PO Box 11750
Blacksburg, VA
24062
540-951-8927

The traditional buying and selling of timber is one of the last "free markets" - similar in many ways to horse trading and used car sales. Typically, the buyer knows what your timber is worth, because that is what a timber buyer does. But do you?

The information on this page serves as a general guide for selling your trees through forest product markets, but bear in mind that the process is complex and our guide is not comprehensive. Selling forest products brings with it a large responsibility. It is often one of the largest financial transactions you'll make as a landowner, and can have a significant impact on the character and health of your forest. The future health and value of the forest rests on the management decisions you make now as you move through the sale process.

To help you get the most out of your forest products sale, this guide addresses the following questions:

• I know I want to make money; what else matters?
• Why do I need an inventory to find out how much timber I have?
• If I know how much timber I have, why do I need a management plan?
• Will logging destroy my future forest? How can I protect my forest resources?
• Clearcuts? Horse logging? Marked sales? What determines how buyers will harvest my forest products?
• How much revenue can I expect?
• How do I go about actually selling my timber?
• What tax issues are involved in my sale?
• What do I do if a logger or timber buyer comes to me?
• How can I find a professional forester or other help in my area?

One of the best ways to protect both your own financial interests and the long-term health of your forest is by seeking help from a professional forester to represent your interests in the sale process and consider the forestland's health and productivity - not only for your generation but for those to come. Because these professionals know the value of your forest products, the legal issues involved in logging and selling timber, and the "best practices" required to harvest your timber in a way that insures a healthy future for your forestland, they can work to make sure you reap the maximum benefits from the sale. Most landowners find that they make more money by paying a consulting forester to manage the sale than they would dealing directly with the timber buyer, and they are more satisfied with the results.

Today, anyone who visits the woods is walking through the "management decisions" of bygone days - what we see and hear and feel results from decisions made 50 or 100 years ago. What will the next generation think of the practices we have used this year?

I know I want to make money; what else matters?

When it comes to making money from your timber, you have options that range from a single harvest to get the maximum lump some now, to a series of harvests over several decades that might decrease your short-term gain, but increase your long-term income. Your income goals as well as your future land use priorities determine both how much timber to harvest (all of it, only the most mature, only certain species, etc.) and how to carry out that harvest (a clearcut, a group selection cut, a marked sale, etc.). Before you plan a sale, you need to determine all your goals.

Even if your objective starts with "To generate income", you still need to answer several other important questions to fully define your needs and goals:

• Do you want the maximum amount of income available now, or are you more interested in generating income over time or at a future date? Does a large, lump sum profit now make sense in the context of current timber markets, family tax structure, etc.? Do your financial goals/plans warrant a single sale or several sales over the next 5-50 years to spread out the income? View your forest as an investment that can grow and mature at various rates depending on the productivity of the land and quality of the trees that are present.

• Do you or your family visit the forest and desire a certain level of aesthetic quality and/or recreation potential? Do you want to hunt? Take pictures? Hike? The type of timber harvest, how well it is conducted, what and how roads and trails are build, and related factors determine how the forest looks and how "user-friendly" it is after a harvest.

• What do your woods look like now? The condition and history of the present forest will determine the opportunities you'll have and the choices you'll need to make.

If you are working with professional foresters, they should ask you these and additional questions to help clarify your objectives for your property and a timber sale. Their mission is to act as you would if you had their knowledge of forestry and forest products' markets, and thus help you make the best possible decisions about land use and harvesting. To do so effectively, they need to know what's on your mind for the present and for the future, and then match your objectives to management prescriptions. You can help by putting together a list of your (and your family's) goals.

Why do I need an inventory to find out how much timber or pulpwood I have?

A forest inventory is your most important tool in marketing your forest products. With it, you know the amount of wood product you own, the quality and "merchantability" (i.e. how much of market there is for it) of these products, and therefore the potential market value at sale time. Without it, you can only guess at the volume and value, or more often, relies on the buyer's "advice" to tell you the worth of your resource.

To have a fair timber transaction with a buyer, you both need to know the true value of your timber resource. Many private landowner's each year give away thousands or tens-of-thousands of dollars of their potential income during a timber sale because they rely only on the buyer. Instead of dealing directly with a timber company or broker when entering into a timber sale, you should seek help from a professional forester who represents your interests and who can give you an accurate assessment of volume and value.

Foresters estimate the amount of forest products on your property is estimated with an inventory, or "cruise". When we "cruise" timber, we collect information on your trees at to estimate the value of sawtimber (in board feet), pulpwood (in cords or tons), and other forest products.

To determine these values, we collect data on trees at designated sample locations that includes species, diameter at breast height (DBH), merchantable stem height, and stem quality. From this information, we calculate the volume of products by species and size class for each stand and for the whole tract.

