Appraisers' Free Forum

**Annemieke Roell**

I am doing a house in the rural areas of Salina on 14 acres. The owners told me they have mineral rights. What do I need to know about using that (or not) in my appraisal?

We don't come across that very often here as most mineral rights do NOT change hands with the deed.

Thanks for your help.
_________________
We're not being stopped by something on the outside, but by something on the inside.

**Edd Gillespie** · Certified General Joined: 13 Aug 2007 Posts: 2282

The only adjustment I can find here is if somebody is actively trying to lease or buy the minerals due some discovery and intent to mine a lode of something.
_________________
Edd “In the real estate economy, there are no guarantees that reason will prevail in a market where emotions run high and the amount of misinformation runs deep.” Jonathan Miller in The Matrix. So what’s an appraiser to do?

DB · Posted: Fri Dec 21, 2007 10:55 am Post subject:

Some mineral deeds are for specific minerals ... some are for ALL minerals ..... and the deeds do expire ... some are good for 100 years and some for other periods .... the goal would be to find other sold properties that sold WITH their mineral rights in tact and see if there was any significant difference in the selling price that could be attributed to those rights .... it might also be time to talk to local realtors and maybe even assessors to see if mineral rights enter into the market place when it comes to value .... In my market, mineral rights show some minor influences ... even with the zinc and limestone operations nearby .. ag lime is a commodity and sometimes a byproduct of zinc mining, but the affect on market values is minimal ...

I would guess that asking Terell is your best bet, particularly since he is so close to your market area ..... Wink

_________________
Tennessee State Certified Residential Appraiser
***************************************
..."If you live to be a hundred, I want to live to be a hundred minus one day,
so I never have to live without you." - Winnie the Pooh.

**Annemieke Roell** · Posted: Fri Dec 21, 2007 12:47 pm Post subject:

Yep, you are right. Actually, Terry works around Salina as well so he should know, as well as our friend John Wilkerson.

I just wanted to post an intelligent post for a change Laughing

_________________
We're not being stopped by something on the outside, but by something on the inside.

**Steve Owen** · Posted: Fri Dec 21, 2007 5:39 pm Post subject:

I really don't know... am writing this primarily so I'll be notified and can see the response when Terrel answers. I don't believe I have ever seen a deed that specifically conferred mineral rights. In Joplin a lot of deeds specifically exclude mineral rights, but since mining here ended prior to 1950 I pretty much assume that it doesn't make much difference.

Of course, the pat answer is that as long as I am comping them to ones that also don't have mineral rights, it would not matter. But, I'm not sure what you would do if it was the other way around.

We had one interesting company here that insisted to take title to "surface rights only." Not really sure why, though. Since I did not appraise it or ever use it for a comp I really didn't need to find out.
_________________
I haven't a particle of confidence in a man who has no redeeming petty vices.
- Mark Twain, a Biography

**Otis** · Posted: Fri Dec 21, 2007 9:47 pm Post subject:

You're appraising the real estate - would the current owner sell the mineral rights with the real estate? (Not LIKELY - most hold on to them forever or until they're offered the "right price" [hmmmmmmmmmmm - wonder when my relatives will do that or pass it on to me Rolling Eyes

]). Just a thought. Not to mention the fact that YOU may not be qualified to appraise mineral rights. Offended

_________________
Don't believe everything you think Wink

What are they SMOKING?<<Link

**Annemieke Roell** · Posted: Sat Dec 22, 2007 12:17 am Post subject:

**Goodpasture** · Posted: Sat Dec 22, 2007 12:32 am Post subject:

**Otis** · Posted: Sat Dec 22, 2007 12:33 am Post subject:

**Jim Plante** · Posted: Sat Dec 22, 2007 7:51 am Post subject:

Err, Otis...
Mineral rights are a part of fee simple unless otherwise specified. So are surface rights, air rights, etc.

You begin with the whole enchilada, then exclude what does not apply. If your SOW is to appraise the market value of the fee simple interest, you just included mineral, air, surface, water, and all other rights unless you specifically exclude them.

One other observation: You do not have to BE competent in order to accept an assignment; you have to BECOME competent, state that you were not competent, then tell how you became competent.
_________________
Jim Plante

**Bill Caudell** · Posted: Sat Dec 22, 2007 8:54 am Post subject:

**Jim Plante** · Posted: Sat Dec 22, 2007 9:07 am Post subject:

Bill, the client should be told up front. "I've never had to separate the mineral rights from the rest of the property before, so I'll have to read up on it and consult with some appraisers who have experience in doing that. Or, if you prefer, I can put you in touch with one of those appraisers. Do you want me to do the appraisal, or would you like some phone numbers."

If s/he says to go ahead, then make sure you detail that agreement in the engagement letter.
_________________
Jim Plante

**Edd Gillespie** · Certified General Joined: 13 Aug 2007 Posts: 2282

**Otis** · Posted: Sat Dec 22, 2007 10:20 am Post subject:

**Steve Owen** · Posted: Mon Dec 24, 2007 10:47 am Post subject:

And... I would add, Otis (although I may later be proven wrong) that in an area like mine where mineral rights rarely transfer, it really does not matter as long as you are comparing one fee simple to another similar fee simple. Is that too siimple?
_________________
I haven't a particle of confidence in a man who has no redeeming petty vices.
- Mark Twain, a Biography