Before You Sell Your Timber: What Every Landowner Should Know

For many landowners, a timber sale may happen only once or twice during their lifetime. Yet the timber growing on a property can represent decades of growth and a significant financial asset.

That is why one of the most important decisions should happen before the first tree is cut: understand what you own and have a professional working on your behalf.

Start With a Professional Forester

If you are considering selling timber, one of your first calls should be to a professional forester.

A timber buyer is in the business of purchasing timber. A consulting forester has a different role—the forester works for the landowner and helps the owner make informed decisions based on the property, timber, current market and long-term objectives.

A professional forester can inventory the timber, estimate volumes and products, evaluate current market conditions, recommend a harvest strategy, market the timber to qualified buyers, assist with timber-sale agreements, and oversee harvesting activities.

At American Forest Management (AFM), forestry is at the core of what we do. Our team includes experienced forestry professionals and Registered Foresters who work with private landowners, families, institutions and other property owners throughout the region. That experience provides something particularly valuable when selling timber: knowledge of both the forest and the local timber market.

With Timber, Location Matters

Everyone has heard the saying about real estate: Location, location, location.

The same principle applies to timber.

Two properties containing similar timber can have considerably different values simply because of where they are located.

Standing timber ultimately has to be harvested, loaded onto a truck and transported to a mill. The number and type of mills within an economical hauling distance can influence the number of potential buyers and what those buyers are willing to pay.

Mill demand matters too. A mill needing a particular product today may be less aggressive several months from now—or another mill may suddenly become a stronger buyer.

That is one reason statewide or regional timber-price averages should only be considered a general reference. Timber markets are local.

What We're Seeing in the Central Piedmont

In portions of the Central Piedmont of North Carolina, our forestry professionals are currently seeing favorable competition for certain timber products.

Local mill demand, available stumpage inventories and changing forest-products markets are creating opportunities on some timber sales. When mills need wood and available supplies tighten, competition among buyers can benefit landowners—particularly when a property contains desirable products and offers favorable logging and hauling conditions.

But that doesn't necessarily mean every landowner should harvest today.

Timber markets vary by species, product, location and mill. The biological growth of the forest must also be considered. In some situations, taking advantage of today's market may make sense. In others, allowing a stand additional time to grow into higher-value products may provide a better long-term return.

Good forestry is about more than asking, “What are timber prices today?” It is about determining when the market and the forest are working together in the landowner's favor.

Know What You Own Before You Sell It

Not all trees—and not all acres of timber—have the same value.

Species, diameter, height, quality, stocking, age and product class can all influence value. A timber stand may contain pulpwood, chip-n-saw, sawtimber, poles or other higher-value products, with each having a different market.

Before marketing timber, a professional inventory can help answer two fundamental questions:

How much timber do I have, and what is it worth in the current local market?

Without that information, evaluating an unsolicited timber offer can be difficult. An offer may sound attractive, but the landowner has little basis for determining whether it accurately reflects the timber's value.

The Property Matters Too

Timber value isn't determined solely by the trees.

Access, terrain, soil conditions, stream crossings, internal roads, tract size, harvest boundaries and seasonal logging conditions can all affect the cost and difficulty of harvesting a property.

Distance to mills can be especially important. Every additional mile a truck travels adds cost. Properties that are well located relative to multiple wood-consuming facilities can sometimes benefit from additional buyer competition.

Likewise, a tract with good access and favorable ground conditions may be attractive during periods when wetter or more difficult properties cannot be efficiently harvested.

This is another reason a knowledgeable local forester can add value. Understanding the timber is important. Understanding who is buying it, where it can go and how it can be harvested is equally important.

Competition Can Make a Difference

Selling timber doesn't have to mean accepting the first offer that comes along.

Depending on the property and market, a professional forester may recommend marketing the timber to multiple qualified buyers through a competitive bid process or negotiating directly with buyers when market circumstances warrant it.

Price is important, but it isn't the only consideration.

Buyer qualifications, payment terms, logging performance, harvest timing, road maintenance, Best Management Practices, property protection and contract provisions can all matter.

A good timber sale should protect both the financial value of the timber and the condition of the land after the harvest is complete.

Plan for What Comes Next

A timber harvest isn't the end of forest management. In many cases, it is the beginning of the next forest.

If the harvest is a thinning, the goal may be to generate intermediate income while improving the growth and quality of the remaining stand.

If it is a final harvest, decisions about site preparation, reforestation, species selection, competition control and future management should ideally be considered before harvesting begins.

Landowners should also consider wildlife objectives, recreational uses, water quality, roads and the appearance of the property after harvesting.

The best timber-sale decisions take both today's income and tomorrow's forest into account.

Don't Overlook the Tax Side

Timber sales can also have significant tax implications.

Timber basis, depletion, the structure of the sale and certain forestry expenses may affect how timber income is treated for tax purposes. This can be particularly important for inherited property where establishing timber basis may have future tax consequences.

A forester can provide timber inventory and valuation information that may assist with this process, but landowners should consult their CPA or other qualified tax professional regarding their individual circumstances.

Decades to Grow. One Decision to Sell.

A mature timber stand may represent 20, 30, 40 years or more of growth. Once those trees are harvested, that value cannot be recreated overnight.

Before selling, take the time to understand what you own, what your local timber market is doing, and how a harvest fits into your long-term plans for the property.

For nearly 60 years, American Forest Management has worked with landowners to manage forests and make informed decisions about their land. From forest inventories and timber sales to harvest oversight, reforestation, wildlife management and long-term forest planning, our forestry professionals can help landowners look beyond a single timber sale and consider the bigger picture.

Thinking about selling timber, or simply wondering what your timber may be worth? Contact your local AFM forestry professional before making the decision to harvest.