Expert: Dick Dennis - 8/20/2006

Question
 Saw your answer about homes depreciating as the lease goes on.
 Thinking about selling our home.  We're (Fellows, Ca.) on a 5 year lease (suppose to renew every 5 years) with chevron/texaco.  The town is a small community of 56 homes (not manufactured/mobil homes), with a small market, resturant, and post office. Some homes are in bad condition, but most of them are in good to excellent condition.  The school (K-8th) in town is not leased, not sure who owns the property.  When someone sells a home, chevron has the option to buy the house at the offer that was made, normally at very low prices. (Who sets the standard price?)  Maybe the sellers have been convinced that they can't get a higher price? Don't know!  
 It's my understanding that on indian leased land the value of a home drops only 15% to 20%.
 The homes here 75%.
     Any info!
               Thanks  

Answer
If your house is on leased land, especially a five-year lease, your house has very little value. That's what leases do to value of properties. You must have a fee-simple title when you own property.

You are at the mercy of the oil companies. If they should decide that they want that land for whatever reason, after the lease expires, you are required to move and they will level the property and build on it for whatever use they have for it.

That's why houses sell at very low prices as you indicated. That town is a typical company town. If you do not have a job with that company you probably have no reason to live there, therefore, the market for those houses is very low.

And if all that is mixed with Indian land, then you have another pressure to keep prices low. Don't be surprised if by some hook or crook the oil companies align their signals with the Indians and build a casino. There's another reason to keep the value of the properties low.

I do wish you well.

Dick Dennis                 dixiedee13@aol.com