Marketing Your Timber:
The Bidding Process
Timber is a multi-million-dollar business You can improve your profitability
in Mississippi. But marketing timber prop- on timber sales by following good mar-
erly is a complicated task, so many keting procedures. A good marketing
landowners do not receive the full value plan helps you to approach the timber
when they sell their timber. sale in a businesslike manner and helps
Landowners sell timber infrequently you answer many important questions,
and often do not have specialized knowl- including these:
edge about logging, timber estimation, uti- • How should I sell my timber?
lization standards, or local markets. Lack • Do I need professional forestry
of marketing knowledge is costly to the assistance?
landowner because it decreases profits on • Are my trees ready to sell?
timber sales. Also, bad harvesting and • How much timber do I have and what
marketing decisions on today’s sale can is its value?
cause loss of future profits by delaying or • Who will buy my timber?
complicating future sales or leaving a
poor-quality stand of timber.
Selling Methods Working with a Consulting Forester
A key element in marketing is choosing a method to We strongly advise landowners to work with a con-
establish the fair-market value for your timber. The sulting forester, especially landowners who are not
two methods commonly used in the South are nego- well informed about local timber markets and/or
tiation and sealed bids. Either method can be used about forest management techniques. A consulting
for clearcuts or for timber that is individually forester is a graduate of an accredited forestry school
marked for sale. and/or registered by the State of Mississippi, who
In the West, open auctions of timber are widely offers his services to the public for a fee.
used. These are rare in the South. In some places, Research has shown that consulting foresters
timber is sold on a share basis with the logger. With increased net returns from high value sales, even
all methods, you will first need a pre-sale timber val- after subtracting the cost of their services. The satis-
uation to be on an equal footing with the timber faction level of landowners following the sale was
buyer. We will discuss pre-sale valuations later in also much higher.
this publication. Consulting foresters may be paid by an agreed-
upon hourly rate, a per-day rate, a flat fee per service,
Negotiation or on a commis-
Certain specialty products, such as high-value hard- sion basis.
woods and poles, are often purchased through negoti- Generally, with a
ation. The buyer and seller agree on a sales price of timber sale, a
timber through face-to-face negotiations. Thinnings, consulting
salvage, and small acreage sales are the most common forester is paid a
examples of negotiated sales. commission
You need to become familiar with local timber based on a nego-
markets and the value of your timber so you will not tiated percentage
be at a disadvantage in this situation. Negotiated pay- of timber sales
ments are primarily by a tonnage rate (dollars per ton) receipts. The per-
for each species and product. Tonnage rates can be a centage is based
fixed amount or the delivered value minus an agreed on the size of the
logging cost. sale and type of
sale, the expected
Sealed Bids amount of work
The value of timber is established through sealed bids. involved, and the
Prospective timber buyers submit written offers to be amount of service provided.
opened at a specified time and place. Each bidder is Larger, higher-value sales typically have a lower
allowed to make only one bid. The bidding process is percentage commission than smaller, lower-value
covered in detail later in this publication. sales. Marked sales require higher commissions
because there are extra costs in marking trees for sale
Working with a Public Service Forester and protecting those not for sale.
Some consulting foresters only market and sell
Public service foresters with the Mississippi Forestry
timber, while others provide full service for their com-
Commission (MFC) or the USDA Natural Resource
mission, such as estimating tax basis, sales security,
Conservation Service (NRCS) can provide limited
logging contract compliance, and arranging for and
assistance to forest landowners. Public service
supervising reforestation. The level of service should
foresters are not allowed to compete with the private
be considered in negotiating the rate of commission.
sector. They also cannot estimate volumes and value of
The names and addresses of consulting
timber, lay out timber sales, provide sales security or
foresters can be found on the Mississippi Board of
logging oversight, prepare sales prospectuses, or mar-
Registration for Foresters website at
ket timber sales for individuals.
http://www.cfr.msstate.edu/borf/. The best way to
These professionals are a great source for general
find a consulting forester is through networking.
