Selling Mineral Rights for Maximum Value in 2020
Do you want to know how to sell mineral rights? Our guide will help you understand the process of selling mineral rights from start to finish. At US Mineral Exchange we are focused on helping mineral owners sell mineral rights for maximum value. If you’ve been looking for the definitive guide to sell mineral rights, this is it!
Why Sell Mineral Rights
Before selling mineral rights you should take a step back and consider your options. For some wealthy individuals, it can make sense to hold onto mineral rights. In many cases it makes sense to sell mineral rights.
Below are some of the most common reasons why selling mineral rights is the best financial decision:
1. Taxes: The #1 reason for selling mineral rights is taxes. If you inherited mineral rights and then sold them for $100,000, you could pay only $5,250 in taxes and keep $94,750. If you collect royalty income of $100,000, you could pay $30,000+ in taxes and only keep $70,000 and it would takes years to collect. Your basis in mineral rights can affect how much tax you owe when selling mineral rights vs collecting royalties. If you inherited mineral rights, it nearly always makes sense to sell.
2. Diversification: In our opinion, another key reason to sell mineral rights is diversification. We talk to a lot of mineral owners who have a substantial amount of their net worth tied to their mineral rights. If your mineral rights make up more than 5% of your net worth you should consider selling. After selling mineral rights, you can invest in a total stock market ETF that will give you diversification AND give you a dividend payment every quarter.
3. Control: When you own a stock, real estate, or other asset, you decide what happens with that asset. When you own mineral rights you do not decide when (or if) any drilling will take place. As a mineral owner, you would prefer that an oil and gas operator drills immediately. However, you have no control over this and many mineral owners wait decades and nothing happens.
4. Oil & Gas Prices: In addition to not controlling when or if any drilling occurs, you also have no control over the price of oil and gas extracted from the ground. Oil and Natural Gas prices have been historically volatile. This industry is known as a boom and bust type of industry. The amount you get from your royalty income is driven by current oil and gas prices.
5. Short Term Financial Need: Many mineral owners are facing a short term financial need. If you recently lost your job, need to make a down payment on a home, want to start a business, or help your child through college, selling mineral rights can make sense.
6. Medicaid Eligibility: While the rules vary by state, if you receive oil and gas royalty income you may not be eligible for medicaid. The rules are complicated but we have a guide to help you better understand the value for medicaid eligibility purposes.
How to Maximize Value When Selling Mineral Rights
If you want to truly maximize the value of your mineral rights, competition is the key. You want thousands of buyers competing to pay you the highest price.
A lot of mineral owners try and sell mineral rights on their own.
Mineral owners believe they can contact a few buyers and find a fair price. Unfortunately, you simply can’t reach enough buyers to sell for fair market value. If you end up selling mineral rights after reaching out to just a handful of buyers, you will nearly always sell below market value. The reason is that every buyer evaluates mineral rights differently.
Let’s look at an example below. After checking with a few mineral buyers, you may find a buyer willing to pay $4,000/acre. That offer may have been higher than the other offers you received so you think it’s a good deal. In reality, you actually got a bad deal! By listing at US Mineral Exchange you could have found a buyer at $5,800/acre.
What many mineral owners don’t realize is that there is nearly always a higher price out there. Typically, a much higher price.
The key to getting maximum value is creating competition among thousands of mineral buyers. When buyers compete for your mineral rights, this drives up the price ensuring you sell for maximum value. That is exactly what we do at US Mineral Exchange.
When you list at US Mineral Exchange we will quickly get your mineral rights in front of thousands of buyers.
Who Buys Mineral Rights
Finding mineral buyers is not difficult. There are literally thousands of mineral buyers out there. Figuring out who buys mineral rights in your area can be done with a quick google search. A legitimate buyer could be an individual, private company, public company, or investment group.
The challenging part is finding a legitimate mineral buyer who will pay the highest price.
