Short Course: The Basics of Pine Region Forest Land and Timber Appraisal

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Agenda
Start Date: November 6, 2012
Location: Red Lion Hotel at the Park, Spokane, WA


This session is an intensive introduction to timber and timberland appraisal for natural resource professionals, appraisal professionals, finance, tax and legal professionals. You will learn how to construct an accurate appraisal for forest assets (timber and land). An accurately performed appraisal will help you receive top dollar when selling forest assets or bid at a competitive price when buying. Confidence in your appraisal will help to minimize business and financial risks, simplify your documentation and reduce the amount of outside appraisal review. The workshop is taught by Vic Mussel man and Norm Elwood, each with 40+ years of experience in forest appraisal, economics and taxation.

Timberlands located both east and west of the Cascade Mountains can be appraised with three generally accepted approaches to value. Each approach will be covered in this workshop and include: The Cost Approach, the Income Capitalization Approach and the Sales Comparison Approach. However, the methodology used in each approach varies between the two regions. This workshop will only cover eastside valuations and use individual tree orientation more in keeping with the uneven-aged forest management practiced in the region. This eastside methodology is not transferrable to westside valuations.

Tuesday • November 6, 2012
8:00 Introduction to Accurate Forest Land Appraisal

  • Workshop overview and introduction to the Uniform Standards of Professional Appraisal Practice.
  • What are the various approaches to appraisal? Separating fact from fiction.
  • What data is needed for an accurate appraisal? What to look for and where to find it.
12:00 Lunch (included with registration)
1:00 Defining the class appraisal problem

  • The purpose, scope and details of the “subject property” appraisal to be developed in class.
  • Where to start? Preparing for an appraisal.
  • Collecting appropriate transaction data: What data is needed for an accurate appraisal?
5:00 Adjourn for the day
Wednesday • November 7, 2012
8:00 Using the Cost Approach

  • Review of questions from Day 1.
  • Continuation of transaction data collection for an accurate appraisal.
  • Developing merchantable timber appraisal cost factors: Calculating all costs to harvest and deliver logs.
  • Cost approach valuation of merchantable timber.
12:00 Lunch (included with registration)
1:00 Preparation and allocation of timberland sale

  • Gathering timberland sales data.
  • Preparation and allocation of timberland sales (continued): Verify and allocate inventory and other timberland sales data
  • Developing cost approach: Preparing and calculating value per acre for land, nonmerchantable young growth and other use classes.
  • Completion of the cost approach analysis and calculating percentage weight of all value components of subject property
5:00 Adjourn for the day
Thursday • November 8, 2012
8:00 Using the Sales Comparison Approach

  • Review of questions from Day 2
  • Selecting appropriate sales comparison transactions: Evaluating acreage, timber inventory and sales conditions of all comparable transactions researched.
  • Developing sales comparison approach: Making value adjustments.Completing the sales comparison approach analysis and choosing the final indication of value by this approach.

Using the Income Capitalization Approach
What data is necessary for the income capitalization approach and where to find it?
12:00 Lunch (included with registration)
1:00 Reviewing the basics of timberland discounted cash flow analysis: Putting the pieces together

  • Developing the income capitalization model: Input data needed and output data desired.
  • Calculating present net worth and completing the income capitalization approach.
5:00 Adjourn for the day
Friday • November 9, 2012
8:00 Review of questions from Day 3.Determining the final estimate of value: Compare and reconcile results of the three appraisal approaches.Specialized Appraisal Topics and Techniques
How to value forest land for higher and better use.Class wrap-up, discussion and evaluation.
Noon Workshop Adjourns
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