A Place of Your Own Part 14: Natural Resources

In my part of the country (the southeast) timber is a big part of any land buying decision. In fact timber value is often the largest single value component of the landownership process. It is also one of the most misunderstood. To maximize value of land, you must maximize the value of the natural resources of the land. To do that, you need a carefully thought out plan and some guidelines to minimize mistakes and maximize returns. For those of you in other parts of the country, timber may not be the prevalent natural resource. You may have coal, oil, gas, minerals, or even wind adding to the value of your land. In any case, well managed natural resources are more valuable natural resources. Here are some points to think about if you are considering selling timber (or any other natural resource).

Make sure you have clear objectives for your property.

It is easy to get caught up in generating revenue and lose sight of your overall objectives. While harvesting timber or selling any of the natural resources on your property has the potential to be financially lucrative, improperly done it can be aesthetically and environmentally devastating. Mistakes can be costly and take years to overcome. Focus on natural resources as part of your overall strategy. Let the overall strategy drive decisions about the resources and not the inverse.

Make sure you understand what you are selling.

Ignorance is expensive. And while the notion that landowners would sell their timber or mineral rights without knowing exactly what they own seems unwise, it happens every day. Less than knowledgeable landowners serve as easy pickings for less than scrupulous timber buyers. Here’s an area where you need to consider the help of a professional. It is not enough to know that you have timber or kaolin or coal. You need to know what it is worth. Different varieties of timber have different values, as do different types of coal or other minerals. Difficulties in harvesting or mining, distance to market, and restrictions that you as a landowner impose will all affect value. You can’t possibly know what you need to know. Hire a professional to properly and professionally assess the quantity and value of your natural resources.

Make sure you properly market your natural resources.

If you’ve never been involved in selling timber or coal or natural gas, your first attempt shouldn’t be a fly by the seat of your pants, “I’ll figure it out as I go along” experiment on your dream property or family farm. If you want to do this for a living, go get whatever certifications you need, get adequate education and training, and knock yourself out. If you want to do it ONCE on your property and be satisfied with the results, go find a certified professional forester, or consultant who DOES do this for a living and hire them to do it for you. They will be able to assess the market, find the buyers, conduct an auction or sealed bid or negotiated deal, manage the whole process, and do it (usually) for a percentage of the sale price.

Make sure you protect yourself and your land.

The only way to protect your property and your interests in any sale is to have a written contract. Here’s a good rule of thumb. If it isn’t written, it won’t happen. That goes for everything from pricing and access to how your property will look when the work is finished. Many timber (and other) buyers have standard contracts for you to sign, but if they don’t address your interests or concerns properly, then you should have your own contract drafted by an attorney familiar with this type of transaction. If the buyer won’t agree to your terms or sign your contract, find one that will. I don’t like surprises or misunderstandings. Simple clear and specific contracts avoid both.

Make sure you practice Good Stewardship.

Whatever you do with or on your property, make sure you do it with sound conservation and best management practices in mind. Be a good steward of the land. Take care of the land, and the land will take care of you.

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