Marketing Your Timber:
Timber is a multi-million
dollar business in Mississippi. Many landowners, however, do not receive
the full value when they sell their timber, because selling timber properly
is a complicated task.
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.
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
- How much timber
do I have?
- What is the value
of my timber?
- Will professional
forestry assistance help?
- Who will buy my
- How should I sell
A key element in properly
marketing your timber is to use the proper selling method. The two methods
commonly used in the South are negotiation and sealed bids. In the West,
auctioning timber is also a widely used method, but it's rarely used in
A negotiated sale is
when the buyer and seller establish the price through face-to-face negotiations.
This is probably the most commonly used method of selling timber; unfortunately,
if the landowner is unfamiliar with local timber markets, he usually is
at a disadvantage in this situation.
Certain specialty products, such as high-value hardwoods and poles, are
often purchased through negotiation.
A sealed-bid timber sale
requires prospective buyers to submit confidential written offers that will
be opened at a specified time and place. Each bidder is allowed to make
only one bid, and bids are not accepted after the specified time for the
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.
There are several steps
in preparing your timber sale prospectus. You must have accurate, reliable
information, and you need to send it to as many prospective bidders as possible.
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!
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
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.
the Bid Invitation
Once your timber inventory
is completed, the sale prospectus or bid invitation can be prepared.
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:
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.
Volume data come from
the timber cruise or tree tally. The information includes total volume and
average volume per acre, which should be presented by species and product
class. If there are separate sale areas, give these data for each tract,
as well as a total sale summary. Mention the log rule used for volume estimation
and minimum top diameters for pulpwood and saw timber.
of the Sale Agreement
Designate the time a
buyer has to harvest the timber by setting a beginning and ending date.
In determining the length of time allowed, consider tract size, volume,
and ground conditions. In the South, one to three years is the normal harvest
Provide all restrictions
or conditions that are to be placed on your logging operation. Restrictions
can include road maintenance, size and type of harvesting equipment, supervision
requirements, and penalty provisions. This information also will be in the
timber sale contract, but the prospective buyer should be made aware of
it before he bids.
Set the date, time, and
place where the bids will be opened. Invite buyers to attend the opening
and specify how you will notify them if their bids are successful. Allow
4 to 6 weeks between advertisement and the bid opening. This allows adequate
time for the buyers to evaluate the sale area and to draw up their bids.
for Bid Acceptance
Explain your conditions
for an acceptable bid. This information includes bid format, how to address
the bid, and terms for a bid-performance bond, if required. Specify requirements
for receiving the bids, either mailed or hand-delivered. State that you
retain the right to refuse any or all bids. Also specify a time limit for
seller and buyer to agree to a sale contract and sale closing.
Outline the payment method
in this section. Specify your preference, such as personal or certified
cashier's check, and time of payment. You may want one lump sum at sale
closing, or perhaps installment payments. Remember to consider your income
tax situation before deciding on how you want to be paid.
Attachments to Bid Invitation
In your bid invitation,
include two maps of the sale area. The first should be of the sale area
itself and the surrounding tracts. It should show property boundaries, sale
boundaries, access roads, streams, and other physical land features. Also,
a description of the sale boundaries should be included.
The second map should show the location of the sale area in relation to
surrounding towns and highways.
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
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.
the Best Bid
Choosing the best bid
is not just taking the highest price offered. Once again, it takes homework
and good advice to make a profitable marketing choice. Find out what other
landowners in your area have received recently for similar timber. None
of the bids you receive may be realistic and you may wish to refuse them.
Also, investigate the reputation of prospective bidders. An important consideration
is who does the buyer's harvesting and the quality of his work. A poor logging
job or problems with the buyer can cost you time and money.
Conduct the bidding process in a businesslike manner. Answer
all questions and inquiries and keep records of discussions to help prevent
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.
By Winston Savelle,
Area Extension Forester, and Bob Daniels, Wood Utilization Forester
State University does not discriminate on the basis of race, color,
religion, national origin, sex, age, disability, or veteran status.
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
Copyright by Mississippi
State University. All rights reserved.
This document may be copied and distributed for nonprofit educational purposes
provided that credit is given to the Mississippi State University Extension