OT: Sale of timber on part recreational land before sale of entire place?

[ExiledInOxford]

Hi all,

I'm going to sell 155 acres of recreational land (retired farm) in east-central Mississippi. About half the property is in timber, and there is a particular tract of pine, with no habitat value, that's been appraised at about 20% of what I estimate the entire place will sell for. My consulting forester recommends selling the timber off that tract and going ahead and selling the entire place pending the timber sale (so just the dirt on that tract). His reasoning is that most people who buy a place cut the timber right away anyway, so why not take the timber on out and then the sale price of the whole place, of course, reflects that harvest.

I guess I'm wondering if this is a common tactic and whether the place would be worth more (and more marketable) with that tract intact.

Can anybody weigh in on this situation?

Thanks!

 

[jethreauxdawg]

Can’t speak to the timber value

But cutting it first will likely reduce the number of potential buyers. There may be more people interested in buying land with the 20% premium for the timber value than there are people interested in buying dirt for 20% less. Just food for thought.

 

[CoastTrash]

No direct personal experience but I don't see how you obtain any more value by cutting timber first. Any buyer of the property is likely going to consider the value of the harvestable timber when making a purchase. Perhaps you get a bit more to cut the timber but you'll have to manage that process - is that delta in value worth it to you? Also, wouldn't a buyer of such a larger tract prefer to have the option to cut/not cut timber. By you cutting the timber, it may reduce the marketability of the property since a buyer could theoretically cut the timber as easily as you can.

 

[garddog]

Depends where it is, what county. Oktibbeha, cut it, it won't change the value much. Winston, Kemper, Noxubee, it will affect the price.

 

[ExiledInOxford]

That was sort of my point, but his counterpoint was that people would rather get the land for 20% less (the timber value, assuming they would cut it anyway) since it reduced their loan (assuming they have a loan). I tend to agree with you, though.

 

[ExiledInOxford]

Good point about managing that process. I don’t want to do it and I don’t want to pay him 10% to do it for me. Another reason to sell as-is.

 

[ExiledInOxford]

Newton, close to Jasper.

 

[80 Dawg]

I’m a consulting forester and a realtor. Here’s my two cents. I agree with your consultant that it’ll probably be best to sell the timber separately because recreational land buyers will most likely not pay you top dollar for the standing timber. However, if you aren’t in a big hurry to sell the place, I would get a good timber appraisal and try to sell the everything first. If no luck getting the right price after 60 days, then proceed with the timber sale.

 

[ExiledInOxford]

Sounds like a reasonable plan to try the package deal first. We have the appraisal in hand.

 

[patdog]

I like this approach. If you can get the right price without doing 2 sales, take it to avoid the hassle of 2 sales. If not, sell the timber. Theoretically, it shouldn't make a difference. But I agree with you that if the buyer isn't buying it for the timber, you're probably not going to get much of a premium over the land value for the timber.

 

[M R DAWGS]

As a potential buyer, I would have no interest in a clear cut recreational tract. You might be surprised what some folks will pay for some pretty and mature trees on their hunting property.

Of course the forester wants to sell the trees first bc that is what he does. He wants his.

I bought some land not long ago and skipped over/never looked at places that had been clear cut.

 

[idog]

What’s merchantable pine going for right now per acre? I’m currently looking at tracts and have no experience with timber values. Anyone willing to share a bit of wisdom that may also help here would be appreciated.

 

[WilCoDawg]

The land of no cell signal. Ahhhhh….

 

[aTotal360]

I'm in real estate, but not in forestry....my 2 cents would revolve around your need to quickly sell the dirt. I'm going to assume the property is more desirable to a buyer with the timber on it. The standing timber could make the property sell more quickly if you need the cash from the sale of both the dirt and timber. Cut it, and you may add months or years to the sale of it.

Lastly, there will have to be an element of timber value speculation. Are we at an high? Where could it's value be 12 months from now?

 

[thatsbaseball]

My sister and I sold 180 acres of recreational property recently similar to what you're describing. My advice is don't cut a single tree. You're going to be shocked at what you can get for the property WITH trees on it. I would be surprised if between a recreational buyer AND/OR an adjoining property owner you don't get more than you expected.

 

[johnson86-1]

Hi all,

I'm going to sell 155 acres of recreational land (retired farm) in east-central Mississippi. About half the property is in timber, and there is a particular tract of pine, with no habitat value, that's been appraised at about 20% of what I estimate the entire place will sell for. My consulting forester recommends selling the timber off that tract and going ahead and selling the entire place pending the timber sale (so just the dirt on that tract). His reasoning is that most people who buy a place cut the timber right away anyway, so why not take the timber on out and then the sale price of the whole place, of course, reflects that harvest.

