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Selling a forest is not significantly different from selling any other real estate. However, unlike, for example, agricultural land, the timber market, and thus the price of a forest, can be very variable.
There are various ways to sell a forest: as a felling area (timber to be harvested), standing trees, or the entire forest property. When offering a felling area on the market, the owner has already prepared the forest for logging and obtained a logging permit. As a result, the buyer of the felling area has a clear development plan, which is specified in the logging permit, along with the area, and can start logging operations immediately after purchase.
If the owner lacks experience or free funds to prepare the forest for logging, standing trees can be offered on the market. In this case, the buyer organizes the development plan and covers the costs. When selling a felling area or standing trees, the land on which the forest is located remains the property of the seller.
When offering a forest property on the market, the seller sells the land along with all the trees growing on it. In this case, the ownership rights will transfer to the buyer—the new owner.
Reasons for Selling a Forest Can Vary
The decision to sell a forest can be influenced by both planned and entirely unforeseen life situations. For example, the desire to make investments and improve financial status. Funds may be needed for a child’s higher education or urgent repairs. Over time, forest ownership can become a burden, as managing a forest requires knowledge and investment. Often, a forest owner may live in one region of Latvia, while the forest is located in another. This complicates forest management as it requires more time and resources. Forests are a national treasure and a renewable resource for society as a whole. At the same time, they are also an asset or resource owned by the forest owner or legal holder, from which income can be generated. By managing it wisely and correctly, the forest will not disappear and will be preserved for future generations. This is provided for by national legislation and regulations, ensuring the sustainable development of forests.
How to Prepare for Selling?
Some owners are ready to sell their property but have not completed the property rights formalities. Such situations can occur when the forest has been inherited or received as a gift, but the new owner has not registered their ownership rights in the land registry and is therefore not authorized to sell the property. At the same time, the cadastral value of the land (on which the forest grows) and the value of the forest stand should be registered in the State Land Service (SLS) database. This can be checked for free on the SLS portal kadastrs.lv if you are the owner. If the forest property has undergone at least a preliminary forest inventory, the value of the forest stand should already be registered. If not, a request must be submitted to the State Forest Service to determine the value of the forest stand. The received certificate should be submitted to the SLS. Once property rights are registered and the forest property documents are in order, ensure that you have a valid identity document.
Do You Want to Sell Only a Part of Your Forest Property?
If you want to sell only a part of your forest property, such as two hectares out of ten, you will need to carry out a property division. The planned division must be specified in a land boundary plan or forest plot plan, marking the boundary along which you will divide the property, and must be submitted for approval to the local municipality. After receiving the municipality’s decision, a certified surveyor must be engaged. The process is not quick and can take a year or more. Once the property is divided, there will be two new forest properties, each with its own cadastral number. To proceed with further sale, each newly created property will require a new forest assessment and forest stand valuation.
Be Prepared for Varying Price Offers!
Although the real estate market is relatively stable and often has an upward trend, when it comes to selling forest property, you may receive very different price offers. The overall value of the forest property consists of the stable part, which is determined by the land value in the specific region based on its fertility and location. However, the other part is variable, influenced by the trees growing on the land and the conditions of logging. Both the current market price of the tree species in the forest and the expected logging costs (including the required machinery, human resources, nearby roads, and seasonal restrictions) are important. Additionally, the cost of transporting timber from the forest to the delivery points (transportation costs constitute a large portion of logging expenses) is a significant factor.
Price differences may also be explained by a company’s interest in operating in a specific region, leading them to offer more. The buyer might be willing to pay more for the type of timber available in your forest. Before finalizing the transaction, make sure you have engaged in discussions with direct buyers. Unfortunately, speculators also operate in this market, offering unreasonably high prices without genuine intent to purchase, misleading about the property’s value and disrupting real transactions. If a buyer starts lowering the price or delays the purchase formalities excessively after eliminating a competitor, it may indicate that the offered price is fictional and the transaction will not proceed. To sell your forest property most profitably, it is safest to closely monitor market trends, conduct research, and compare the offers from potential buyers.
Don’t Lose Vigilance Even with Certified Appraisers!
Of course, you can use the services of a certified appraiser to determine the price of the forest you wish to sell. Even in this case, the appraisal obtained will be only an estimate, based on timber prices at the time of the appraisal. Therefore, you should monitor market trends to understand the most suitable time for selling. Once you have sold the forest, don’t forget about taxes! Ensure you know in advance how much you will need to allocate for taxes! We are accustomed to the idea that the value of the forest increases in the long term. However, remember that inflation is rising, and the prices of fuel and other goods and services are increasing, which will “balance” the apparent difference between the forest’s value then and now.
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