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Author Topic: What is typical in a timber sales contract?  (Read 1145 times)

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Offline dustyhat

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Re: What is typical in a timber sales contract?
« Reply #20 on: January 03, 2018, 04:52:29 PM »
I log and saw and i would never sell my sawlogs any less than 50% and they should only ask for no more than 35% of your veneer. its your timber not theres, sounds fishy, seriously.
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Offline dgdrls

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Re: What is typical in a timber sales contract?
« Reply #21 on: January 03, 2018, 08:08:51 PM »
http://www.forestryforum.com/board/index.php/topic,99040.0.html

very helpful discussion,

Be patient and take your time.

D

Offline Ron Wenrich

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Re: What is typical in a timber sales contract?
« Reply #22 on: January 04, 2018, 06:15:40 AM »
I've never been an advocate of having timber cut for shares.  There is too much dependency on the logger's skill in bucking and marketing of logs.  There is also the dependency on the logger honesty and bookkeeping ability. 

Putting it out on bids gives everyone an even footing.  The timber is marked and volume is estimated.  A good forester will be pretty close on their cruising ability and volume estimation.  Every bidder will look at the same trees.  The bid prospectus should have the volume broken down into species, with the number of trees in each diameter class, and the volume of each.  The marking should be done to encourage good management by removing low value trees.  It should also encourage regeneration.  Payment for timber is always in advance and the forester should administer the contract to assure good logging standards are met. 

Loggers should have the ability to know what sort of value they'll get out of the trees.  Loggers should be able to figure out what the yields will be by grade and attach a value to it.  I've sold timber for landowners as a consultant, and I've also been a procurement forester.  I know how it is done and know many a logger and mill owner that buy timber on this method and makes money. 
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Offline paul case

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Re: What is typical in a timber sales contract?
« Reply #23 on: January 04, 2018, 11:39:20 AM »
I only know my experience.
Timber here in my area is marginal at best. Buying it on bids much of the time pays the owner less than what shares cutting will pay. The loggers that bid on timber here generally buy any tree that is more than 12'' dbh and only pay for the butt logs. That is their way of insuring against poor quality logs.
Most cannot tell ALL the defects inside the tree til it is cut.

That is just how they do here in my area. 20 miles from here is different.

I would say that references for a logger would be good to check out. The questions to ask the people he has cut for is Did you get paid? and Were you satisfied with their work?.

PC
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Offline WV Sawmiller

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Re: What is typical in a timber sales contract?
« Reply #24 on: January 04, 2018, 01:40:44 PM »
Paul,

   I think that is an excellent point and it does make sense loggers might bid less if they have to pay for the tract/logs before cutting.

   I have not sold nor do I intend to sell any of my timber but if I did the thing I would be most interested in would be talking to previous customers and get their opinion of how well the logger honored his promises even if the return was more or less than originally projected and how good a job they did with clean up and protecting the owners property.

   If the logger's reputation turns out to be good you might use him on a trial basis then bring him back in a year or so for more cutting as appropriate.
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Offline paul case

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Re: What is typical in a timber sales contract?
« Reply #25 on: January 04, 2018, 03:43:46 PM »
In my opinion that is a good idea as well. A trial basis will help you see if it is worthwhile for you and for the logger. Just give them 10 or 15 acres to cut and if it works out let them cut more.

PC
life is too short to be too serious. (some idiot)
2013 LT40SHE25 and Riehl edger,  WM 94 LT40 hd E15. Cut my sawing ''teeth'' on an EZ Boardwalk
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Offline Claybraker

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Re: What is typical in a timber sales contract?
« Reply #26 on: January 04, 2018, 06:09:17 PM »
Thank you all for the warm welcome and your responses. It's 80 acres, give or take. I'm not sure how much she wants timbered at this time. She has some white oak and walnut--the other I'm not sure. She has contacted a few foresters in the past with mixed results. Most did not respond to calls, one said she should find someone more familiar with the local market (he was 90 minutes away??), and one told her that he would be happy to tag the timber, but that he didn't have much luck with sealed bids in our area.

 She's very near Magoffin Co.

