Would you buy land w/o mineral rights?

Would you buy farm land w/o mineral rights or royalties? and if so what would you pay for it?

The 3 I have found sold the land 57% less than the apprasied value.

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Permalink Reply by Carol Kuniholm on February 15, 2012 at 12:51pm

Hi Billy - I'm not sure what "nonsense" you're referring to. My suggestion was to see what happened to people who had the experience of split estate rights - and then decide if that risk is worth taking. There are plenty of people - all over the country - who are regretting finding decisions they made without enough information. Information is power - right? So why not learn as much as you can? I don't know any anti-frackers who started out that way. They all thought fracking was a good way to bring money into their communities. And they all wish they'd known more than they knew - they would have made different decisions if they had. 

Permalink Reply by Billy Park Whyde on February 15, 2012 at 2:41pm

After seeing your post over at the school thread it would be hard for me to believe that you have a open mind on the issue of fracking. 

 I might point out that some individuals might just like the idea of say locating to Florida. With say 200 acres at possibly $6000/acre =$1,200,000 plus 20%  royalty on say a 640 acre unit and say production averages 900/bbl the first year $2,053,125 ya know they might not ever be wanting to sell the old place! 

Permalink Reply by Chartist on February 15, 2012 at 12:49pm

I would if I was going to farm it ....I might pay $1000 an acre...If it was for hunting only, I'd pay maybe $200 an acre.

Permalink Reply by Paul Martinelli on February 16, 2012 at 4:50am

good luck,,,,,hunting land is still going for 1500-2000/acre without mineral rights.

Permalink Reply by Dan on February 16, 2012 at 3:08am

Sarah,  If you are looking to expand your farming operations there will be many new considerations in the future.  No offence to any farmers out there but I suspect in the future once farmers start seeing a influx of wealth many will not want to toil long hours anymore and will be spending more and more time at the vacation home.  latter their children growing up in wealth will not even consider farming.  A percentage of those farmers will want to retain ownership of the land.  We all know what happens to land that is no longer producing.  Some will have to pay to have the pastures and feilds maintained.  Kind of like fuedal times I think you will be able to lease land for $1.00 an acre and pay the land owner royalties on production just to keep them from becoming over grown.  Since the shale plays involve such a chunk of the "bread basket" of America, this is going to effect quantity and price of food the world over.  As much as I am against subsidies I would bet it won't be long untill the govt. starts paying farmers to grow crops more instead of paying them not to.  I would also bet that as out west we will start seeing more and more migrant farm workers.  Our landscape is about to transform much more drastically then just oil and gas wells everywhere.  We are only scratching the surface of the wave of change.  If the price is right I would buy the land.  I don't think any new land is coming our way.  Good Luck

Permalink Reply by Billy Park Whyde on February 16, 2012 at 3:33am

  I had a aunt and uncle that used to run a small dairy farm. my uncle and aunt never smoked. Well my uncle died of cancer I do not recall the area of cancer but years after my aunt died of cancer of the throatand larynx .

  I spent some of my summer vacation out on the farm as a kid. I will never forget spraying for the flys in the milking parlor. Open up that screw on cap fill it up , cap it and pump it away till it looked like a London fog. Twice a day 365 days a year what caused the cancer? 

  

Permalink Reply by Kathleen on February 16, 2012 at 4:27am

Even 18 years ago when we were buying land we shyed away from any that said no mineral rights but I have to say if I feel in love with the farm I think I would have bought it. The first farm bought in Mahoning had the minerals tied up for 99 years but we got the little check every three months. We know what we know now but than mineral rights didn't bring to much unless it was going to go into full coal production.  I've learned timber is another great surface right since than so again I'm not sure which way I would go.  If I did buy I think the question would be what the lease states and at least now we know what to look for hopefully.  I would never sell my deep rights anymore when I sell so either way I would own rights.

I know so many people right now that have loved where they lived for 20+ years to just find out they do not own the rights.

I think it would be very hard to buy a nice parcel with the rights without paying tons of money right now.  I saw a 86 or 89 acre farm for sale in Calcutta for almost a million dollars.  That land with rights a year ago would be worth around 200,000.00 maybe 300,0000.00

If you look to the western states Mineral rights almost never transfer and I expect this to be the way around here from now on.  It will become uncommon to get a farm with rights IMO in the near future.

Permalink Reply by Mike h on February 16, 2012 at 5:12am

Nice analysis. I'm also considering the flip side. If we ever decide to sell, I don't know what the market will be like for surface+mineral rights. Mineral rights will clearly be worth more than the surface. We may decide to keep the rights or sell them seperately.

 

I agree with Kathlen that we will probably see something more like the western states where mineral rights are generally seperate.

Permalink Reply by Adam Thomas on February 16, 2012 at 5:17am

Kathleen,

You are right, in many places, the mineral rights have been split off a long time ago.  People will eventually accept it and this discussion will no longer take place.  Since this is so new to the area, many people draw on their beliefs because it is what they know.  In the future, people will accept the fact that mineral rights will not transfer and it will not be the issue that it is being made into today.  It will just take a while for that to happen.  Real estate prices will eventually reset themselves without the mineral rights once the mineral rights are no longer such a bargaining point as they are currently.

Permalink Reply by Billy Park Whyde on February 16, 2012 at 5:42am

Not promoting anything here but what is happening with this question as to property value?  This link I pulled out of the blue in a Google search. O the right side scroll down to chose a county in Ohio to view the listings. Some list the mineral rights issue some don't (probably to suck in potential buyers) http://www.landandfarm.com/search/Ohio-land-for-sale/

Permalink Reply by Kathleen on February 16, 2012 at 12:12pm

I can almost tell by looking at the list price if minerals are included or not on the parcels over 5 acres or so.  If I see a parcel with 80 acres for 160 thousand or around there I know the mineral rights are not there.  It seems the land prices are staying the same as 18-24 months ago without mineral rights attch.  $1500-2000 an acre.  There is a listing in the homes book for 40 acres for I think it was around 70 or 80 thousand, in Rodgers ohio.  It's been in the homes book for 3 months now and I almost called the first time thinking how could someone not know about the oil/gas than decided I just would be making a fool out of myself asking what was up with this property.  I clicked on one of those listing in your link to see if I guessed right again, the price was without minerals but about the same as 2 years ago.

I feel our surface property is worth exactly the same today as 2 years ago or close.  Than it goes by what lease you signed to lower the value.

I think the next game will be how much are they worth.  Time will tell. :0)  This could be fun!  Cougar land services were out here Monday mapping.

Permalink Reply by dr j on February 16, 2012 at 6:02am

This is an excellent discussion.  

If I was going to live on the parcel, I would attempt to purchase the rights also.   After that it would depend on the lease.  In Sarah's situation- unless the lease was awful and didn't give any surface protection, I would go for it if the price was right.   Especially if it was contiguous to my current farm and could  be used.   

Meanwhile for our farm currently, I will try to keep both the land and mineral rights together and in the family for generations to come.  

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