management advice, such as whether your timber is
Attend local forestry meetings and ask other landown-
ready for harvest. They can provide information and
ers for the names of reputable forestry consultants.
assistance with government programs like cost-share
Once you have names of several consulting foresters,
for timber stand protection, improvement, or reforesta-
interview them and ask for references. Be sure to
tion. A public service forester may also be able to give
check these references.
you a list of timber buyers and/or loggers in the area
Before any work is done, you and your consulting
to help you in marketing your timber for sale.
forester should discuss and agree on the extent of
services provided, method of payment, and expected Logging Access and BMPs
fees. A written contract or letter of agreement should Log loading decks and logging roads and skid trails to
spell out details clearly to protect both you and your be used by the loggers to drag timber should be
consulting forester. marked on the tract. If the tract is not adjacent to a pub-
lic road, you must obtain written rights-of-way or ease-
Title and Taxes ments from the owners of the land that must be crossed
Many timber sales are cancelled when potential buyers to gain access. Contact your county supervisor to obtain
cannot verify ownership by title search. Only a legal permission to haul timber on county roads. The timber
owner can sell timber. Therefore, before you attempt to buyer or logger should pay any permits or fees.
sell timber, verify your ownership and clear title to the Best management practices (BMPs) are a set of
timber. Satisfy any liens and secure a release from the operating guidelines created by the Mississippi
lender. Make sure property taxes have been paid in Forestry Commission to protect land and water quali-
full. If the tract is owned by more than one owner, all ty. You must follow BMPs for any timber sale. One of
owners must agree to sell and be willing to sign the these practices involves the protection of streamside
sales contract. management zones (SMZs). The forester can identify
the SMZs and mark any trees to be harvested within
Timber Valuation: these zones.
Determining Pre-sale Timber Value
Successful timber marketing requires you to know
Marked Timber and Sale Boundaries
what you are selling. A forester can perform a pre-sale There are several ways to identify timber to be sold.
valuation of timber to determine the types of timber People usually mark sale boundaries by painting on
present, the volume of each type, and an estimated fair trees. To mark SMZs, you can paint the boundaries or
market value. At the same time, he or she can help use plastic flagging. Roads or good fences also can be
you improve site conditions that adversely affect log- used to define the sale area. Poorly marked boundary
ging potential and marketing plans. lines can lead to timber trespass problems and dis-
To estimate standing timber value, the forester courage prospective buyers.
performs a “timber cruise.” This may be a 100 percent Some types of timber sales require marking of
tree tally or, more likely, a random sample of meas- individual trees. Thinnings, individual or group selec-
ured timber in plots or points spaced over the tract. tion, seed tree, or shelterwood harvests may require
From this cruise, the forester generates information on that individual trees be marked with paint. These trees
the volume or tons of timber by species and product. should be marked at chest or eye level and at ground
The forester combines this cruise data with timber level. The high mark is for the logger while the low
price information to provide an estimate of timber mark ensures only the proper trees are removed dur-
value. You can use this value to determine if a negoti- ing the harvest.
ated offer or bid offer is reasonable.
Sometimes, the contract describes which trees are Bid Opening Details
for sale. In first thinnings, often the logger or operator Set the date, time, and place where the bids will be
selects the trees to harvest. Another common practice opened. Invite buyers to attend the opening and speci-
for first thinnings is to remove preset rows of timber, fy how you will notify them if their bids are success-
such as every third, forth, or fifth row. ful. Allow 4 to 6 weeks between advertisement and the
bid opening. This allows adequate time for the buyers
Notify Neighbors to evaluate the sale area and to draw up their bids.