I guess I'm wondering if this is a common tactic and whether the place would be worth more (and more marketable) with that tract intact.

Can anybody weigh in on this situation?

Thanks!

How much of the ~77 acres of timber are you looking to harvest? Where I live, the mixed timber and pasture recreational setup is pretty valuable. If you harvested all the timber, it would hurt your value pretty good (no clue if the timber proceeds would make up for it), but if you harvested 30 acres and so were selling 30 acres of clear cut, 47 acres of standing timber, and 78 acres of pasture, you might not get hurt that bad. Probably be better if that pasture to standing timber ratio was flipped or closer to 50/50, but maybe not, especially if there is anywhere to put a pond in the pasture area.

 

[GloryDawg]

There is a track of 100 acres next to my parents land in Madison County that was cut. Now it's up for sell. No way in hell I would buy it. Stumps and limbs everywhere. It is useless until it is cleaned up and he cost of doing that, I am not sure what it would be. No way I would cut it if I was going to sell it.

 

[ExiledInOxford]

As a potential buyer, I would have no interest in a clear cut recreational tract. You might be surprised what some folks will pay for some pretty and mature trees on their hunting property.

Of course the forester wants to sell the trees first bc that is what he does. He wants his.

I bought some land not long ago and skipped over/never looked at places that had been clear cut.

Good point. He takes 10% to manage the sale and harvest. This tract is on the back, out of sight, but still...

 

[ExiledInOxford]

What’s merchantable pine going for right now per acre? I’m currently looking at tracts and have no experience with timber values. Anyone willing to share a bit of wisdom that may also help here would be appreciated.

I don't have my appraisal in front of me or I would tell you. I'm sure one of our foresters can help.

 

[ExiledInOxford]

I'm in real estate, but not in forestry....my 2 cents would revolve around your need to quickly sell the dirt. I'm going to assume the property is more desirable to a buyer with the timber on it. The standing timber could make the property sell more quickly if you need the cash from the sale of both the dirt and timber. Cut it, and you may add months or years to the sale of it.

Lastly, there will have to be an element of timber value speculation. Are we at an high? Where could it's value be 12 months from now?

That's the wild card, right? The speculative value of standing timber. WTF knows? I'm not in a hurry to sell it but, having said that, would love to minimize the headaches involved.

 

[ExiledInOxford]

My sister and I sold 180 acres of recreational property recently similar to what you're describing. My advice is don't cut a single tree. You're going to be shocked at what you can get for the property WITH trees on it. I would be surprised if between a recreational buyer AND/OR an adjoining property owner you don't get more than you expected.

LOL my neighbor has already expressed his interest while explaining to me all the reasons why it's not worth as much as I would like for it to be.

 

[ExiledInOxford]

The tract in question is quite literally a back forty. The rest is in mixed pasture and timber (some planted, some natural regeneration / mixed). The land includes two ponds, a year-round creek, and a cabin. It is quite a desirable property.

 

[ExiledInOxford]

I tend to agree - the aesthetics are quite unappealing. Not to mention the damage done to riparian areas, access, etc.

 

[Shmuley]

Appropriate response to a neighbor like that: "You know, the highest and best use is probably just busting it up into smaller tracts for mobile homes."

 

[thatsbaseball]

LOL Then ask your neighbor if he would sell you some of his land adjoining you for the price you're asking for yours....they usually get real quiet when you ask that.

 

[johnson86-1]

The tract in question is quite literally a back forty. The rest is in mixed pasture and timber (some planted, some natural regeneration / mixed). The land includes two ponds, a year-round creek, and a cabin. It is quite a desirable property.

A cabin with two ponds, a creek, and 37 acres of timber, 78 acres of pasture and 40 acres of clear cut on the back of it would still be worth a lot here. In fact, I'm not sure how many of the buyers would view the difference in acreage as significant. Not going to be enough for hard core hunters regardless, and for ones that aren't, not a huge difference between having 37 acres of timber and 77 acres. I assume you would have some of the same type buyers coming from the Jackson or Meridian area. Of course the flipside is that with them not caring whether that back forty is clear cut or not, they won't value that forty that much regardless. But there are so many people that just can't go buy 500 acres, their willingness to pay what they can afford may offset that.

 

[ExiledInOxford]

A cabin with two ponds, a creek, and 37 acres of timber, 78 acres of pasture and 40 acres of clear cut on the back of it would still be worth a lot here. In fact, I'm not sure how many of the buyers would view the difference in acreage as significant. Not going to be enough for hard core hunters regardless, and for ones that aren't, not a huge difference between having 37 acres of timber and 77 acres. I assume you would have some of the same type buyers coming from the Jackson or Meridian area. Of course the flipside is that with them not caring whether that back forty is clear cut or not, they won't value that forty that much regardless. But there are so many people that just can't go buy 500 acres, their willingness to pay what they can afford may offset that.

