Timber Valuation

Starting with a complete timber cruise (timber inventory) and ending with a comprehensive report, our approach to timber appraisals emphasizes objectively collected data to determine not only timber volumes, but also unit prices to provide clients appraisal-level confidence in the value of their timber.

Why do people need their timber valued?

When a property is purchased, the purchase price is allocated between timber and land. The timber values are used for timber tax purposes, both when timber income is realized and when the property is eventually sold. A timber valuation is a necessity when valuing a large forested property (forestland appraisal), as timber is usually the major price driver of the total value. Timber values are absolutely necessary when buying or selling a forested property for the same reason. Prior to a timber harvest, a timber valuation is especially critical if the timber is to be sold for a single fixed price.

How is timber valued?

Determining the value of timber requires not only the careful and scientifically conducted measurement of trees, but also the thorough analysis of timber markets and how value will be recognized in the measured timber. At fountains, we apply equal care to both aspects of timber valuation. The objective is not merely to put a value to a measured volume of timber, but to truly appraise the market value of the timber as it stands on the land.

The value of timber as it stands uncut is referred to as stumpage and is essentially the price paid at the mill, less the cost of logging and transportation; this figure is then applied to the volume of standing timber.

Volumes on a tract of land vary according to the history of land use as well as a variety of biological factors. Prices vary according to market demand and production costs.

Mill prices tend to be competitive with each other and driven by the market and the price of lumber. Mills buy timber according to species and grade. Grades are based on the quality and size of individual stems. Most mill price levels are based on the availability of timber and the market for the final product.

Logging costs tend to be more variable and are related to the specific property situation, and include felling the timber, removing it from the woods, and delivering it to the mill. Logging costs can vary tremendously according to the type of equipment used, the distance from the mill, the size and distribution of the timber to be cut, the topographic features of the land, and the condition of both internal and external access.

Please refer to our Timber Valuation and Appraisal white paper for more information.