Does "merchantable timber" mean the whole tree value or part of it?

Question

Looking at a 90 acre parcel listed with a timber cruise attached. The listing says something like 40 acres of merchantable pine plus the rest in younger growth. My assumption was that the cruise number is basically what the trees are worth if I cut them tomorrow, but the broker said merchantable only counts stems above a certain diameter and the pre-merchantable stuff has value too, just not today's value.

So what am I actually buying here? Is the land price supposed to be timber value plus bare land value added together, or is that double counting? And someone on another forum said you shouldn't pay full timber value because you carry the risk of getting it to market. I don't know if that's real or just negotiating talk.

Rena Guide · Accepted Answer

Merchantable timber means the standing trees that are big enough right now for a mill to buy. There's usually a minimum diameter, measured at breast height, and a species and quality standard. Below that, you have pre-merchantable trees, which are real assets but not sellable this year.

A timber cruise is a survey where someone samples plots across the property, measures the trees, and scales up to an estimate of volume per acre by product class. The two classes you'll see most are pulpwood, the smaller stuff that goes to paper and chips, and sawtimber, the larger stems that get cut into lumber. Sawtimber is worth several times pulpwood per unit, which is why timber value climbs as a stand ages and more trees cross that threshold.

On your pricing question, timber value plus bare land value isn't double counting. Those are genuinely two assets sitting on the same deed, and appraisers separate them. What your other forum was pointing at is that the cruise gives you stumpage value, the price standing, before logging and hauling. If the parcel is far from a mill or hard to get equipment onto, real buyers discount for that.

One thing worth putting on your list early: ask whether the timber rights actually convey with the land. Some parcels have been sold with a reserved cutting right for a period of years, meaning someone else can come take the trees you thought you bought. That's a title question and a state-by-state one in how it gets recorded, so have whoever does your title work look for it specifically.

renee_dubois · Answer

The reserved cutting rights thing is real and it's the sort of clause that reads like boilerplate until you actually price what leaves the property. I look at small apartment deals mostly, and this is the same shape as buying a building where someone else already collected two years of rent in advance.

diane_kowalski · Answer

Ask when the cruise was done. A cruise from four years back understates volume because the trees grew, and overstates it if there's been a thinning since. I've seen listings recycle an old cruise as if it's current. Also ask for the plot data, not just the summary page, because the summary is where the flattering rounding happens.

brandonlee36 · Answer

One more on the haul distance point. Stumpage in a tract 20 miles from a mill and stumpage in a tract 90 miles out are not comparable numbers even for identical trees, because the logger prices the trucking backward out of what they'll pay you. Ask the broker which mills are actually buying in that basin and whether any of them have curtailed.

Does "merchantable timber" mean the whole tree value or part of it?

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