For cost and efficiency, inventories most often rely on statistical sampling (rather than counting every single tree), and therefore have a "margin of error"; if you are selling your timber, the sample estimate should have an error of plus or minus 10% or less to make sure both you and your buyer get a fair deal.

Once your forester has an accurate volume estimate, he or she will apply current market prices to estimate the value of the standing wood products. Keep in mind, though, that other factors such as accessibility, harvest method, and environmental concerns can also affect pricing. If you have very valuable timber, but it's hard for loggers to get to, your revenue may be slightly lower; again, a professional can help assess the impact of site and accessibility on projected revenue.

With a solid inventory in hand, you have the basis for solid, equitable negotiations with potential timber buyers.

If I know how much timber I have, why do I need a management plan?

Anyone interested in knowing more about their forestland and how to best manage for multiple objectives can benefit from a management plan, but these plans are particularly important when it comes to harvesting timber because they help determine what you'll have left after the harvest. A plan generally describes the forest by stands (defined by similar tree species, sizes, and history), and include a management prescription (i.e. set of recommended activities) for each stand based on your objectives.

Importantly, if you want to sell forest products, the prescriptions include recommendations on what and where to harvest, and how to promote the next generation of trees. A management plan helps you reach not only a short-term goal (make money now from timber), but also your long-term goals (harvest timber when your children go to college, create a "pretty" forest to walk through, establish grouse habitat for hunting, etc.).

One of the greatest benefits of having a plan for your property is having access to a forester's and/or a wildlife biologist's professional suggestions. This provides you with a tool for making informed decisions about management activities that affect the resources under your care, including the potential revenues over time.

Will logging destroy my future forest? How can I protect my forest resources?

Logging - even clearcutting - in and of itself will not destroy your forest provided you and your forester take the time to develop a harvest plan geared to your objectives, sign a contract that adequately protects your interest, and monitor the logging operation. A timber harvest is only as good (or bad) as the planning and monitoring that surround it.

To protect the forest's future, foresters consider residual stand structure and forest regeneration (i.e. what trees, saplings, seeds, and vegetation are left) as key aspects of any timber harvest activity. The species composition and structure of your woodland are key in determining the best type of harvest for your property. Conversely, the type of harvest greatly affects the residual forest stand and/or regeneration potential of your woodland; how you harvest today will influence what your woods look like in a year, 10 years, and even 50 years. As you work with your forester to plan your sale, you'll balance all of these factors to make the best choice for your short and long-term goals.

Many factors determine the natural regeneration potential of a forest stand, including stand size, stand age, tree species, and the regeneration conditions the harvest itself will create (e.g. large sunlit openings, shade canopy, etc.). In addition, a number of factors determine the viability of a residual stand after a harvest, including stand age, tree species, the number of trees present (stocking level), and the range of tree sizes (stand structure). Your forester should evaluate all of these factors in the process of writing a forest management plan or completing a stand inventory prior to the timber sale.

With all the data in hand, your forester can predict whether or not trees will grow back without assistance after your harvest, and even to schedule when you will be able to sell more timber. If regeneration needs help (e.g. seeding or planting new trees, fencing to minimize deer browse), your forester can plan for those activities and include the cost in the overall financial plan for the sale. The needs and outcomes depend upon the factors mentioned above, and differ for every harvest activity. For example:

• Suppose your objectives include maximum dollars from this sale and you are willing to invest a little of the proceeds for the possibility of a subsequent sale as soon as possible: You may consider clearcutting your present stand, then planting a fast growing timber species to regenerate the site. Depending upon the site and the species planted, you or your family could sell sawtimber again in 30 to 60 years.
  
  
• On the other hand, suppose you are concerned with recreation potential after the harvest as well as some income now, and you have some valuable timber in a stand of mixed species and sizes: You may be best served by a selective harvest that provides for some income now and a healthy residual stand on the site. In this case you may be able to sell more timber in 10 to 15 years.

These are only 2 of many possible scenarios you and your forester can talk about as you plan the sale; every forest and every landowner is unique, and your forester's job is to help you decide what's right for you.

What determines how buyers will harvest my forest products?

As you may know, loggers can harvest timber in a variety of ways. Not only are there different logging methods (e.g. skidders and small bulldozers, horse logging, helicopter logging), there are also different kinds of harvest systems (e.g. "even-aged" harvests take the entire overstory to leave an even-aged forest; "two-age" harvests leave selected trees of a certain age, "uneven-age" leave a variety of different trees). The methods and the systems depend both on what you have now and what you want in the future.