There are a lot of “buyers” who appear legitimate. They will make you offers but they have no intention of buying your mineral rights. They are flippers who put you under contract and then sell that contract for profit. Figuring out who buys mineral rights and who flips mineral rights is virtually impossible.
If you get lucky enough to locate a legitimate buyer, it is unlikely they are offering the best price. A lot of mineral owners will accept an offer after talking with just a few buyers. They end up selling mineral rights below market value and losing out on thousands of dollars. Don’t fall into this trap!
You need an advocate on your side that knows the industry.
Avoid Common Mistakes When Selling
Over the years we have seen a number of mistakes mineral owners make when selling mineral rights. When you sell mineral rights, avoid these common mistakes:
For Sale By Owner: The worst mistake you can make is selling mineral rights on your own. When you sell mineral rights on your own you are taking a big risk. You are betting that you can find the best price and that you know how to navigate the closing process without being taken advantage of. At US Mineral Exchange we have spent years figuring out the tricks mineral buyers use. We know how to get you the best price and can help you avoid expensive mistakes at closing.
1st Offer: The most common mistake we see mineral owners make is accepting the first offer they receive. Many mineral owners incorrectly believe that if they don’t accept this offer they will lose out. These offers sometimes come with a short deadline to accept, creating a sense of urgency. Don’t fall for this trick! You have held your mineral rights for years. Selling mineral rights to the first offer you receive is a recipe for disaster!
Flippers: Another common mistake we see are mineral owners who sell mineral rights to a flipper. These flippers will put you under contract at a below market price. Then, they turn around and sell to someone else at a higher price. This is extremely common in the industry. Mineral owners typically have no idea it’s happening.
It typically works like the example below. You gather up a few offers and go under contract at $2,000/acre. That buyer then turns around and sells to someone else at $3,000/acre. That buyer will then turn around and sell for $4,000/acre.
Mineral owners convince themselves they have found the $4,000/acre offer. Finding the highest market offer when selling mineral rights is like finding a needle in a haystack. You need access to a pool of thousands of buyers to get the best price.
Market Value: Mineral owners almost always believe their mineral rights are worth more than they are. A lot of mineral owners will talk about what their mineral rights may be worth in the future. We hear phrases like, “oil prices will be higher in the future so this will be a great investment” or “as soon as they drill a few more wells to extract more oil it will be worth a lot more.”
Your mineral rights are worth what a buyer is willing to pay TODAY, based on the current market value. It may take years for oil prices to go up or for a new well to be drilled. If you are serious about selling mineral rights you need to be willing to accept the market value.
How to Sell Mineral Rights
When trying to determine how to sell mineral rights, you have two options available:
1. Selling mineral rights on your own
2. Working with industry experts at US Mineral Exchange
Reasons to avoid selling mineral rights on your own:
Your Time: You could spend hours just locating a few buyers and submitting your information.
Exposure: Even after spending hours finding buyers you will have only scratched the surface. There are literally thousands of buyers out there and it’s impossible to reach each one individually.
Flippers: You’ll have to navigate around flippers who will try to quickly get you to sign something and then make a huge profit when they find a buyer.
Shady Buyers: Not all buyers are created equal. Some buyers will take advantage of a mineral owners lack of experience with mineral rights.
Negotiation: Unless you are extremely familiar with selling mineral rights, negotiating the best possible deal will be difficult.
Final Sale: At the end of the day, you’ll have no idea if you got maximum value for your property. Were other buyers out there who would have paid more? Very often the answer is yes!
Reasons to list with US Mineral Exchange:
Save Time: You won’t need to search for buyers. You can provide your information once and then get exposure to a huge network of buyers.
Maximize Value: Your property will get instant exposure to a huge network of buyers. These buyers will compete against one another driving up the price and maximizing mineral rights value.
Quality Buyers: There’s no need to worry about flippers and shady buyers. You’ll be working with industry experts who know the market.
Tough Negotiators: By working with industry experts you gain the upper hand in negotiations. Mineral buyers recognize they are competing against others and respond accordingly.
