would you pay more than it's worth?

Started by Erin, January 22, 2008, 01:56:47 PM

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muldoon

Hi Erin,

I am still pretty new here, so I try not to comment on things I don't know about and be careful what I say when i think I do.  Really, no one can tell you when it's the "right" piece of land or what you "should" pay for it.  That being said, all I know is that to me land buying was about half rational and half emotional.  I looked at a little more than a half dozen places before picking the one I did, and when I knew it was the one that was it.  I paid (financed) 4000 an acre for 18 acres.  Since that time 3 sites on the same street have gone for 5500 - 7500 an acre.  I looked at cheaper and I looked at more expensive but deep down I knew I needed to see 5 or 6 things to really move me to do a deal.  At one point I honestly thought it would never happen.  Water, elevation, slope, views, timber, grassland, possibilities for fruit trees, vegetables, privacy, sustainability, and not next to trailer parks, scrap metal yards or the like.  We all have different things we want, but when they all line up it's go time.  I worked a deal the best I could and got him down some.  Truth be told, I would have paid asking price because it was everything I wanted.  Think about how long you will be living there or about how long the structures you build will be in place (will they belong to your children or grandchildren one day?)  A few hundred dollars now may not matter that much when you look at the long term.  I think I understand exactly what you mean when you say "the dream" as I am still chasing mine and will be for some time.  Anyway, thats how I looked at it when I went though the land buying process, good luck to you. 

Also, if the well water is slow in gallons per minute, look at putting a cistern in.  Something to consider is that even a direct solar well pump going at 2 gallons per minute can fill a 5000 gallon tank and you will never be without water regardless of the amount of water being pumped at any time.  If you have enough of an elevated location to place it on you can even let gravity deliver pressurized water to you from the cistern. 


Erin

QuoteWe all have different things we want, but when they all line up it's go time.
I think you're right.  There's just something about this place that just "speaks" to us.  :)  Here's a few pics (friend of mine said, 'yeah, it speaks to me too.  It says, no way in h@!! would I ever live there!' lol)


My husband on the hill on the very NW corner, looking to the SE (at his elbow you can kind of see his full-sized blue pickup, to get a feel for how high the hill is)


standing in the northwest corner, looking east.  The county road (going horizontally across the center of the pic) is the eastern boundary.


Finally, the hill in the south west corner, looking back to the north.  Fenceline in pink. 
The wise woman builds her own house... Proverbs 14:1


MountainDon

Pink fences? I've never seen pink fences in range country.  ???


:D
Just because something has been done and has not failed, doesn't mean it is good design.

Erin

To say nothing of those pink words floating in the sky.   ::)




;)
The wise woman builds her own house... Proverbs 14:1

Homegrown Tomatoes

You'd have a great view of sunrise!  I think it has potential... I'd miss trees, but hey, it's Kansas, and you'd have LOTS of sky to make up for the trees that are missing!


Drew

Sounds like they would be motivated for the no strings option, Erin.  Or rather, I would be in an arms-length negotiation.  Therefore they probably don't want to know if there is water on the land since if there wasn't they would have to disclose that fact.  By taking this position they put the risk of water/no-water on you.  That's fine.  You should just be compensated for it in your price.

There.  I've just told you something you already know.   ;)






CREATIVE1

OK, the land speaks to you.  And I'd listen.  But if the deal doesn't go through, buy the biggest piece of land you can (if it's subdividible)
and sell some of it later, or give it to your kids for them to build on.  Better than a 401-K in many cases.

Erin

Subdivide?!   :o  what a horrifying thought!!



;)
Seriously though, at 3/4 of a mile, the current neighbors would the closest I've had in ten years!
The wise woman builds her own house... Proverbs 14:1

Erin

I just talked to the realtor today...
Oh my.


The seller said they'd go for $400 an acre and pay half of the title insurance fee (?  Gotta Google to find out what that is, exactly, though I do know it's only a few hundred bucks).  But they want to retain 50% mineral rights...
Hmm....
The wise woman builds her own house... Proverbs 14:1


glenn kangiser

"Always work from the general to the specific." J. Raabe

Glenn's Underground Cabin  http://countryplans.com/smf/index.php?topic=151.0

Please put your area in your sig line so we can assist with location specific answers.

MountainDon

What are the odds of there being something worthwhile digging/drilling for? 

It would not be nice to end up with a mine or oil derrick, then pump disturbing your view and other planned uses. On the other hand if it could be restricted to some small out of the way corner 50% of something worth going after could be quite nice.

Or do you think this is just a way to get you to go away or make to counter offer more money and no mineral rights?
Just because something has been done and has not failed, doesn't mean it is good design.

Erin

There's actually fairly reasonable odds that there's natural gas.  And there are maybe a couple of dozen oil wells in a 50 mile radius, too.
They haven't really expressed interest in retaining their mineral rights before now, though.  It's been more along the lines of a validation for higher asking prices...

I talked to my attorney/Dad about this yesterday right after getting off  the phone with the realtor and he doesn't know much about mineral rights as that's not really someone anyone cares about back home.  (Ie, there's nothing more valuable than water under the ground.  ;) )  but he did say that 50% probably means they'd have just as much of a right to be digging around as we would. 

