Selling Your Land? Here Are 4 Reasons You Need a Timber Inventory First
When timberland investors look toward property acquisition, they are interested in two key-value factors: timber and land. Even though it’s right there in the name, the purpose of timber is often overlooked when selling land. Timber owners generally have a good understanding that their timber is worth something, but don’t fully understand what that something is.
This guide explains a few reasons you need an established timber inventory before selling your land.
Why Does Timber Inventory Matter?
A timber inventory is an important tool used to determine the value of the trees standing on your property. In too many cases, owners or brokers lacking timber experience will use their best guess or rely on uninformed advisors for timber value. In some instances, they may come close to the actual timber value, and in other instances they may not. Without a formal timber inventory conducted by a professional forester, timberland owners looking to sell their property can’t properly provide the actual value of the land they’re selling.
#1: Buyers Want to Know the Timber Resources
Even for smaller land with a minimal timber resource, buyers want to know what the timber resource is, and what they can expect from timber investment. For buyers with less experience, putting verifiable timber values in the front of their minds can be the key ingredient in closing the deal. Regardless of buyer experience, providing timber inventory gives your buyers peace of mind that can help them make the right choice.
#2: Transparency Makes You a Trustworthy Seller
When you provide a professional timber inventory report to a prospective buyer, you become a trustworthy seller. Potential buyers still might want to run an audit of your timber or conduct their own inventory. However, if you professionally prepared your timber inventory, discrepancies in value are unlikely to arise.
#3: Timber Inventory Informs Prospective Buyers
In each region, there are a handful of expert land and timber buyers that count on buying at below market value based almost exclusively on buyer ignorance. These buyers, often out of malicious intent, look for tracts with a strong timber resource and an owner unaware of its value. Although having a timber inventory doesn’t change a seller’s motivation, it does make them informed.
#4: Without Inventory, the Buyer Holds the Cards
In most cases, knowledgeable timberland buyers will conduct a timber inventory if no current inventory exists. If the buyer’s inventory shows more volume and value than the seller expects, they’ll willingly move to close and accept extra timber for free. If a buyer’s inventory shows less volume than expected, the buyer will likely expect downward price adjustments.
In both cases, the seller loses the negotiation because the buyers played their own cards right by keeping timber inventory.
Although your own rough estimate of timber volume might turn out to be within 10% of an experienced professional forestry firm’s estimate, informed timberland buyers don’t typically value the seller’s opinion when selling land. Ultimately, the initial estimate for a valid timber inventory pays for itself when experiencing what can be lost at closing.
Tutt Land Company is a full-service real estate and land management company offering development services, timberland management, and brokerage of land, residential and commercial properties. Contact us for more information.