Timber appraisal is the process by which your acreage’s lumber is assessed and assigned a sale value. To ensure consistent valuations from one appraiser to the next, all services must adhere to the Uniform Standards of Professional Practice and use one of the three accepted methods of farmland appraisal. Clifton Forestry & Appraisal Service of Statesboro, GA, has been providing accurate, reliable appraisals for years and offers an overview of the basics of the valuation process.

Understanding the 3 Methods of Timber Appraisal

1. Cost Approach

At its simplest, the cost approach to timber appraisal is the process of assigning value to each of the various components of a property. Once each of the property’s timber components are given a value, these numbers are added together to generate a final market valuation for the estate. Given the fact that each timber component is assigned its own value, this method works especially well for insurance purposes.

2. Income Capitalization Approach

The idea behind the income capitalization approach is that an investor purchasing land is essentially paying for future revenue. Therefore, to determine the amount any given property can reasonably be expected to generate in the future, the income capitalization approach uses mathematical processes, such as a cash flow analysis, to determine a piece of real estate’s capacity to generate revenue in the years ahead. Based on this capacity generation, a present-day value is assigned.

3. Sales Comparison Approach

The sales comparison approach is likely the most simple to understand. In this approach, the value of a property is determined by comparing the values of similar properties that have either already been sold, are currently listed for sale, or are under contract. The result of this comparison yields an average market valuation that is then assigned to the property being appraised. To ensure accuracy, once an average is reached, it is then adjusted to take a number of factors into consideration. These factors include unique site features, the date of each sale, and the average volume of timber per acre.

Looking to have a timber appraisal conducted on your property? Call (912) 489-8250 or visit the Clifton Forestry & Appraisal Service website for more information.