Creating a Timber Sale Prospectus
In preparation for advertising your sale, create a timber sale prospectus with a detailed overview of what you are offering for sale and your contract requirements. The prospectus should include anything that may result in an additional cost for the buyer (for example, your restrictions on harvesting and skidding techniques or additional work required). Sale prospectus items include:
- Seller?'s name, address, and telephone number.
- Location of the timber for sale (legal description and directions, GPS coordinates).
- Description of the timber to be sold (volume by species and product; method used to estimate volume; tree species, size, and quality).
- Type of bid you are seeking (lump sum or sale-by-unit) and whether you will choose a buyer using sealed bids or an oral auction.
- Time period and procedure for inspecting the timber. (Allow at least one month for prospective buyers to inspect the timber.)
- Date, time, and place that sealed bids will be opened or an oral auction will be conducted.
- Whether a bid guarantee (usually a few hundred dollars) is required from all bidders and a down payment deposit (usually 10% or more of the bid price) binding the offer must be paid when the contract is signed. (Bid guarantees are returned to unsuccessful bidders. For the successful bidder, that amount can be applied toward the down payment)
- When payment is to be made. (In a lump sum sale, ask for full payment before the start of harvesting. If this is not possible, negotiate a definite payment schedule that calls for specific percentages at specified dates. In a sale-by-unit situation, negotiate a definite cutting and payment timetable with the buyer.)
- Any major conditions or limitations on the sale, such as a harvesting deadline, forest management guidelines (for example, equipment limitations, method of slash disposal, restrictions on access to the area, conditions when loggers cannot operate), additional work required (such as construction of water diversion devices on roads or trails when the sale isn?ft active for extended periods or at the end of the sale) or who has cutting rights to tops that could be sold as firewood. (Note that excessive restrictions on buyers may result in fewer bidders or reduced bid prices.)
- The requirement of a performance bond. (A performance bond is an amount of money over and above the sale price, usually 10%, posted by the buyer and held in escrow by the seller. Its purpose is to ensure that the buyer abides by and fulfills all terms of the contract. It should be returned to the buyer when all contract conditions have been met.)
- Statement that the logger will be expected to carry workers?f compensation insurance and liability insurance of $1 million or more.
- Method recommended for scaling products.
- When the successful bidder will be notified (usually within seven days after bids are opened) and how much time the buyer has to sign the contract and provide the down payment after being notified of an acceptable bid (usually ten days).
- Statement indicating you have the right to reject any or all bids.