VARDAMAN VIRTUAL FORESTRY COMPANY

The Most Direct Link to Knowledge Workers in the Southeast Forest Economy

In our April 1989 newsletter we announced that, to reduce the uncertainty for timber buyers and thereby to raise net receipts for timber sellers, "WE GUARANTEE NUMBER OF TREES BY DBH CLASSES IN MOST SAWTIMBER SALES OF INDIVIDUALLY-MARKED TREES." Early this month we had a sale that, we think, proves the value of this guarantee, one of the unique JMV&CO ideas mentioned elsewhere.

Our client Mrs. Brown (not her real name) negotiated by herself for several weeks with Timber Buyer A, an active participant in the local market, and finally got him to offer $56,000. Still convinced that her timber was worth more, she brought the offer to our district manager and asked him if he would conduct a sale according to the usual JMV&CO procedure, provided that he did not earn anything until her net receipts reached $56,000, and he agreed to do so. Before she authorized us to start, however, Mrs. Brown went back to Timber Buyer A and gave him one more chance to raise his offer. He refused, even though he knew it was his last exclusive opportunity.

We then marked and measured each sawtimber tree with a steel tape, sent out 157 invitations to bid, each containing our guarantee as described above, and received eight bids as follows:

Mrs. Brown was delighted, of course, because she got $19,641 more than she would have received by her own efforts. But the unusual feature of the sale was the action of Timber Buyer A. He had one final chance to raise his offer before we started, but refused to do so because, we think, he was negotiating on the basis of a sample estimate of the volume and knew how wrong it could be. Our 100% tree count and corresponding guarantee removed his doubts about the volume and enabled him to bid almost $10,000 more.

That's why we proclaim that the combination of steel-tape measurements of all trees and guarantees, and idea unique to JMV&CO, raises net receipts to timber sellers.

We later learned that Mrs. Brown is very good at asset management. She told us that she took her problem to three other consulting foresters. One quoted a fee of 4.5% for selling the timber on a sample cruise or 6.5% for selling it on a 100% measurement; another quoted a 6.5% fee; the third quoted a 5.0% fee; none was willing to guarantee numbers of trees by DBH classes or any other way. Mrs. Brown chose us even though our fee was 7.6% , the highest of the five alternatives. She realized that the most important figure is her net income from the sale. We think that we can do the same for you.