How is a forest valued?
January 4, 2022 2:52 PM Subscribe
Some friends and I made an intentionally low bid on 100 acres (40 hectares) of forest and the winning bid was about twice as much as the property's assessed value, which we figured would be the high bid. What would have factored into that high bid?
We're not particularly serious and our only plans would be to have a place we could always go to hike or camp in. At most we might build a shed to store things in. So our valuation was based on the land's recreational value to us.
I get that this is all speculation but I'm curious about what other people are considering that we aren't. If amounts matter our bid was $15,000, the assessed value was $55,000, and the winning bid was around $110,000. The minimum bid that would be accepted was around $10,000.
There's a private dirt road that gets to the property right now, and passes through a couple of other properties. We actually drove up to the property to check it out ahead of time and the road was wet and only usable by a pickup truck or actual off-road vehicle so we ended up walking the last couple of hundred metres and decided that we would lower our bid because the road wasn't always usable.
The only thing that would be allowed to be built on the land right now would be a hunt camp. If a proper road were put in then the owner would be able to put in a cottage or house. There are moose in the area. Would buying the place at that price to be a hunt camp make sense? Are they planning on spending what it would take to put in a proper road and then build one or more cottages? How much does it cost to turn a dirt road into a paved one?
The whole lot was forested with mature trees, a mix of softwoods as well as oak and maple at the least (none of the trees still had leaves but there were lots of acorns on the ground and we saw that a couple of trees on other properties were tapped for maple syrup). I could believe that the trees would have value as lumber. Any idea how much they'd be able to get if someone came and harvested the trees? If you have a bunch of forest can you claim carbon credits for what the trees pull out of the air?
The lot isn't on any river or body of water. There is a small stream that runs through it but I wouldn't be surprised if that went dry once there was no rain or snow around.
We're not particularly serious and our only plans would be to have a place we could always go to hike or camp in. At most we might build a shed to store things in. So our valuation was based on the land's recreational value to us.
I get that this is all speculation but I'm curious about what other people are considering that we aren't. If amounts matter our bid was $15,000, the assessed value was $55,000, and the winning bid was around $110,000. The minimum bid that would be accepted was around $10,000.
There's a private dirt road that gets to the property right now, and passes through a couple of other properties. We actually drove up to the property to check it out ahead of time and the road was wet and only usable by a pickup truck or actual off-road vehicle so we ended up walking the last couple of hundred metres and decided that we would lower our bid because the road wasn't always usable.
The only thing that would be allowed to be built on the land right now would be a hunt camp. If a proper road were put in then the owner would be able to put in a cottage or house. There are moose in the area. Would buying the place at that price to be a hunt camp make sense? Are they planning on spending what it would take to put in a proper road and then build one or more cottages? How much does it cost to turn a dirt road into a paved one?
The whole lot was forested with mature trees, a mix of softwoods as well as oak and maple at the least (none of the trees still had leaves but there were lots of acorns on the ground and we saw that a couple of trees on other properties were tapped for maple syrup). I could believe that the trees would have value as lumber. Any idea how much they'd be able to get if someone came and harvested the trees? If you have a bunch of forest can you claim carbon credits for what the trees pull out of the air?
The lot isn't on any river or body of water. There is a small stream that runs through it but I wouldn't be surprised if that went dry once there was no rain or snow around.
These days, the price of timber is pretty high, globally. Near my own property, someone bought a similar site to "yours", logged it, and then fenced it for raising cattle. I recon that the price of the property pretty much equaled the sales value of the timber, and they might even have gotten government support in some form to do the fencing (tax rebates or direct payments). I was a bit angry with myself because I had thought of buying the land for recreational purposes, but not of the economic opportunities.
posted by mumimor at 3:58 PM on January 4, 2022 [2 favorites]
posted by mumimor at 3:58 PM on January 4, 2022 [2 favorites]
They're almost certainly going to clear-cut and pay for the whole property and then some with the profits. Depending on the area, it might be turned into a cattle ranch after to generate more income.
(Guess who just watched this happen to a neighboring property?)
posted by ananci at 8:11 PM on January 4, 2022
(Guess who just watched this happen to a neighboring property?)
posted by ananci at 8:11 PM on January 4, 2022
You can set yourself a reminder in two or three years and check the property again with google maps to see if it has been cleared. Google maps images usually get updated in that timeframe.
posted by SweetLiesOfBokonon at 12:15 AM on January 5, 2022
posted by SweetLiesOfBokonon at 12:15 AM on January 5, 2022
BTW, if you are still thinking of buying a forest with your friends, you can do something in-between total clear cut and keeping the forest, and it will end up being very nice. If you take roughly every other tree, you create space for the undergrowth to come up, and the result can be a much more diverse and healthy forest, with a richer bird life.
posted by mumimor at 3:30 AM on January 5, 2022
posted by mumimor at 3:30 AM on January 5, 2022
While yeah, the price of timber is up, so is the value of real estate. It's often very surprising how people find ways to develop wild property, I've more than once hiked on a steep hillside that was for sale, thought "this is no place for a house", and a few years later, a house was there.
That road is probably not as hard to fix as you'd think, to a certain standard that just involves some dump truck loads of gravel until it's minimally passable by car. I have not heard of gravel driveways precluding building a house; they certainly don't around here. But maybe your area has different standards.
Sadly carbon credits for forests are not yet much of a thing. Also mature forests trap the carbon already in them, but don't pull a lot more out of the air.
posted by joeyh at 3:48 AM on January 5, 2022 [1 favorite]
That road is probably not as hard to fix as you'd think, to a certain standard that just involves some dump truck loads of gravel until it's minimally passable by car. I have not heard of gravel driveways precluding building a house; they certainly don't around here. But maybe your area has different standards.
Sadly carbon credits for forests are not yet much of a thing. Also mature forests trap the carbon already in them, but don't pull a lot more out of the air.
posted by joeyh at 3:48 AM on January 5, 2022 [1 favorite]
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Assessed values are often out of sync with actual market value for all kinds of reasons. You'd need someone with local expertise to tell you if that's the case and why for this specific property.
posted by ssg at 3:14 PM on January 4, 2022 [5 favorites]