I am buying a house in which the mineral rights are non-negotiable. Should I walk away from this and look for a house that includes the mineral rights? How often does this happen? How will buying a house without mineral rights affect my property or resale value?
Dear Rocio,
I can tell you from my experience and my properties here in Fort Worth. My neighborhood on one rental property, using a lawyer, we got 27.25% of the hole, and $6,000 bonus up front. Now that was in 2008. They haven’t drilled yet and it’s close to the end of that lease.
My lease under my home was $6,000 per acre bonus lease, up front with 25% out of the hole and no transportation charges, which means I get the price at the head where they sell it and don’t have to pay any transportation charges to get the gas to market. They have drilled the first of several wells in my neighborhood.
My neighbor got his first check, $60 for three months of production off 1/3 of an acre. We have same size lots.
So now if you’re purchasing a home for rental or yourself, you use that lease to get something you want. When I sold a home this summer, I used the lease underneath it as a $10,000 chip. Was it worth $10,000? No, but to people buying homes, with all the talk going of how rich we’re getting, they want the minerals. Were they willing to pay $10,000 for my minerals? Yes, they were. What is the return on $10,000 repaid at $20 a month? Not a good choice now, but if and when natural gas goes to $12.00, those of us that use natural gas in heating and cooling our homes will be real unhappy about it.
Now a little history, my granddad started town in West Texas in 1923, bought and sold land and kept minerals along his way. Some of his wells have been pumping for 80 years, so when you hear that natural gas wells are only good for so long, after that long they come back and clean out and reenergize the wells from injection to other methods.
So my best advice if you have a regular home on 1/3 of an acre or less is to use the oil royalties to get more out of the couple that think their oil royalties are something special to them to keep. Make them pay dearly to keep them.
Best to you, and if you decide to keep the royalties, then get an attorney to help you figure out the right way to make a lease that protects you over the oil company.
God bless and continued success.
If you like the house then buy it. The odds of you finding someone who WILL sell their mineral rights would be like finding a needle in a haystack. Especially these days since the general public is so savvy to what is going on with gas drilling. This should not affect the resale value of a home either.
Real Estate Broker 13 years
Land and Mineral rights owner - 5 years