During a sale
Arranging a sale
A consulting forester can carry on many of the activities described in the "During a sale" section of this unit including arranging the sale, preparing a timber contracts, arranging tours of the timber for prospective buyers, negotiating the sale contract, and inspecting the timber harvest. Let's take a closer look at the steps of the process.
There are a number of different ways that a landowner can sell their timber and receive payment for it. Also, keep in mind that practices vary in different parts of the country. Let's examine the advantages and disadvantages of some of the most common approaches to timber sales.
Selling by sealed bid
In this type of sale, a professional forester prepares a description of the timber and sends it to as many potential timber buyers as possible, including procurement foresters and Certified or Master Loggers who have completed professional training on forest operations. The competition generated from a sealed bid sale will normally result in a higher market price than other sale methods. Your state government's division of forestry can provide a list of buyers for various timber products such as sawlogs, veneer logs, pulpwood, etc. in your area.
Bids are normally accepted via phone, mail, fax, email, or in person, and should include buyer's name, company, phone number, and signature (if appropriate for method of bidding). Bid invitations should be simple but informative and include the following:
- Date, time, and location of the bid opening
- Terms for payment
- Timber volume summary
- Location map
- Notice of “show-me” tour of the sale area
- Bid form
- Information about the performance bond
- Statement of seller’s right to refuse bids
- Insurance requirements
- Contract terms, including duration
In a sealed bid, the timber buyer can pay for the timber up front before any harvesting begins (lump sum) or on a payment schedule. The landowner places a certain amount of trust in the buyer when they accept payment on a schedule. The sealed bid method is best for high quality timber and large acreages. The landowner has the most amount of control in this type of sale since he is guaranteed payment by contract before any timber is harvested.
Contract logging/delivered sale
In this type of sale, which is common in the northeast, the landowner or forester working for the landowner, hires a logger for a set fee. The landowner maintains ownership of the logs until he is paid by the mill. In this case, timber value is based on log value measured by the scale at the mill, not stumpage value as timber stands in the woods. Contract logging may be an appropriate way to sell timber if there is only one interested buyer or the timber is of lower quality.
Pay-as-you-cut
In this type sale, the timber buyer and landowner agree to a fixed price per unit of logs delivered to the mill. The mill scale is the standard measure of the volume of timber removed from the landowner's property. In this case, the mill scale slips are the only record that the landowner has to document the volume of timber which was removed. In pay-as-you-cut sales the landowner is placing a certain amount of trust in the logger and has less control over the sale than in sealed bid sales. However, it can be an acceptable way to sell low quality timber or small acreages.
Negotiated Sales (On shares)
These types of sales go by many names, but they share common elements. In these cases there is no written contract. The landowner has little control over the sale and is relying on the buyer, logger, or mill, rather than the market to determine the timber value. In the case of selling on shares, the logger and the landowner agree that they will each get a percentage of the profits for each load taken to the mill. This is not a recommended selling practice.
Bid Invitation
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