By Jim Griffith
Registered Forester #1616
I recently learned the hard way that you can’t secure the highest possible bid for your timber by knowing what your timber is worth nor by contacting a timber buyer known for paying good prices. I was selling timber for a landowner who had a 10-acre stand of pine in the corner of his pasture that he wanted to convert to grass for his livestock. I did a 100 percent tree count on this small stand of trees and categorized each tree by the product for which it should sell. I came up with a value of $12,500 for the timber stand.
Because it was a small tract, I thought it might be difficult bidding to the masses, so I decided to pick a “good buyer” and sell the timber directly. “Good Buyer” is a term I use for someone who has been a consistent high bidder in the past and operates his harvest operation in a credible fashion.
I contacted this good buyer from the past, and he was excited about buying this small, but quality tract of timber. The buyer came out, did his own tree count, called me back and was excited about buying this timber for $7,400. I immediately thought, “What in the world have I done wrong?”
I quickly turned around and called another “good buyer.” My second buyer showed up with the same enthusiasm and offered us a whopping $7,800. Now I was really wondering where I went wrong in calculating the timber value! So, I picked up the phone and called a third “good buyer.” He showed up with unequalled excitement and an offer of $8,400.
By this point I was thoroughly beside myself, wondering if I had royally messed up my tree count and thinking I must not know the timber market like I thought I did. However, I was not yet willing to throw in the towel and concede my ignorance, so I decided to bid out the timber after all.
I put together an invitation-to-bid package and sent it out to 75 timber companies. This 10-acre stand of pretty good quality timber located next to a paved road brought ten bidders to the table. On the low end the bids ranged from $7,400 to $8,400. On the upper end the timber brought a $13,000 bid (just over the fair market minimum price I had determined from my tree count) and a high bid of $15,750. Needless to say, we took the high bidder on this tract and were glad to get it.
So why did the first “good buyers” come in so low on their bids, when they had been top bidders in the past on other tracts in their area. I can authoritatively tell you, “I don’t have any idea!” It just happens that way some times.
Timber cruising is not an exact science. There are times we all miss the estimate, but a 100 percent tally of all the trees in a stand should yield accurate enough information by which you can feel good about selling your timber. This situation is a perfect example of why it is important to not only know the value of what you have, but to make sure you market your timber in an appropriate way to obtain the highest price for your asset.
Jim Griffith is Gen. Manager of Georgia Farm Bureau Timber and Real Estate Cos.
Georgia Farm Bureau News – November 2007