We timbered our land the year we bought it.
Timbering is not going to leave a park setting when the loggers leave. You will have left over tree tops, stumps and trails. Where the decking operation was on our place was a pile of wood three stories tall. My plan was to hire a drum
chipper and make mulch but never did. That pile was a good back stop for shooting but 15ish years after harvesting, that pile of wood is now a small pile of dirt and a few larger logs. Amazing how fast it all rotted and most people would have not idea what was there. With the equipment out there today, that can grind down stumps and slash, it might pay to hire a crew to clean that stuff up. Just remember, if part of the sale contract specifies cleaning up the slash and stumps, YOU are paying for that work. You will get less money for the trees since the logger will have to pay for the cleanup. We simply sold the timber to the logger with a few stipulations and we figure we would deal with cleanup ourselves. More on the contract below.
Looking at the price of raw land, one could see a vast difference in the price of land that was crop land, pasture, timber or land that had been clear cut. The cheapest land was clear cut land. Why? Because one was going to spend money pulling up the stumps and getting rid of the slash. Pasture land cost more than crop land because of the amount of money it cost to grow and maintain pasture land.
I knew nothing about the timber business but I did a bunch of learning fast. The North Carolina extension office was a great resource for online material and they have classes from time to time regarding land management and taxes. As our resident Economist Professor mentioned, you will have tax issues and you will need to know the basis value of the timber when you bought the land. A forester can provide that information. We hired a forester to inventory our trees, market the trees, sell the trees and monitor the logging. Like a real estate agent/broker, the forester works on a percentage of the sale. The more money you make, the more money he makes.
Our forester advertised in places that loggers hang out and on the day of the sale, we had an auction at dawn on the land. It was a closed bid sale, the bidders handed us their bid, we went to the tail gate of my truck to open and sort the bids. The highest bidder got the trees.
In NC, the timber is sold like you would sell land. There is a deed and a contract laying out the specifics of the sale. In NC, there is a timbering best management practice(BMP) document that specifies how the logger will operate, and as part of the sale contract, the landowner can add other requirements.
How much are your trees worth is a fundamental question and where people get ripped off all of the time. Our forester "cruised" our land and provided us an inventory of EVERY marketable tree on the place. The inventory was listed by tree type, pine, oak, etc, how many trees we had in a given size in inches, as well as the MBF(Thousand Board Feet) of timber. Without this information how does one know what one is selling much less it's worth?
Once you know how many MBF you have, one still has to know how much it is worth. What is the going price in your area? In NC, there is/was a phone number you could call and get the recent price of timber in several areas across the state. While we used MBF as the measurement for the sale there are other measurements used.
Back to taxes. In NC, if one timbers land and sets up a management plan, one can have the land valued as timber land which really lowers the taxable value of the land. When we bought our place we had a very low tax valuation. The year after we bought, the county reappraised properties and our land dramatically went up in price. The price was so high we wondered if we would be able to pay the property tax!
Since we had timbered the land, I wrote up a timber management plan and got our taxes reduced. Often a forester will create the management plan but it is not rocket science and the extension office has information on the plans. The state forester will do the plans but our local guy had so many to do it would take months to do and we did not have the time to wait. If we had the time, he would have done the plan for not cost to us.
I know people who are very smart and very well educated who have gotten ripped off selling timber. Most people are not in sales/marketing and simply do not know how to sell stuff. Timbering is not rocket science but it is a big complicated due to taxes, logging regulation, knowing how much timber one has, its worth and the legal aspects of selling timber. There are some thieves in the timber business so one has to be careful. There can be big money selling timber but you only really get one or two big sales in a lifetime so one has to get it right.
Don't be in a hurry to sell your trees. Do your homework first.
Later,
Dan