All good points. Hopefully we're in a sweet spot. Time and the market will tell.

 

[GreaterCowbell]

My 17 cents on the subject.

I commonly deal with this type of situation (I'm a Forester, Real Estate Broker as well as Appraiser). Do you want a speedy transaction or would you like to net the most from the sale?

I have run regressions on 100's of comparable timberland sales with various $ amounts of timber located on them. I have found from this research that tracts with higher timber values do not receive their full value for each of the components (land or timber) as they would had they sold separately. This is especially the case when tracts have very high timber values. I suppose the reasoning behind this is that land buyers do not always recognize the value of the timber like a timber buyer would and are less likely to pay full value. In the appraisal profession this is called the contributory timber value, which is not always equal to the actual value.

If the highest net return is your priority and time is not an issue, I generally advise landowners to harvest the timber if there is >$1000/ac in timber value. This of coarse adds additional time to the completion of the sale as you wait for the harvest to be completed. Doing this also will allow to reduce the asking price for the land which will place it in the price range of more buyers. In my experience land buyers will be hesitant to purchase land subject to a timber harvest (most want to see the final product). Also, if possible, leave wider than normal buffers along streams within the harvest area and where visibility is a concern to improve the overall aesthetics.

If a time is your main concern and you would like to proceed quickly (no harvest) be sure to include a recent timber cruise/appraisal with your listing advertising. This will help buyers feel more comfortable paying the additional premium you will be asking for the included timber.

 

[greenbean.sixpack]

A cabin with two ponds, a creek, and 37 acres of timber, 78 acres of pasture and 40 acres of clear cut on the back of it would still be worth a lot here. In fact, I'm not sure how many of the buyers would view the difference in acreage as significant. Not going to be enough for hard core hunters regardless, and for ones that aren't, not a huge difference between having 37 acres of timber and 77 acres. I assume you would have some of the same type buyers coming from the Jackson or Meridian area. Of course the flipside is that with them not caring whether that back forty is clear cut or not, they won't value that forty that much regardless. But there are so many people that just can't go buy 500 acres, their willingness to pay what they can afford may offset that.

Location, location, location. Proximity to Jxn is going to drive the value up. Raw land, not suitable for farming and without much value in timber (pasture/deer hunting land, but not big enough to manage) in Carroll/Grenada/Montgomery/Leflore/Tally will usually bring in $2k or less per acre. Houses/Cabins and county water/proximity to power and paved roads will obviously increase the value.

 

[M R DAWGS]

I’ll be honest, I’ve got a thing against clear cuts. I luckily got to hunt an old plantation place in northern Madison county for 10 years before it was clear cut. They took a freaking beautiful and historic place with some areas of 100 yr old trees and turned it into a battle zone in about 3 months. Made me feel like a family member had died.

It was also a great deer and turkey hunting place until it was ruined for another 100 years.

It drove me to buy my own place where I determine if any trees are cut or not.

I reckon that I’m a tree hugger in some sense, but one of the most rewarding things that I do is to drive around my land on a Friday afternoon and look at my land and trees.

 

[greenbean.sixpack]

There is a track of 100 acres next to my parents land in Madison County that was cut. Now it's up for sell. No way in hell I would buy it. Stumps and limbs everywhere. It is useless until it is cleaned up and he cost of doing that, I am not sure what it would be. No way I would cut it if I was going to sell it.

How much per acre? Cut over land can recover quickly.

 

[Eleven Bravo]

I’ve got 360 acres in SW Mississippi that got its first thinning 13 years ago. A neighbor (and cousin) had his timber (which is comparable to mine) clear cut about a year ago. He got decent prices at that time. I don’t ever want to clear cut my place because it will look like somebody dropped a nuke is the middle of the place. I’ve had several timber buyers (I call them timber criminals) price the timber on my place over the past year. I don’t have to cut it, and I won’t cut it at the prices I’ve been quoted. I would basically be giving it away. I’m not interested in selling the land because it’s been in my family since 1830-but if I was going to sell it it would sell it with the timber as-is. I can’t imagine that anyone would want to buy it with it being a total cutover, but that’s just me.

 

[dawgoneyall]

How much per acre? Cut over land can recover quickly.

Aesthetics aside..cut over promotes a healthier ecosystem (assuming you don't put up a parking lot) thus more biodiversity.