Each logging method and each harvest system has advantages and disadvantages for both forest health and revenue; your forester can explain your options and help you determine the best choice for your land and your goals. You and your forester can work together to consider species, size class, and stem quality information to plan the harvest and create different scenarios regarding what trees to cut and what to leave standing. For example:

• Suppose the inventory shows that you have relatively high volumes of good quality, healthy maple, oak, and ash trees that are 8-14" in diameter. Trees this size are usually considered growing stock by a forester, and will provide for the future forest stand. With plenty of these smaller trees available to fully "stock" the stand afterwards, the forester can recommend a selective harvest that removes the larger sawtimber trees (16" + in diameter), but leaves these smaller trees in place. Some smaller stems may also be removed to improve the quality of the residual stand and improve forest health.
  
  
• Alternatively, suppose the inventory shows that most of your volume is in oak species of the larger size classes (16"+ in diameter). From this inventory a forester can see that if all the large sawtimber-sized oaks are removed, you'll be left with an understocked stand with few trees suitable as growing stock. Knowing that oaks, ash, yellow-poplar, black cherry and many other species regenerate best in full sun, a forester might recommend a clearcut harvest to remove the scattered smaller diameter trees with the larger ones, opening up the site to full sun and providing for the best regeneration conditions.
  
  
• In a different scenario, suppose you want to generate a specific amount of revenue from a sale. The forester will use the inventory to determine how much of the stand will need to be harvested to produce that revenue, then determine the best harvesting method to reach your financial objective while not degrading the forest resource.

How much revenue can I expect from the sale of my trees?

Foresters and timber buyers determine revenue potential based largely on stumpage value - the economic worth of standing trees to a forest landowner or potential buyer. Stumpage value depends on two broad categories: the physical properties of the standing trees and the way they're marketed.

The physical characteristics that affect the stumpage value of any given tree are species type, size, form, and quality. Certain species are more desirable than others in the wood products industry due to species-specific qualities (e.g. milling characteristics and density) and consumer preferences (sometimes established by tradition, sometimes dependent on current trends or fads). For example, black cherry is a highly desirable sawtimber species which brings relatively high stumpage prices because of its long tradition in the fine furniture industry. On the other hand, an American beech of the same stature might bring the seller 10 times less because only low-grade markets exist for its end use. Importantly, these values change over time; your forester should be aware of current broad market conditions as well as local factors (e.g. a flooded local market or a real shortage of timber jobs) to give you the best possible value estimate.

A tree's size and form also play a major role in stumpage value. Other factors being equal, the larger and straighter a tree, the higher the potential market value. Large trees with several "merchantable logs" are more economical for a logger to harvest (the length of a "log" depends on the tree species and product; it represents the length of wood the logger will load on the truck). One 20-inch DBH, 3-log red oak might yield 300 board feet; in contrast, a logger would have to cut three 18-inch, 1-log red oaks to equal that same volume.

Size also brings more potential for high-grade lumber (e. veneer rather than pulpwood), and therefore higher prices. Good form, or straightness, is also valuable, translating into fuller stacked loads on haul trucks and maximum board feet cut out of any given log.

Log quality is the last major tree characteristic that affects stumpage value. It depends mostly on external defects detected in the merchantable logs of a tree. Such defects include dead branch stubs, swollen knots, woodpecker holes, lightning damage, and visible rot. All of these flaws produce imperfections in the interior wood of the tree that decrease its desirability or strength characteristics for wood products.

Finally, as noted earlier, site accessibility and harvest method can also affect revenue; the more it costs the logger to get the trees, the lower the profit on the sale.

The other key issue that affects price is the way you market your trees, as explained in the next section.

How do I go about actually selling my timber?

Once you decide that a harvest matches your objectives, and you know the volume and value of the products, you need to market them appropriately to bring the best price.

Typically, you'll get the best market prices by advertising the products to be sold through a sealed bid sale. Prospective buyers, who are competing against each other to supply wood to their markets, can bid on the sale by submitting a bid in a sealed envelope; you and/or your forester opens all bids on a set date and time. Landowners typically accept the highest bid provided it meets or exceeds the estimated current market value of the products. This method allows you to decline unsatisfactory bids and usually maximizes revenue.

Other methods for selling timber include:

• negotiating with a single buyer for a fixed price for the specified products

• cutting "on shares", where the buyer/logger pays you a predetermined percentage of the value received for the logs delivered to the mill.

  We encourage landowners to be cautious in dealing with buyers on the shares basis. This situation forces you to rely totally on the buyer to tell you how much timber was cut and taken to the mill. If you and the buyer don't have a strong, established relationship of mutual trust, problems generally arise with this business relationship.

Whatever method you chose, we recommend taking the following steps before any harvest activities start (Note that this list isn't complete; it includes just a few highly recommended activities):

• Know and clearly mark property boundaries where they coincide with the sale area.

