We’re in the middle of winter, but spring is just around the corner. Are you one of the millions of Americans who expect to spend part of your summer stuck in noisy traffic and breathing smog? More and more of us are yearning for a place where it is quiet enough to hear leaves rustle and enjoy the aroma of freshly cut grass. A place like rural Arkansas.
Many people don’t know it, but timberland in Arkansas is still cheap compared to other real estate investments. In addition, it’s not unusual for owners to enjoy timber growth of over 10% per year compounding annually. Add this to the value increase of Arkansas land reported by the USDA (United States Department of Agriculture), and you can figure out that Arkansas timberland is a very attractive investment. If you are considering the purchase of Arkansas timberland, here are a few things you need to consider.
First, find a “Buyer’s Agent”, preferably one who specializes in timberland. Avoid frustrating hours with a Broker or Agent who works for the seller! They have a contract with their client, which confirms their allegiance to them. Seek out a professional who will have allegiance to you. Look for an Agent who is willing to purchase timberland on your behalf with his goal to get you the best deal possible. This includes a minimum Site Index* of 70 and a minimum Growth Rate of 10% or more.
Second, make sure they are qualified. Find out how long they have been a licensed real estate agent and what experience they have in determining the value of timber. It is best to find an Agent with experience or credentials as an Appraiser, and regulated by a State or Federal Agency. Find out what experience they have in negotiating the purchase of land, and representing buyers. It is best to find a Certified Buyer’s Agent. There are only a few of us around. But above all, look for an Agent who is closely involved with the timber industry. Before you sign an Agency Agreement, ask for references or letters of introduction you can verify.
Third, require your Agent to furnish you land and timber at, or below, “Market Price” to be verified by non-interested third-party appraisers and foresters. This should be done at his expense. If he can’t afford to pay for the appraisals and timber reports, he is probably operating on a shoe string and may be too hungry to have your best interest in mind. Our firm hires outside professionals, at our expense, who are Registered and Regulated by the State in which the timberland is located to conduct land and timber appraisals. We require every Forester to furnish a report that includes Site Index, Timber Value, and Timber Growth Rate. Likewise, the Appraisers must be on the approved list of a local bank in the location of the timberland.