The debate

Larry Caldwell larryc at teleport.com
Wed Dec 3 18:41:31 EST 1997


In article <34844DF8.EF63C3A4 at lebmofo.com>,
Ron Wenrich <woodtick at lebmofo.com> wrote:

> The root of the problem is that you can't find a ready buyer for these woodlot
> improvements.  It depends on what the buyer is looking for.  In PA, buyers are
> looking for land value increase (speculation), esthetic enjoyment, recreation
> (hunting and camping), and domestic use.  Timber growing is far down on the list
> as reasons for buying land.  That eliminates a lot of buyers and lessens the
> opportunity to have a higher asking price for land.  It is possible to buy land
> where the timber has a higher value then the asking price of the land.

That's mostly an education problem, or an opportunity, depending on what
side you are looking at.  It's not uncommon to see land buyers around here
buy a piece of ground with a nice home, pay for it by logging the timber
on the land, then taking their profit by either turning the home into
a country rental or selling it at a discounted price.

A good logger can leave a clean job and you can actually get a premium
price from the city folk because of all the "riding trails" you have
opened up.  :)  A lousy logger just leaves a ruined mess for the next
owner to deal with, which is why you can pick up some nice houses on
large acreages really cheap.  Of course, the original seller sold for
somewhere around half the true value of the property, and screwed
themselves out of hundreds of thousands of dollars.

Like Mike pointed out, it really is a penalty on ignorance.  Around here
we reserve the term "Tax on Stupid" for people who buy lottery tickets.  ;>

You can pretty much ignore the buyers, and start educating the sellers
on what they have been giving away.  At the very least, a seller should
have a cruise in their hands when they go to set the sale price.  If
they haven't invested anything in the land, they really can't expect
a management appraisal, but at the very least they should know what
they are giving away.  

I had a realtor appraise my last home.  Then I paid for a cruise, walked
next door, and sold the place to my neighbor for 50% over the realtor's
top dollar price.  I didn't get top dollar PLUS cruise, I sort of split
the difference.  What I really did was add the timber value to what I 
thought I could sell the place for after a neat logging job.  On paper
it looked like I was giving the buyer a real break, and in truth I was
in a hurry and wanted to cash out quick.

BTW, the buyer's bank accepted the real estate appraisal plus the cruise
as a fair market value for the property.  There was no hangup at all in
processing the loan.

Let the seller worry about getting their price.  You don't have to justify
squat to the buyer, unless the buyer is the person who pays you for the
appraisal.  If a buyer is hiring a forester for an appraisal, they know
exactly what they have in mind.

-- Larry



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