Before the sale, make sure you and your neighbors
agree on the property boundaries. Clearly mark the Location and Size of Sale Area
agreed upon property and sale boundaries so that there Include the complete legal description and acreage of
is no danger of trespass during the sale operation. the sale area in this section. If the sale area is in sepa-
Landowners are not legally required to notify rate tracts, provide information on each one. Include a
neighboring landowners of the intent to sell timber, description of the sale boundaries and how they are
but it is a good idea. marked because the prospective buyer will want to
examine each tract. In your bid invitation, include two
Potential Buyers maps of the sale area. The first should be of the sale
The last step in preparing your timber sale prospectus area itself and the surrounding tracts. It should show
is to develop a list of prospective buyers. Each compa- property boundaries, sale boundaries, access roads,
ny buys a slightly different mix of timber species, streams, and other physical land features. The second
sizes, and products. A good place to start is the map should show the location of the sale area in rela-
MSUCares website for Forest Products. You can gener- tion to nearby towns, highways, and county roads.
ate a list of wood-using industries by product and by
county from this site. Sale Area Tour
The Mississippi Forestry Commission and MSU If desired, set a time and place for prospective buyers
Forestry Extension Service may have lists of prospec- to tour the sale area and be shown the boundaries,
tive timber buyers and the products they buy. If you SMZs, logging and skid trails, road access, etc. The
have a forestry consultant, he or she should already buyer may then return at a later time to cruise the tim-
have a good list. ber so that he or she may prepare a bid.
Preparing the Sale Prospectus Type of Sale
This section tells the buyer how the timber is to be
The best way to attract interest in your timber is good
sold. Timber may be sold by lump sum, which is a sin-
advertising. Whatever the selling method, a good tim-
gle sum agreed upon before harvest. Timber may be
ber sale prospectus, often referred to as a bid invita-
sold on a per-unit (pay as cut) basis, which means the
tion, is a key to attracting interest in your timber. More
timber owner is paid a flat rate for each unit harvest-
buyers result in greater price competition, which gen-
ed. Payments are usually determined by scale tickets.
erates higher offers for your timber.
Also in this section, include a description of how the
There are several steps to preparing your timber
trees to be cut are designated—by marking (paint),
sale prospectus. You must have accurate, reliable infor-
diameter, species, or sale boundary. Include how the
mation, and it needs to be sent to as many prospective
volume information was determined (i.e., from a sam-
bidders as possible.
ple timber cruise or a 100-percent tree tally).
Once your timber cruise is completed and the sale
is planned, the sale prospectus or bid invitation can be
prepared. The invitation to bid is a letter with support-
Tree Volume (tons)
ing materials and maps that describes sale conditions You can include a table of total and average volume or
and the timber being sold. tonnage by species and product class. Average tree
Each bid invitation is different, depending on the size by species and product is also useful. If there are
type, size, and information included. The main ele- separate sale areas, give this information for each tract,
ments in a bid invitation include these: as well as a total sale summary. Identify the log rule
used for volume estimation and the minimum top
diameters for pulpwood and saw timber.
Identification of Seller or Seller’s Agent
This section should identify the seller(s) by giving full
legal name(s), business or home addresses, and tele-
Harvesting Restrictions and Conditions
phone numbers. If a forestry consultant is representing Provide all restrictions or conditions that are to be
you, this section also indicates he or she is your agent placed on your logging operation. Such restrictions
and includes the firm’s name and contact information. can include no wet weather logging, required road
maintenance or rehabilitation after use, special sites
and trees to be protected, supervision requirements, required. Specify requirements for receiving the bids,
and penalty provisions. This information also will be either mailed or hand-delivered. State that you retain
in the timber sale contract, but the prospective buyer the right to refuse any or all bids. Also specify a time
should be made aware of it before bidding. limit for seller and buyer to agree to a sale contract
and sale closing.