Okay, you've got some homework to do.  Start with a management plan,  it would be a good exercise with your grandmother,  to define her objectives for the land, and possible intergenerational transfer at some point.  I think Ky offers  some of that for free, at least for starters. They'll send out a service forester to do a walk through and give you some ideas. http://forestry.ky.gov/LandownerServices/Pages/default.aspx

Here's the regional offices, find the one that's appropriate, give them a call, and go from there.  http://forestry.ky.gov/regionaloffices/Pages/default.aspx Start with the stuff that's free, and in person the service forester may have some advice on private consultants, or any other helpful information to help you and your grandmother determine the value of the timber.  BTW, sorry to hear about your grandmother's recent injury to her wrist that makes it impossible for her to sign a contract. Once she has a clear idea of what the timber's worth, it should heal rather quickly.   Fact is us landowners  have no idea what our timber is worth, it's not a level playing field.  The deck is stacked against us. Just like real estate appraisal isn't an exact science,  appraising the value of timber is similar, ultimately both are worth what someone is willing to pay for it and competitive bidding is the best method for selling both.

Sorry if this gets a little lengthy, but I wanted to share some of my family's history, in the hope no one else makes the same mistakes we did. My Grandfather had a gorgeous stand of timber that he had spent most of his life growing and improving. He was an early proponent of "banking on the stump"  When he got sick,  and went to the nursing home,  in order to raise some cash to pay for that, my uncle insisted the thing to do was to cut some timber, and he would handle all the arrangements since he was in the timber business. My grandfather had 3 daughters,  my uncle was married to one of them.  If he paid 25% of fair market value, I'd be suprised. When my grandfather passed, my uncle still kept his crew logging.  By this time, armed with what little I knew about timber value, I was being a real PITA until Dad finally put a stop to the cutting until things could be sorted out, and the rest of the timber was put out for competitive bid.  Wish I'd been a PITA earlier. My uncle insisted that even having a cruise done would have cost 10% of the value of the timber, a complete lie. What, didn't anyone trust him? He acted so hurt.  Besides, he was a man and knew more than Mom and her other sister. Any way, they finally put it out for bid, and for some strange reason the sale yielded much higher than my uncle had said was left.  So the estate cut what was left, then had the property surveyed, divided in 3rd's. and replanted. pulled numbers out of a hat at the lawyers office to determine who got which 3rd. After it was divided relations continued to be strained among the sisters.  How strained? we only found out my uncle had passed away 6 months after the fact, when my brother was doing some genealogical research and found his obituary online.

Fast forward a few years, and I had a feeling those planted pines were ready for the first thinning, so I reached out to the service forester who conducted an exhaustive windshield cruise, slowed down all the way to 25mph and confirmed that yep, probably ought to think about thinning in the next few years, sent us a nice letter with the results of the data he had collected. Even estimated the BAF.  That really was all the accuracy I needed, an opinion from someone that didn't have a financial stake in the decision.

I set about finding a forester to handle the thinning, and took me a while, but finally found one, after several phone conversations,  Mom was still suspicious, and not terribly interested in cutting *any* timber, given her previous experience.  I got the forester to put together a proposal for the thinning, and carried it to Mom, and had the forester call Mom using  the magic words "forest vigor."  Worked well, and we got the first thinning done without a hitch. every one was happy, Mom especially  because she got FMV instead of getting stolen from. She looked like a genius, and even bragged to her one sister she was still talking to how much she had made on the thinning.

That was 2010,  in  June 2013 Mom was diagnosed with a glioblastoma.  That's a fancy term for inoperable brain tumor.   as part of the process for preparing the transfer of her property, I insisted we have the land and timber appraised, to establish our cost basis. The lawyer who was handling things thought it was an unnecessary expense, but I was a real PITA and finally she agreed to be reasonable and do things my way. Mom passed the day after Christmas.  my siblings and I established an LLC for the land, which is what Mom wanted, even though the lawyer tried her best to drive a wedge anywhere she thought she could stick one.

One of our first meetings I mentioned we might want to think about a small sale to put some working capital into the LLC for expenses.  I was really thinking about the second thinning, even though it was too early,  but there is a dog hair stand  of natural regeneration that needs to be cut and replanted. Should have been done on the first thinning, but Mom really didn't want to cut any more than absolutely required.