If one party had a controlling interest, say 25/75, would the smaller interest still have the right to decide to drill or not?  Or, would a better compromise be to stipulate royalties only.  Ie, if we hit oil drilling for water we'd share a percentage of the income, but they couldn't decided whether to be poking holes in our front yard or not?
The wise woman builds her own house... Proverbs 14:1

MountainDon

Quote from: Erin on February 28, 2008, 08:18:39 AM
If one party had a controlling interest, say 25/75, would the smaller interest still have the right to decide to drill or not?  Or, would a better compromise be to stipulate royalties only.  Ie, if we hit oil drilling for water we'd share a percentage of the income, but they couldn't decided whether to be poking holes in our front yard or not?
It seems to me all the details as to who has what right, to do what, and when, would all have to be spelled out in exquisite legal detail.    IMO, it would be best for you if the seller could be placed in the position of only being due royalty's with you in full control of all the actual surface activity. I'm not a lawyer but that must be possible. But would it be agreeable to the seller is the big question.
Just because something has been done and has not failed, doesn't mean it is good design.

Willy

Quote from: MountainDon on February 28, 2008, 12:10:08 AM
What are the odds of there being something worthwhile digging/drilling for? 

It would not be nice to end up with a mine or oil derrick, then pump disturbing your view and other planned uses. On the other hand if it could be restricted to some small out of the way corner 50% of something worth going after could be quite nice.

Or do you think this is just a way to get you to go away or make to counter offer more money and no mineral rights?
Who is to say that maybe they are figuring water is a mineral and if they drill a well they can have 1/2 of the supply or charge them for it. This sure sounds like a bogus deal to me what the guy wants yet he keeps lowering his cost per acre to get him to buy it. Isn't like it is in the middle of some kind of city or development?? If there is something in the ground worth money why not have 100% and not sell, something is not right in this deal?? It isn't like the land is worth 20 grand a acre and he would make a killing getting rid of it! Mark


ScottA

It's pretty common in raw land sales for sellers to retain 50% mineral rights. I've seen it several times. I would just tell him no thanks if you think there's any chance of someone wanting to drill anytime in the future. He might not but you never know what his heirs might do.

muldoon

I had a glut of mineral rights issues when I bought my place because it actually had a producing well on it in the past and is in a small county with many thousands of actively producing wells.  (texas tea?)

There were three varieties that I saw.  The rights to the oil/gas (underground) and surface agreement rights (ability to control getting underground) and the last was mineral royalties.  I would not touch a piece of property that did not have 100% surface rights as someone could come along and decide to start drilling next to your house without your consent.  Mineral rights without a legal surface agreement gives them way too much control over your property.  Royalties are slightly different in that they are not owners of the material but share in any wealth you get if you decide to drill and find anything. 

What was important to me was that I had complete control over any heavy equipment going after any mineral under me.  (Yes, this included directional drilling if they setup on my fenceline and diagonally drilled.)  The royalties that were existing from the 60s and 70s could not be undone. 

Given that oil is at 100 a barrel right now it wouldn't take very long at all to come out losing on this deal if anything was ever found.  Any chance of just giving them the 450 an acre they want and getting it no string attached?  Seems to me you will need to get a lawyer involved in these mineral rights contracts if you go that route (and cared about not getting screwed) which would likely eat away the same amount either way. 

Erin

Talked to the realtor today and told her we might have a problem. 

I said the mineral rights thing is going to be a deal breaker.  She then tried to tell me that she'd said from the very beginning that retention of mineral rights was an issue.  I said no, they hadn't been, or we wouldn't have gotten this far.  So she looked back at her notes. 
"oh.  I  guess you're right.  He just tossed that in here this last time..."

So I said we'd be happy to do 25% of royalties but not rights.  There is no way anyone but my husband and I is going to have a say over whether our back yard is dug up by speculators.  Or whether we have an oil well sitting in the front lawn.   :P

She understood and asked for the limitation on the royalties (I said 15 yrs) and she said she'd e-mail the seller.


We are so close I can taste it!   I just pray that this isn't where the whole works comes to a grinding halt...   :-\

--Erin
The wise woman builds her own house... Proverbs 14:1

MountainDon

Just because something has been done and has not failed, doesn't mean it is good design.

Homegrown Tomatoes


Erin

No.   :P
The last couple of times I've put in our counter-counter offer and then waited for a week or two before finally getting irked and calling to see if she's heard anything.  Both times it was, "Oh, i just heard from him.  I was going to call you today..."  What are the odds?  ::)

Anyway, I'm trying to hold out this time so that she actually will be the one to get back to me rather than vice versa...
The wise woman builds her own house... Proverbs 14:1


glenn kangiser

Erin, we just had relatives out from McCook.  Near you?
"Always work from the general to the specific." J. Raabe

Glenn's Underground Cabin  http://countryplans.com/smf/index.php?topic=151.0

Please put your area in your sig line so we can assist with location specific answers.

Erin

yes.
I'm about 80 miles west of McCook.  It's my nearest "big shopping" town.  I'm there about once a month.
The wise woman builds her own house... Proverbs 14:1

Sassy

Hey, Erin, I have a lot of relatives in & around McCook, Culbertson & Bridgeport.   My grandparents were from there, my dad, his brothers & sister were born there, plus we have a lot of extended family.  We used to visit my grandparents on 4th st at least once a year - everything probably has really built up now - it used to be a small town IIRC. 
http://glennkathystroglodytecabin.blogspot.com/

You will know the truth & the truth will set you free

Erin

Bridgeport I don't know as well (being about 150 miles northwest) though I was just through there this weekend, actually...
And Culbertson is still a pretty small town.  But McCook seems to be hanging on.  Population 8,000 or so, and definitely the trade center for our area.
The wise woman builds her own house... Proverbs 14:1

Sassy

McCook, pop. 8000 - still pretty small - I have cousins who still farm out that way, although they've lost lots of acreage to the gov't/corporate farms, over the years...  Have you ever heard of the "Old Stone Church"?  My ancestors helped build that - I guess they have anniversary celebrations every year there - with lots of my relatives attending.
http://glennkathystroglodytecabin.blogspot.com/

You will know the truth & the truth will set you free