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Black Walnut Timber Sale

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From: TOM LEnz
City:
JACKSONVILLE, IL
I HAVE 53 WALNUT TREES. LOGGER WANTS TO GUARANTEE ME A MIN OF $19,000 OR 70% OF WHAT THE LOGS BRING UPON SALE. SHOULD I MAKE HIM PAY THE $19,000 UP FRONT

 
Extension Message
From: Jay Hayek
Extension Specialist, Forestry
Natural Resources & Environmental Sciences
jhayek@illinois.edu
Boy do I love these kind of questions! Please read carefully and please read it all, as this advice is priceless!

Oh yeah, before I forget – I’m only going to say this once, “Do not sell your timber on shares.” Selling your timber on “shares” means the logger will pay you a certain percentage for the delivered logs and he get’s the rest, i.e., 50:50%, 60:40%, 70:30%, etc. If you want to SAFELY maximize profit, then sell your timber via sealed-bids. If you want to avoid nightmare scenarios where some landowners get taken to the cleaners and literally hand over excess profit to the logger, then by all means sell your timber via the shares method. Trust me, you absolutely do not want to sell your timber via the shares method. Sorry, but it had to be said :-)

Okay, the story is you have 53 black walnut trees. For the sake of argument, let us just say that each tree contains 200 board feet (very conservative). Additionally, for the sake of argument, 20% of your volume is veneer (again, this could be conservative). Now the fun part:

53 trees x 200 board feet/tree = 10,600 board feet (total volume, Doyle scale) 10,600 bd ft x 20% = 2120 bd ft (veneer)

2120 bd ft x $3.00 = $6,360 (low veneer value) 2120 bd ft x $8.00 = $16,960 (higher veneer value)

8480 bd ft x $1.00 = $8,480 (low sawlog value) 8480 bd ft x $1.50 = $12,720 (higher sawlog value)

Low Estimate = $14,840 Higher Estimate = $29,680 Somewhere in the Middle = $22,260

***Note: timber value is a function of many factors, including volume, quality, logging conditions, weather, distance to mills, contract requirements, topography, number of trees, etc.

BOTTOM LINE…MARKET YOUR TIMBER, DON’T JUST SELL IT! FURTHERMORE, DON’T SELL QUALITY TIMBER VIA THE “SHARES” METHOD.

Who is to say that a timber buyer 4 counties away wouldn’t be willing to pay $30,000 for your timber? Black walnut marketing pays for itself, take advantage of the system, and market your timber the smart way, the best way, the sealed-bid timber sale way! Remember, you can do all marketing in the world and mess it up by not utilizing a legally binding timber sale contract with the timber buyer. As a rule, don’t use the timber buyer’s contract; contact me or your local district forester for a sample timber sale contract that protects both the buyer and the seller’s rights equally.

Selling timber is a business transaction. If the timber buyer refuses to sign a contract, simply take your business elsewhere. I CANNOT EMPHASIZE THIS POINT ENOUGH!!! Do not fall for the good old boy timber trick, “if you don’t make me sign a contract, I’ll pay you cash and you won’t have to report it to Uncle Sam.” GARBAGE. If you fall for this scam, you’re going to wind up with an IRS audit or even worse, the buyer is going log all your trees, and skip town because you failed to sign a formal contract stating the conditions of the business transaction. Not to mention, he convinced you to only accept 10% down with the rest paid to you after he receives his check from the sawmill. Yikes, I’ve witnessed that sad story too many times in my short career!

Therefore, if I were in your shoes, I would hire a professional consulting forester to mark, scale, and appraise the trees you want to sell. Also, require your forester to determine your timber basis. Timber basis is essentially the value of the “standing timber” on the date you purchased the property. The IRS affords you some nice tax benefits if you know how to sell your timber the correct way, which includes knowing your timber basis! By the way, a professional forester is an individual with a four-year degree from a forestry accredited college or university. If you doubt their qualifications, simply request their credentials or contact your local DNR forester.

After you have this essential information provided by your professional forester, you essentially have two options:

(1) Take the information and market your timber on your own via the sealed-bid method. Draft a legitimate timber sale announcement including where your timber is located, how many trees you have for sale, how the trees are marked (color paint), veneer volume, total volume, timber sale requirements, bid opening date and location, who to contact to view the timber prior to the sale, aerial photo of the property with boundaries clearly marked, and any other comments you want to make regarding the timber sale, including the right to refuse any or all bids. Take this timber sale announcement and mail it to as many Illinois licensed timber buyers as you can. It’s customary to give timber buyers at least 45 days to evaluate your timber for sale.

ALTERNATIVELY,…

(2) Hire a professional consulting forester to mark, scale, appraise, and market the timber on your behalf (similar to an agent). Most consulting foresters in Illinois charge 6-10% commission on the value brought by the winning bid; however, commission are negotiable. If you hire a professional consulting forester, require a written contract with him/her outlining their commission and services. Make sure part of the service agreement includes the forester’s requirement to monitor the harvesting operation. If I’m going to pay a professional consulting forester 6-10% commission, then I expect high quality services. The minimum services I expect from a consulting forester include determine timber basis; mark sale and property boundaries; mark sale-trees with paint on bole and base; scale individual trees by volume and value; estimate total sale value; develop and mail timber sale announcement; show your marked timber prior to sale date (optional); attending the bid-opening date; draft and witness the signing of the timber sale contract; and monitor the harvest operation (at least twice).

Sorry I had to give you the long answer Tom, but trust me – it’s the best darn answer you’ll ever get regarding how to market your timber!

Best of luck to you!

 
From: Char Myklebust
City:
Lake Shore, MN
We have two black walnut trees that have been felled and need to be removed from our property. One is 75 years old and the other is around 50 years old. How do we find a person who might be interested in the wood? One tree is 28 feet long (a 28' bolt) and the other is 28' but divided into a 17' bolt and an 11' bolt.

Thanks for your advice!

 
Extension Message
From: Jay Hayek
Extension Specialist, Forestry
Natural Resources & Environmental Sciences
jhayek@illinois.edu
Greetings Char:

Please contact your local state forestry agency regarding the marketing and sale of your black walnut trees:

http://www.dnr.state.mn.us/areas/forestry/index.html

Best of luck!

 
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