Conditions weren't good, so I sorta put things on hold until the ground dried out.  My sister got a little antsy at the slow process, so decided she would take over.  She got in touch with our forester we had used in the past, and somewhere in that process the size of the timber sale grew a bit more than I really wanted to cut, but the proceeds go into the the LLC so it's really no big deal. We fought enough as kids riding in the back seat of the car on long trips.  Since the proceeds will be a bit more than the expenses needed for the next 15 years or so, we've got a trip to plan.  Maybe a couple. I'd like to go back to Alaska, and I can talk my brother into that, but I'm thinking my sister wants Hawaii this time. I suppose I'll have to compromise and let her have her way.

Cost of a good forester, trivial. Remaining on speaking terms with my siblings- priceless.

Offline Southside logger

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Re: What is typical in a timber sales contract?
« Reply #27 on: January 04, 2018, 09:21:43 PM »
In my opinion that is a good idea as well. A trial basis will help you see if it is worthwhile for you and for the logger. Just give them 10 or 15 acres to cut and if it works out let them cut more.

PC

Hi Paul,

What you suggest here is not bad logic, but it can cause problems for the logger.  It is expensive to move equipment.  A one man operation with a small skidder, chainsaw, and truck mounted loader might not be turned away from such an arrangement.  But unless they were cutting close by many mechanical crews would not even look at 10 acres of select cut unless it was top notch walnut or white oak.  It's the sad reality of the economics of logging today.  When you have $2 million in equipment that drinks fuel like water, is worn out in 4 years, wages, insurance, workmans, comp, you are in the commodity world and have to think that way.  The other issue is fiber commitments to mills, more and more the mills expect just in time, just the right volume of wood, etc so logistics and planning are becoming increasingly difficult.  Not saying you can't find the guy who will work that way, but the selection of those guys is becoming less and less.
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Offline CJennings

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Re: What is typical in a timber sales contract?
« Reply #28 on: January 04, 2018, 09:47:05 PM »
A big problem with this is if there's no one monitoring the sale it's very easy for the logger to rip you off. They'll give you the receipts, sure. From one mill or from some of the loads. They either won't give you receipts for some loads or they'll take some to one mill, some to another mill, and give you receipts only from one mill.

When the logger says "selective cut" I'm hearing high grading in the back of my mind. Maybe it won't be, there are a lot of good loggers out there, but I think you want more than just this logger involved in whatever is done.

Offline Southside logger

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Re: What is typical in a timber sales contract?
« Reply #29 on: January 04, 2018, 10:14:23 PM »
A big problem with this is if there's no one monitoring the sale it's very easy for the logger to rip you off.
When the logger says "selective cut" I'm hearing high grading in the back of my mind.

Wow - really?  There are also foresters who have pet loggers out there too you know.  Some that cruise a track and never show up again, but expect their commission just the same, etc.  People are people no matter what line of work they are in, there is always good and bad.   Trust but verify was and still is a good policy. 
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Offline paul case

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Re: What is typical in a timber sales contract?
« Reply #30 on: January 04, 2018, 10:44:23 PM »
Southside,

You are correct. That do present a problem.

PC
life is too short to be too serious. (some idiot)
2013 LT40SHE25 and Riehl edger,  WM 94 LT40 hd E15. Cut my sawing ''teeth'' on an EZ Boardwalk
sawing oak.hickory,ERC,walnut and almost anything else that shows up.
Don't get phylosophical with me. you will loose me for sure.
pc

Offline Claybraker

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Re: What is typical in a timber sales contract?
« Reply #31 on: January 04, 2018, 11:41:27 PM »
 First logger that can figure out how to handle small 10 acre tracts profitably will make a killing down here in the deep south.  that was back in the days of chainsaws, bobtail pulpwood trucks and dipping turpentine.

Offline Southside logger

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Re: What is typical in a timber sales contract?
« Reply #32 on: January 04, 2018, 11:50:01 PM »
It's what I do - but to do it I need to have all my equipment and run the sawmill so I have market options for the lower grade, which means I am slow.  A lot of the 10 acre folks expect their lots to be opened and done in no time flat, and want the same money as a 400 acre lot owner.  I won't touch those, and I can't think of one that has actually been cut that I said no to.  I can say that a killing I am not making.... :o so maybe I still don't have it figured out. 
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Offline WDH

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Re: What is typical in a timber sales contract?
« Reply #33 on: January 05, 2018, 07:35:13 AM »
No matter what business endeavor you are involved with, there are good practices to follow and poor ones too. 

It is a good business practice to know the value of what you are selling, no matter what it is. 

It is good practice to keep up with anyone operating on your property. 

