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Timber sellers should obtain multiple bids to insure highest price

By Jim Griffith

The Georgia Farm Bureau Forestry Commodity Advisory Committee is always looking for ways to educate timber growers as to how they can put more money in their pocket during the process of growing and marketing their timber. My job is to do just that, help you get the most for your trees when you sell them.

For most of us, selling the timber on our property is a once in a lifetime event. It would be a shame to spend 25 years growing and caring for your trees only to sell them for less than what they are worth. It is not like you can take your trees to the corner market or to the auction barn and sell them to the highest bidder.

Everyone knows if you called the local car dealer to come to your home to buy your car when you decided to sell it that you would probably have not done what was best for your pocket book, right? So what makes calling the nearest local timber buyer the best way to sell your trees? Someone recently walked into my office telling me about a timber bid where the high bidder left $50,000 on the table. This overage amounted to a third of the overall value of the sale. Chances are that you’ll give up this type of opportunity for gain if you call a local timber buyer.

I have been accused before of running down timber buyers. That is not my intent here. I am only saying, human nature makes us bid more for anything under competition. With more bidders, you have more opportunity to sell your trees for more money. The largest spread between the first and second place bidder I ever had was $150,000. It was a pretty big sale, but it still amounted to 33% more money for the seller. At this rate, every third sale results in an extra sale value just by using good marketing. That sounds like a no-brainer of a reason to invest in assistance in selling your trees.

Number one, you need to know what you have. How can you be comfortable selling anything for which you do not know the value? A timber cruise is a must in the sale of your timber. But remember, a timber cruise is a statistical sample. Most timber cruises are within an accurate range of a tract’s value 95% of the time. There are always unforseen factors that may cause the actual value of a timber tract to come in above or below the predicted value estimated during the timber cruise. This is why it is so important to have multiple bidders. They all do their own cruise work and come up with their own numbers. Even with exact fieldwork, there is still going to be variation in the results of timber cruises conducted by different bidders due to variation in their sampling procedure.

Jim Griffith is general manager of the GFB Real Estate and Mortgage Companies.
Georgia Farm Bureau Neighbor – June 2003

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