Some landowners require the successful buyer to post Provisions for Payment
a performance bond. This bond provides an incentive Outline the payment method in this section. Specify
for the timber buyer/logger to correct any problems your preference, such as personal or certified cashier’s
promptly. The performance bond is released when the check, and time of payment. You may want one lump
sale is successfully completed according to contract sum at sale closing, or perhaps installment payments.
specifications. If installment payments are the preferred method,
require the timber buyer to pay interest on the unpaid
Duration of the Sale Agreement balance. Otherwise, the IRS will impute part of the
Designate the time a buyer has to harvest the timber timber sales proceeds as taxable interest.
by setting a beginning and ending date for the timber
sale. Clearly state options for a sales contract extension Timber Sales Contract
in case of poor weather or inability of the logger to Attach a copy of the timber sales contract. Consulting
deliver the wood. In determining the length of time foresters can provide a sales contract that you can
allowed, consider tract size, volume, and ground con- modify to meet your needs, or you may consult a
ditions. In the South, 1–3 years is the normal harvest lawyer with experience in creating timber sales con-
period allowed. tracts.
Conditions for Bid Acceptance Bid Form
Explain your conditions for an acceptable bid. This Include a sample bid form to make it easier for the
information includes bid format, how to address the buyer to submit his or her bid. This also makes it easi-
bid, and terms for a bid-performance bond, if er for you to compare bids.
Bid Opening Ethics utation in the forestry community. An example would
Landowners and their agents must abide by bid open- be to accept a bid from Buyer #1, then contact Buyer
ing ethics. Today, bids can be mailed, faxed, emailed, #2 and use this price to leverage a higher price with
and even phoned in at the last minute. Prepare to Buyer #2 after the bid opening.
accept bids by all methods, and seal each bid in an
envelope. Choosing the Best Bid
Do not open the sealed bids early. Keep them con- Examine the bids and, based on bid price and knowl-
fidential until the appointed time. Do not allow late edge about the bidders, select the winning bidder as
bids to be accepted. Do not bargain with bidders soon as possible. Notify all unsuccessful bidders
before or after the opening. promptly. Schedule a meeting with the winning bidder
Open the bids at the appointed time and date in to discuss drafting and executing the sales contract.
the presence of the bidders. Buyers do not know how Choosing the best bid is not just taking the highest
many bidders there are until the bid opening. Bid price offered. Each bid should stand on its own and it
results should be provided to all bidders but otherwise should not be used to leverage or “bump up” another
kept private. bid. If all bids fall below 10 percent of your pre-sale
The decision to accept or reject bids should be timber appraisal, then you may be justified in rejecting
made within the appointed time frame, usually the all bids. It may also mean the timber appraisal was not
day of or up to 3 days after the bid opening. Conduct realistic.
the bidding process in a businesslike manner. Answer Investigate the reputation of the top bidders. Consider
all questions and inquiries, and keep records of discus- who does the buyer’s harvesting and the quality of the
sions to help prevent misunderstandings. harvester’s work. A poor logging job or problems with
Some landowners violate timber sale ethics by the buyer can cost you time and money.
“bumping bids.” This is a quick way to ruin your rep-
Don’t let selling your timber become a disappointing Munn, Ian A., and E. Carlyle Franklin. 1995.
experience. Seek professional assistance if you lack “Valuation of Consulting Foresters’ Contribution
enough experience to properly market and bid or to Timber Sale Prices.” The Consultant, Winter
negotiate a timber sale. Create and use a good market- 1995.
ing plan for timber sales to meet your forest manage-
ment goals and objectives and receive a fair price for
Revised by Deborah A. Gaddis, Extension Professor, Forestry, and Stephen G. Dicke, Extension
Professor, Central Research and Extension Center, from an earlier version by Winston Savelle and Bob
Discrimination based upon race, color, religion, sex, national origin, age, disability, or veteran’s status is a
violation of federal and state law and MSU policy and will not be tolerated. Discrimination based upon
sexual orientation or group affiliation is a violation of MSU policy and will not be tolerated.
Extension Service of Mississippi State University, cooperating with U.S. Department of Agriculture. Published
in furtherance of Acts of Congress, May 8 and June 30, 1914. JOE E. STREET, Interim Director (POD-09-10)