It is good practice to avoid conflict-of-interest situations or to manage them carefully.  An example of a conflict of interest is where someone is giving you advice but will also profit off of you for that advice. 

If you are selling a pile of hog meat, and you set an average price, it is good practice to pay attention and not to let the first customer that you deal with take only the tenderloins and backstraps and leave you with just the snout, tail, feet, and low quality meat. 

It is good practice to have a firm understanding of any deal or arrangement, and putting things in writing is a good way to avoid misunderstanding or misinterpretation. 

There is good business and bad business not matter what endeavor you are in. 
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Offline CJennings

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Re: What is typical in a timber sales contract?
« Reply #34 on: January 05, 2018, 07:46:18 AM »
Wow - really?  There are also foresters who have pet loggers out there too you know.  Some that cruise a track and never show up again, but expect their commission just the same, etc.  People are people no matter what line of work they are in, there is always good and bad.   Trust but verify was and still is a good policy.

I don't know why that post rubbed you wrong but it's not intended as an attack on loggers. It's just stating some facts. And yes there are bad foresters too. I've seen what I described in that post firsthand. I also caught a timber theft situation this past summer where a logger crossed a line (for a lousy beech of all trees to steal  :D). Anyone in VT has probably heard of the Bacons. Infamous for this situation. It's why I suggested to have third party involved. Check references, do a background check. It stinks for the good loggers but people need to protect themselves and their land. Trees grow back but mature hardwoods don't spring up overnight either and the landowner can be on the hook for fines if laws are broken. https://northernwoodlands.org/articles/article/timber-theft

Offline bill m

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Re: What is typical in a timber sales contract?
« Reply #35 on: January 05, 2018, 08:50:48 AM »
Southside logger, You are correct that some foresters have their favorite loggers they go to most of the time. I am sure it is because they are loggers they can trust to do the best job for the land owner for honest money. I know a few around my neck of the woods. I don't know of any that use or even recommend bad, less then honest loggers.
Having a private consulting forester manage your job helps insure a proper job that meets your goals for the most amount of money.
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Offline Claybraker

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Re: What is typical in a timber sales contract?
« Reply #36 on: January 05, 2018, 09:50:56 AM »
Exactly WDH. that whole "conflict of interest"  thing is why I always suggest the service foresters as the first step for rookie landowners.  It's free. Normally anything free should be valued at acquisition cost, but in the case of service foresters there's a lot of value just in avoiding a conflict of interest.

Offline Southside logger

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Re: What is typical in a timber sales contract?
« Reply #37 on: January 05, 2018, 10:19:08 AM »
Southside logger, You are correct that some foresters have their favorite loggers they go to most of the time. I am sure it is because they are loggers they can trust to do the best job for the land owner for honest money.

This same conversation has been hashed out here on the FF many times in the past, so I am not going to dig into that rabbit hole again, but to say people have their own motivation and as I stated to the OP - do your own homework.  There are good and bad in every walk of life, and there are places where money makes a circle, foresters with pet loggers are no exception to that rule.  When I start to hear things like "he's the best" the hair on the back of my neck stand up on end.  I recently observed such a circle with a rather well known name involving lots and lots of money on multiple levels, each "recommending" the next player because "no one is better", or "it's worth it to wait for him". 

Selling timber is a financial transaction, not unlike investing your 401K money, you best be well educated in the entire picture if you are going to come out on the up end of it. 
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Offline bill m

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Re: What is typical in a timber sales contract?
« Reply #38 on: January 05, 2018, 12:11:36 PM »
Southside logger, You are correct that some foresters have their favorite loggers they go to most of the time. I am sure it is because they are loggers they can trust to do the best job for the land owner for honest money.
Selling timber is a financial transaction, not unlike investing your 401K money, you best be well educated in the entire picture if you are going to come out on the up end of it. 
So what you are saying is that a land owner must be well educated in growing, harvesting and selling timber if he expects to make a profit. I don't think so. There have been many land owners, who know nothing about trees, who have made a lot of money selling timber with the assistance of an honest well educated forester.
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Re: What is typical in a timber sales contract?
« Reply #39 on: January 05, 2018, 12:45:06 PM »
Much good advice given. Seek out the services of a certified forester serving your area for advice in valuing and selling your timber.

http://www.forestryforum.com/board/index.php/topic,33345.msg480853.html#msg480853
~Ron

 


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