Is Your Timber Buyer a Scam Artist?
The timber business is the perfect environment for scam artists. Why? Unlike land, cars, houses, or other everyday things people own, there is no good, easy way to find comparable sales to make a quick assessment of value to know if you are getting a fair offer. Standing timber value (stumpage value) may be worth a few hundred or several thousand dollars per acre. Access, weather, market timing, species, size, volume, and many other factors determine the value of standing timber.
The term “pinhooker” is a forestry industry term used to describe the timber scam artist. A pinhooker is a buyer who purchases timber rights, usually at a fraction of market value, then resells them to another buyer, generally without assuming any responsibility or liability. These speculators prey on landowners’ ignorance of timber markets and values.
Strategies pinhookers may use to separate you from your money:
The numbers game. Many will contact landowner after landowner until they get a bite. Eventually, they will find someone naive enough to sell.
The persuasive good ole’ boy. Pinhookers are often very likable and will charm a target into making them feel like they are selling to a friend. You’re a Christian? Surprise, they are too! Do you like hunting? Surprise, they do too! These malleable malfeasants will pretend to be whatever they need to be to turn the deal and separate you from your money.
You owe me. Little favors create a sense of obligation in normally socialized people. I’ve heard of pinhookers stopping by and dropping off produce from their garden to potential marks. Those tomatoes soon grew into tens of thousands of dollars of cash that should’ve gone into the landowner’s pocket. Beware of Greeks bearing gifts!
The scare tactic. Tells a landowner that their timber is unhealthy (beetles, disease, etc.) and that they will lose income if they don’t cut soon.
The high-pressure salesman. Some will repeatedly contact a landowner and pressure them to sell. They may say things like, “Markets are going to decline, you better sell now” or “We are cutting nearby and will be moving our equipment soon” to create a sense of urgency to speed things along.
The deal sweetener. Others may add incentives such as quick cash, “free” reforestation, dozer work, or other promises.
The bait and switch. Some may work as a team. One party will contact a landowner and make an offer for the timber. If he can’t close the deal, his partner will make contact and make an offer at a later date. This second offer will often be considerably higher than the first but still much lower than the actual market value. We generally assess value by comparison, so the price bump sometimes makes the landowner feel that the second offer must be legitimate since it is much higher than the first.
Affiliations and endorsements. Some will create a website or brochure claiming “affiliations” with reputable conservation and forest industry advocacy organizations to create an image of credibility—treat these as red flags.
Testimonials. Testimonials are a powerful tool for persuasion. When people like you (other landowners) recommend them, it can be a way to get you to drop your guard. The testimonials may be actual people they’ve worked with, but here’s the catch, most landowners aren’t knowledgeable enough to know a good job from a bad one. Landowners generally make their judgment based on how the job looks afterward. So the crook that cons a landowner out of $100,000 but then does a few thousand dollars worth of post-harvest cleanup (dozer work, sowing grass to green up roads and loading areas, etc.) will get a much better rating by the landowner than the buyer that pays a fair price but doesn’t do as much follow-up work.
The quick close. I’ve heard many stories of the pinhooker showing up with a roll of cash and a contract in hand. The allure of quick, easy cash can persuade some to sell when a little patience could’ve yielded them much more revenue.
These scam artists are successful in every age and socioeconomic group. I’ve seen everyone from the trusting elderly landowner to the best-educated doctors and lawyers get taken to the cleaners.
What is a timber Seller to Do?
If you are unsure of your timber’s value and are not familiar with the timber sale/harvest process, your best bet is to hire a professional forestry consultant to handle the job. Forestry consultants provide private landowners with timber sales, appraisals, and forest management services. The consultant works as the landowner’s agent, developing and implementing a plan to meet their goals (timber income, stand improvement, wildlife habitat, etc.). The consultant charges a fee, but you’ll generate more net revenue, have greater returns in the future, and avoid the lingering doubts that you could’ve gotten more money, a better job, etc.