the forester’s inventory. We specify in the timber contract that the purchaser has a given time period to harvest the wood sold as well as other terms that need to be agreed upon pertaining to the particular sale and harvesting of the wood. At the expiration of the contract, whatever wood is left reverts back to the landowner. It is not very often that any wood is left and we hope the logger is able to harvest what they pay for. Lump sum sales can be negotiated with timber buyers or sold on a sealed bid sale.

Whether you thin or clear-cut the stand, the stand will be sold by either a per unit or a lump sum sale. The sale can be negotiated or sold by sealed bids. We prefer the sealed bid sale for it is a very straightforward sale and it is designed to promote intense competition. This competition among bidders is what often brings the high dollar sales. After the initial work of inventorying the timber and marking the sale lines, an invitation to bid on the tract is mailed out to potential bidders. In the invitation, we supply the pertinent details of the sale and the timber contract. A period of time is allowed for buyers to conduct their own inventory and on the bid date the bidders arrive. At the designated time of the bid opening, we open the bids and read them to everyone. The landowner and the forester have already determined the minimum acceptable offer. If the highest bid reaches the minimum acceptable offer, then we notify everyone that the highest offer is accepted. We expect the successful buyer to close within two to four weeks. If the highest offer does not reach the minimum acceptable offer, we will meet with the highest bidder and negotiate the best offer or repackage the tract and sell at a later date. This process seems very simple and straight forward, and it is. However, a lot of planning, work and effort go into having a successful sale. GHLT knows this process, has the experience and knows what to do if the sale is not successful. By knowing the products we sell, the market we are in, and the years of experience, GHLT has the knowledge to make the sale successful and negotiate the best outcome or highest return for the landowner’s timber investment.

The correct method of sale is very important and is proven to be successful. Timber is a very important portion of the make up of land evaluation. We have seen time and time again where the timber component has been neglected or mis-valued and tremendous amounts of money have been lost. Most of the time, a consultant can make your timber sale produce a higher value. GHLT can take the doubt out of your sale and make it a good experience for you. The timber market does fluctuate, and we would usually not sell timber or timberland without having a good updated timber inventory. By law, you do have to be a registered forester to sell timber for a fee if it is not your own. Land brokers can participate with consulting foresters in a joint venture to ensure their clients are getting the fair market value for their timber and timberland. Green Hill Land & Timber, LLC has all of these capabilities and wants to help landowners and land buyers make the best informed decision possible.