David B. Kittredge, Jr. and William Haslam, University of Massachusetts, Amherst, MA 01003.
Hiring a consulting forester is perceived by many landowners to be an expensive or unnecessary additional cost. Landowners may be approached by a potential buyer of standing timber and offered a lump sum price which at first glance may seem quite attractive, especially if they have no prior experience with the sale of timber. In many cases, however, without professional expertise and experience in the marketplace, landowners are unable to evaluate the reasonableness of the offered lump sum. Frequently, landowners are advised to seek professional advice if they are contemplating the sale of timber, however many are reluctant to do so because this step represents an additional cost, with benefits that are difficult to understand and measure.
The goal of this study was to characterize the extent to which lump sum bids for the same standing timber can vary. We sent a survey form to 170 practicing foresters in Massachusetts and received 32 replies with usable data, representing lump sum bid information for 164 timber sales.
We found the average range between high and low bids to be 212 percent, meaning that, on the average, the high bid was more than twice as high as the low bid for the same timber. For one sale with 5 bids, the high bid was more than 11 times the price of the low bid.
Our results suggest that there is considerable variation in lump sum bids for standing timber. A landowner accepting a lump sum offer, without professional advice, would likely not know if the offer was a reasonable one. Likewise, when timber is sold competitively, some offers may be higher than others.
The dramatic variation represented by a high percentage difference between actual high and low bids for individual timber sales can be attributed to variation in a number of factors, including but not limited to:
We believe these results suggest that landowners should be aware of how timber values can vary and to consider the services provided by a private consulting forester. Other benefits to contracting with a private forester include: advice and assistance in the development of long-term management goals; preparation of a sound contract that will protect landowner interests; timber harvest supervision to ensure compliance with local, state, and federal regulations; technical design of roads, erosion control measures, and equipment restrictions. Our results represent only one good reason to seek professional advice. The expense of a consultant can often be offset by higher prices offered for timber.
For detailed results and methods, see the Northern Journal of Applied Forestry, Volume 17, Number 1, March 2000, pages 7-8.