Marketing Your Timber:
The Bidding Process

Landowners sell timber infrequently and often do not have specialized knowledge about logging, timber estimation, utilization standards, or local markets. Lack of marketing knowledge is costly to the landowner because it decreases profits on timber sales. Also, bad harvesting and marketing decisions on today's sale can cause loss of future profits by delaying or complicating future sales.

Prevent problems by following good marketing procedures. A good marketing procedure helps you to approach the timber sale in a businesslike manner and helps you answer many important questions, including:

• Are my trees ready to sell?
• How much timber do I have?
• What is the value of my timber?
• Will professional forestry assistance help?
• Who will buy my timber?
• How should I sell it?

Selling Method

Negotiation

Certain specialty products, such as high-value hardwoods and poles, are often purchased through negotiation.

Sealed Bids

As with many other products, the best way to attract interest in your timber is good advertising. Whatever the selling method, a good timber sale prospectus, often referred to as a bid invitation, is a key to attracting interest in your timber sale. The more interest, the more competition and therefore, the higher the sale price.

Sale Prospectus

One of your first steps is to arrange for some professional forestry assistance. A lot of people might say "Well, this is just an extra expense." It is, but it's well worth it to have professional help, because professional foresters can make you money.

In a study by University of Georgia researchers, it was found that landowners who used professional forestry assistance received 23 percent more income per acre for their timber than did those who sold timber themselves. That can pay for a lot of help!

Obtain assistance from the Mississippi Forestry Commission, the Cooperative Extension Service, or the Soil Conservation Service. In addition, some companies provide help under their landowner-assistance programs. However, the most complete and personalized help will come from a private forestry consultant.

The second step is to get an inventory of your timber, and this requires professional assistance. You need to know what you have, how much you have, and where it is. An experienced forester will make a "cruise" of the timber you want to sell. It may be a 100-percent tree tally or a sample plot-type cruise, depending on the size and type of sale being considered. From this cruise, he will be able to give you information on the number of trees in each diameter and height class, by species and product. Get this information for each tract to be sold.

The third step is to verify ownership and to mark the sale boundaries. While you know you are the owner, no buyer will actually purchase the timber until all ownership records have been thoroughly checked. You should make certain that you have a clear title on file and that your property taxes are paid. If there is a lien on the property, a release should be secured before the sale.

In addition, if there are problems with road access to the property, you should secure written rights-of-way or easements from surrounding owners (to allow easy access). Once this is done, the sale boundaries should be marked clearly. If the sale area does not have easily defined boundaries (such as roads or fence lines), then use paint or plastic flagging to mark them. Poorly marked boundary lines lead to problems for the buyer and the seller and can discourage prospective buyers.

The last step in preparing your timber sale prospectus is to develop a list of prospective buyers. Each company buys a slightly different mix of timber species, sizes, and products. This makes it necessary to ask around and to consult local agencies (such as the Mississippi Forestry Commission and the Cooperative Extension Service) to get a list of prospective timber buyers and the products they buy. If you have a forestry consultant, he should already have a good list.

Preparing the Bid Invitation

The invitation to bid is a letter (with supporting materials and maps) that describes sale conditions and the timber that is to be sold. The bid invitation is your advertisement to attract interested buyers. The more complete the prospectus, the better your chances of attracting prospective bidders.

Each bid invitation is different, depending on the type, size, and information included. Main elements in a bid invitation include:

• Identification of Seller/Seller's Agent -- This section should identify the seller(s) to the buyer by giving full legal name(s), business/home addresses, and telephone numbers. If a forestry consultant is representing you, this section also indicates he is your agent and includes his firm's name, address, and telephone number.
• Location and Size of Sale Area -- Include the complete legal description and acreage of the sale area in this section. If the sale area is in separate tracts, provide information on each one. Include a description of the sale boundaries and how they are marked, since the prospective buyer may want to examine the tract. Also, set a time and place for prospective buyers to tour the sale area, if desired.
• Type of Sale -- This will tell the buyer how you are selling your timber, by lump sum or unit (pay as cut) sale. It describes how the trees to be cut are designated -- by marking (paint), diameter, or species within the sale boundary. It tells whether the volume information was from a sample timber cruise or a 100-percent tree tally.

Bid Guidelines

Volume Information

Duration of the Sale Agreement

Harvesting Restrictions/Conditions

Bid Opening

Conditions for Bid Acceptance

Provisions for Payment

Supporting Attachments to Bid Invitation

The second map should show the location of the sale area in relation to surrounding towns and highways.

The summary stand tables from the timber cruise should include the number of trees by diameter class, species, and product class.

A sample timber sales contract can be included, so the buyer can examine it and identify any problem areas.

A sample bid form will make it easier for the buyer to submit his bid. This also makes it easier for you to compare bids.

Choosing the Best Bid

Conduct the bidding process in a businesslike manner. Answer all questions and inquiries and keep records of discussions to help prevent misunderstandings.

Keep all bids confidential until the opening, and do not bargain between bidders before or after the opening. Open the bids at the appointed time and date in the presence of the bidders.

Examine the bids, and, based on bid price and knowledge about the bidders, select the winning bidder as soon as possible. Notify all unsuccessful bidders promptly. Schedule a meeting with the winning bidder to discuss the drafting and execution of the sales contract.

Too often selling timber is a disappointing experience because a landowner does not take advantage of assistance only a phone call way. Following a good marketing procedure helps you conduct timber sales that will meet your timber-management goals and objectives while receiving a good price. You'll also have the satisfaction of knowing that your timber sale was handled professionally.

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Publication 1620
Extension Service of Mississippi State University, cooperating with U.S. Department of Agriculture. Published in furtherance of Acts of Congress, May 8 and June 30, 1914. Ronald A. Brown, Director