• Prepare a written contract between the Seller and the Buyer to protect both parties and to describe in detail the agreement between the two. Timber sale contracts should be fairly extensive and inclusive; most private consulting foresters have standard contracts that they customize for individual clients. A good contract should include damage restrictions, performance expectations, and required clean-up activities. State forestry departments can also supply you with a suggested list of items that should be included in the contract.

• Clearly describe the trees to be cut in the contract, and clearly paint sale boundaries in the field. For marked timber sales, clearly paint individual trees on the uphill and downhill side of the stem and at the base of the tree to be harvested.

• As a courtesy, notify neighboring landowners of the sale. Though not required by law, such notifications can help neighbor relations and address or prevent potential problems.

• Review state laws governing forestry practices. These laws primarily deal with water quality issues, such as Virginia's 1993 Forest Water Quality Bill. They may also exist for other aspects of harvesting operations such as reforestation and wildfire prevention.

What tax issues are involved in my sale?

There are special income tax considerations involved with timber sale transactions and forestry investments. While income is the primary concern, you may also need to address questions of capital gains, expenses, management investments, and basis. Land classification and tax status are also important factors that may influence your activities. Regardless of your individual status or the size of the sale, thorough records of activities, expenses, and revenues are very important for addressing your tax concerns.

Many professionals can help you deal with taxes and your timber sale, including foresters to provide a timber inventory and value estimate, accountants or attorneys to help you apply tax laws to your particular case, and the local Internal Revenue Service office to provide tax publications of interest.

The 1995 USDA Forest Service Agriculture Handbook No. 708, Forest Owners' Guide to The Federal Income Tax, is one valuable source of assistance. You can also order this guide through the Government Printing Office at (202) 512-1800.

What do I say when a logger or buyer comes to my door and offers me cash for my timber?

If you own any significant forest land, you may well open the door one day to find a logger offering you money - perhaps what sounds like a lot of money - for your timber. What do you say?

Think of it this way: what would you do if you opened your door to a used car salesman offering you cash for your 2-year old Chevrolet Suburban? You probably wouldn't just hand over the keys, would you? First, you'd want to know the blue book value so you'd know if the offer was low, high, or on target, and you might even check out prices on a few web sites or at local dealers. You'd also consider the car's current condition - is it mint, or has your teenager backed into the corner of the house a few too many times? Then you'd want to evaluate what you'd be left with. Cash in your pocket is nice, but if that's your only car, and the money won't buy a new one that meets your needs, you're worse off than when you started.

Instead of taking the money and surrendering the keys, you'd probably politely thank the salesman, say you'll consider the offer, and get a phone number. Then you'd close the door and start doing some research.

The same principle holds true for your timber. Before you sell anything, we strongly recommend at least contacting a professional forester to discuss your situation and arrange for an inventory - like the blue book value or the information you find on the web, that inventory means that both you and buyer know the value of the product up for sale.

You and your forester can then discuss other appropriate actions to protect your interests and maximize your gains.

How do I find a professional forester or other help in my area?

Foresters Incorporated, Blacksburg Virginia

If you live in Virginia, West Virginia, Pennsylvania, Maryland, North Carolina, Tennessee or the the surrounding area, we would be happy to help at any or all stages of the process. You'll find details about our services under Non-industrial Private Landowners > Forest Product Sales. Please take the time to explore the rest of our web site or contact our office for more information on our services. Email us at forinc@foresters-inc.com, call us at 540-951-2094, or write us at P.O. Box 11750, Blacksburg, VA 24061.

Private Consulting Foresters

If you live in another area of the country, you'll find private consultants in your area who can provide all services associated with timber sales, including preparing forest management plans and forest inventories, locating and marking boundaries, analyzing market values, marking or designating trees for sale, preparing a bid prospectus, advertising the sale, preparing the sale contract, laying out logging roads and landings, and monitoring the harvest monitoring for contract compliance.

To find foresters who are members of The Association of Consulting Foresters of America, Inc., visit the ACS web site or contact:

ACF (National Office)
1403 King St.
Alexandria, VA 22314
(703) 548-0990

The ACF sets strict standards for membership. Members must comply with ACF's professional and ethical standards, and must obtain specific work-related continuing education credit every year.

National Forestry Association

You can also contact the National Forestry Association and ask for a referral for a professional forester:

National Forestry Network
374 Maple Ave. E
Suite 210
Vienna, VA 22180
(703) 255-2700

State Departments of Forestry

You can find your state's Department of Forestry in the the government pages of the phone book, or visit the National Association of State Foresters.

U.S. Forest Service

The U.S.F.S. manages our nation's forests, has a branch of their organization that assists state and private foresters, and orchestrates the Forest Stewardship Program, but they typically do not directly assist private landowners in land management.

You can find more organizations and web sites on our Resources page.

If you have any questions about anything you read here, please contact our office and one of our foresters will be happy to speak with you.