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Re: Question for the timber folks
[Re: Fuzzy_Bunny]
#1132355
11/01/14 08:49 AM
11/01/14 08:49 AM
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Joined: May 2012
Posts: 12,481 Pike County, AL
Fuzzy_Bunny
OP
Booner
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OP
Booner
Joined: May 2012
Posts: 12,481
Pike County, AL
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I did my homework before making the sale and weighed my options and discussed them with multie people who know finance and timber.
A lot of good advice has been given, and my post may have been poorly written, but i was more interested in what I need to watch out for on a daily basis while the timber is actually being cut, such as looking at roads and making sure boundaries are being obeyed.
I am excited to see this happen and prehaps a bit anxious, so I just thought I would see what advice others had to say.
The thing that surprises me most in this post is people saying lump sum is the way to go. The people I talked to all said it is just like any other contractor bidding a job. They have to bid it to make a profit, and will err on the side of caution when forming out large sums of cash.
Last edited by Fuzzy_Bunny; 11/01/14 08:56 AM.
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Re: Question for the timber folks
[Re: Rebelman]
#1132359
11/01/14 08:52 AM
11/01/14 08:52 AM
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Joined: Oct 2007
Posts: 1,708 Opelika ,AL
bwhunter
8 point
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8 point
Joined: Oct 2007
Posts: 1,708
Opelika ,AL
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I have opened lump sums and truly felt sorry for he buyer.
If a lump sum is done correctly all the risk is on the buyer. Agreed. If you have a good estimate of the timber volumes there's little risk to the landowner on a lump sum sealed bid. We always state that the owner has right to refuse any or all bids. The advantages of lump sum are that you get paid up front for your timber, and you don't have to stay on the logger for product sorts. If you have a competitive market, I believe the landowner comes out better on lump sum sales most of the time. Once the contract is closed, the landowner is paid and is guaranteed the price. With pay as cut, there is always a risk that all of your timber won't get cut. You can get stuck with 80% of your timber cut, then it gets too wet and there's not enough left for them to justify bringing their equipment back. And plenty of other scenarios where the job doesn't get completely finished. If it's bought lump sum, you better believe they will get all of the wood cut. We had a bid opening this week. Our value estimate of the timber was $56,500. We had 7 bids ranging from $39,000 to $66,000. We feel like our landowner was paid more than market value and I'll bet the buyer won't lose any money. It is sometimes hard to compare unit prices when different dealers are hauling similar products to different mills. On the fringe of a market some dealers may haul canterwood and pay $13 per ton while a different buyer says it's too far to haul canterwood and he takes it to the pulp mill for $10 a ton. Unless you have very limited markets it's difficult to compare unit prices on a sale with multiple products and mill options. I am a consulting forester and we usually charge a commission for our services. Our goal is to get the landowner the most money for their timber and we sell alot of timber lump sum. Operator select thinnings are sold pay as cut as well as sales where the majority of the volume is in one or two products that are going to a certain mill.
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Re: Question for the timber folks
[Re: timbercruiser]
#1132409
11/01/14 10:46 AM
11/01/14 10:46 AM
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Joined: Jul 2011
Posts: 34,917 Boxes Cove
2Dogs
Freak of Nature
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Freak of Nature
Joined: Jul 2011
Posts: 34,917
Boxes Cove
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I use to sell a lot of timber lump sum for clients in NW FL. One tract I sold I had estimated about $190,000 as the price. I had 6 bids, the first 5 were within $10,000 of my estimate and the last one I opened was $300,000. The old boy had an error in his bid, but he paid up and lost his butt. That was one of the worst mistakes I have seen, but I knew him and it tickled the crap out of me. That ol' boy have the "big eye" that bad or a huge math error?
"Why do you ask"?
Always vote the slowest path to socialism.
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Re: Question for the timber folks
[Re: 2Dogs]
#1132418
11/01/14 10:57 AM
11/01/14 10:57 AM
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Joined: Mar 2013
Posts: 14,654 Tuscaloosa Co.
N2TRKYS
Booner
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Booner
Joined: Mar 2013
Posts: 14,654
Tuscaloosa Co.
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I use to sell a lot of timber lump sum for clients in NW FL. One tract I sold I had estimated about $190,000 as the price. I had 6 bids, the first 5 were within $10,000 of my estimate and the last one I opened was $300,000. The old boy had an error in his bid, but he paid up and lost his butt. That was one of the worst mistakes I have seen, but I knew him and it tickled the crap out of me. That ol' boy have the "big eye" that bad or a huge math error? Or the mill really needed it.
83% of all statistics are made up.
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Re: Question for the timber folks
[Re: Fuzzy_Bunny]
#1132419
11/01/14 10:57 AM
11/01/14 10:57 AM
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Joined: Jul 2011
Posts: 34,917 Boxes Cove
2Dogs
Freak of Nature
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Freak of Nature
Joined: Jul 2011
Posts: 34,917
Boxes Cove
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Lot of good info to digest above. We've had several thousand acres of hardwood cut over the years and never sold any lump sum. The hiring a retired , trustworthy person to check loads is a great idea. About 10 years ago when we had our big tract cut, my father was retired and he went to the log woods every day. He carried his lunch and stayed all day some, folks thought he worked for the logger . He wasn't checking the logger as much as all the various mills the timber was delivered to. He'd scale every load and if there was much difference at all, he took a ride to the mill. Like someone above said, bout the only way you get a premium price on lump sum is to have some super high grade timber and bid it. Just do your home work and try to settle with someone that has a spotless reputation. As the Gipper said " trust but verify"
"Why do you ask"?
Always vote the slowest path to socialism.
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Re: Question for the timber folks
[Re: Fuzzy_Bunny]
#1132502
11/01/14 12:09 PM
11/01/14 12:09 PM
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Joined: Mar 2004
Posts: 7,891 Monroe County, AL
deadeye
14 point
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14 point
Joined: Mar 2004
Posts: 7,891
Monroe County, AL
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Lump sum makes sense sometimes but I don't like to be obligated to the buyer and like to keep the option to demand they pack up and leave if I don't like their operation. You definitely want a performance bond in a lump sum deal. I recommend you hire a professional to put it together for you and manage the sale which is an additional quite sizable expense. BUT - if you don't know anything about selling timber or replanting it is money well spent.
Last edited by deadeye; 11/01/14 12:15 PM.
A man is not old until regrets take the place of dreams
He alone is educated who has learned the lessons of open-mindedness
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