How a woodlot timber sale works: what Alabama, Arkansas and Florida extension publications say about lump sum, pay-as-cut and contracts

This page reports what three land-grant university extension publications say about selling standing timber from a private woodlot. It describes the sale methods and contract items and does not give prices. This page reports what the official source says. It is not legal advice: ask the office named here. For price series, see log and timber prices.

Two ways of being paid

All three publications split timber sales into two payment methods, though they use different names. The table sets out what each says.

Method	How it works	What the sources say about it
Lump sum	The buyer pays a fixed price for the standing timber before any tree is cut. Arkansas notes the buyer may pay in full or make a partial first payment followed by a final payment later.	Alabama says the seller's total is independent of the amount actually removed, and that the buyer takes on merchandising the trees and hauling them to market. Florida says it moves the risk of timber loss to the buyer, and that some bidders may offer less than they would for pay-as-cut because they carry the cost of measuring the timber, financing the payment and bearing the risk.
Pay-as-cut (per unit)	The buyer agrees a price per unit for each product class, such as sawtimber or pulpwood, and pays as the timber is cut and delivered. Arkansas says payments are in most cases weekly. Alabama says the buyer passes the mill scale tickets to the seller as proof of volume or weight.	Alabama says it can often bring the seller more money but the logger must sort products into their most valuable class, and that nothing is paid if wildfire, hurricane, tornado or theft destroys the timber first. Florida calls it the most common method and says the seller keeps ownership and the risk of loss until harvest, so close monitoring matters.

Arkansas also names a third arrangement, selling "on shares", where the logger or buyer keeps a percentage of the proceeds. It says this is common in parts of the state, and it lists it as an approach to avoid because landowners may not receive the full value of their timber unless they know enough to negotiate well.

Negotiated or sealed bid

The University of Florida publication describes two selling methods used in the South. In a negotiated sale the seller settles a price with one or more buyers, which it says may be fair but may not match what a bid sale with many responses would bring. It lists small or irregular tracts, thinning or salvage sales, few mills within trucking distance, and specialty products among the cases where negotiation is appropriate. In a sealed-bid sale the seller advertises to as many prospective buyers as possible, may set a minimum bid or reserve the right to refuse all bids, and buyers submit confidential written offers opened at a set time and place. Florida says sealed bids have historically yielded the highest price to landowners and suit large, uniform tracts. Alabama likewise says sealed bidding often produces a better overall offer when there is enough competition, and that direct negotiation may suit sensitive sites or young-stand thinning where a particular logger has a good reputation.

Items listed for a sale notice

Florida lists items a sale notice or invitation to bid is said to include.

The seller's name, address and phone number, or those of the forester managing the sale.
The location of the timber, with a map, legal description, directions and how the boundaries will be marked.
The type of bid, lump sum or pay-as-cut, and a general description of the timber.
A time for buyers to inspect the area, with usually at least one month between the notice and the bid opening.
The date, time and place of the bid opening.
An optional down payment, which it says is reasonable at 5 to 10 percent of the bid price and returnable to unsuccessful bidders.
A performance bond, often 10 percent of the sale price, held in escrow until the buyer meets the contract terms.
Insurance requirements, including a certificate of insurance for workers compensation, general liability and vehicle cover.

What a contract covers

Arkansas gives two guidelines, to always sell timber under a written contract and to seek professional forestry help, and says the contract protects both buyer and seller and need not be complicated. It adds that many buyers have standard contracts that can be a starting point, but that the landowner needs to check that their own objectives are met, and that an attorney should review any contract before signing. Its checklist and the Florida list of provisions overlap on most items.

Contract item	Arkansas checklist	Florida list
Parties	Seller, buyer and others involved.	Names, addresses, phone numbers and email.
Area and timber	Legal description and marked boundaries.	How trees or the harvest area are marked, and a provision for trees that grow to merchantable size during the contract.
Payment	Lump sum or pay-as-cut, and terms of payment.	The amount, and how the buyer verifies the timber cut and paid for.
Damage and care of property	Damage clauses.	Fences, roads, bridges, buildings and residual trees, with allowable limits and repair or payment.
Title and access	Seller provides right of access and guarantees title.	A title search showing clear ownership, and the buyer's right of ingress and egress.
Contract period and breach	Contract period, when title to trees passes, and conditions for breach.	Beginning and end dates, renewal terms, and penalties for noncompliance such as cutting undesignated timber.
Liability and disputes	Both parties indemnify the other, plus a dispute resolution clause.	Insurance and indemnification of the seller, and a stated method of settling disputes, with arbitration panels generally preferred to courts.

Alabama adds that lump sum sales usually include a timber deed showing the seller has clear title, and that best management practices for skid trails, forest roads and stream crossings can be written into the contract. Florida says a long, restrictive contract may scare buyers away, and mentions a clause for or against assignment of the contract to a third party.

Help the sources point to

Each publication recommends a forester. Alabama cites research that landowners with a consulting forester earn more net income from timber sales than those without one, and that the Alabama Forestry Commission posts a sample notice of timber sale, contract considerations and a consulting forester directory by county. Florida says consulting foresters can handle the inventory, the contract and harvest supervision for a fee, that county forester services are free but limited to technical advice on properties of 160 acres or less, and that the Florida Forest Service keeps an online vendor database. It also notes that many mills will not buy from loggers who have not completed the Master Logger program.