Final Sale: When you close the sale of your property, you’ll have full confidence knowing that someone was standing beside you looking out for your best interests while helping you maximize value.
When you decide to sell mineral rights on your own, you end up wasting time, adding stress, and making less money! You have to navigate the process of finding a buyer who won’t take advantage of you and will pay you the highest price.
Working with an expert who specializes in selling mineral rights is critical for mineral owners to protect their interests and maximize value.
Where to Sell Mineral Rights
Figuring out where to sell mineral rights can be overwhelming. With so many options available, you may be asking yourself how do you sell mineral rights and get a good deal?
Here are some common ways to find mineral buyers and sell mineral rights:
Attorneys: If you go to your attorney and say, “I want to sell my mineral rights” they will probably help you. While attorneys can help you navigate a legal document, you should never sell mineral rights through an attorney. The reason is that they simply won’t get you a good price. At best, they have a small number of buyers they work with. If you sell through an attorney, you will sell below market value.
Phone Calls: Some companies still make cold calls to mineral owners. Their goal is to get you on the phone and then convince you to sell. Shockingly, some mineral owners still sell mineral rights like this. You are talking with one buyer. Having a discussion and getting an offer is fine. Not getting competitive bids will cost you.
Knock at the Door: While uncommon, there are still door to door salesmen who will try and buy your minerals. Do NOT sell mineral rights like this. These guys are experts at convincing you they are giving you a fair price. They are not! They will put a lot of pressure on you. Don’t fall for it!
Letters in the Mail: This is one of the most common ways that mineral owners sell mineral rights below market value. If your mineral rights have much value, you will be getting letters to sell on a weekly or monthly basis. Mineral owners will stack these letters up in a file as they come in. They review the letters, pick the highest offers, then reach out and negotiate the best deal they can. This is a terrible way to sell mineral rights. Why? Most of the large mineral buyers who pay the best prices do not send letters in the mail. They rely on US Mineral Exchange to locate mineral rights for sale. When you accept an offer based on a letter you received, you didn’t reach the big players who will pay the highest prices.
Online Mineral Buyers: Finding a buyer online is like throwing darts at a dart board. You will spend hours submitting your information to these buyers. You have no idea who is behind the website. It’s impossible to know whether the buyer is legitimate or a flipper. It’s easy to setup a basic website and appear legitimate. Don’t play roulette when selling mineral rights and hope you land on a good buyer.
US Mineral Exchange: The best way to sell mineral rights is through US Mineral Exchange. You submit your information one time and we handle everything from there. We will quickly get your mineral rights in front of thousands of buyers ensuring the best price. We’ll negotiate the best possible deal for you. In addition, we will help you navigate the closing process from start to finish.
Have an offer to sell mineral rights already? No problem. We don’t get paid unless we find you a higher offer! Listing is truly a risk free way to ensure you are getting the best price.
Selling Mineral Rights at US Mineral Exchange
When mineral owners are selling mineral rights, they turn to US Mineral Exchange because we are the industry leader. By working with US Mineral Exchange you are partnering with an industry expert who is 100% dedicated to protecting your bests interests.
At US Mineral Exchange, we offer both a standard listing as well as a mineral rights auction. The standard listing is ideal if you do not have a current offer on the table. The mineral rights auction listings are ideal if you have an offer on the table that you are considering accepting.
We will stand beside you each step of the way by answering your questions, negotiating the best possible deal, and navigating the closing process. We are fully invested in helping mineral owners and we look forward to working with you.
Learn more about how the process works and the required documents to list.
Contact US Mineral Exchange:
If you have questions about how to sell your mineral rights, we’re here to help! We speak with mineral owners every day and we look forward to hearing from you. Please don’t hesitate to fill out the form below with any questions and our friendly team will respond quickly.
Common Questions
The more information you can provide about your property the better! We can give you a better idea about the value of selling mineral rights if you provide more information. The most important thing we need is for you to answer the questions and provide your state and county.
If you have the required documents to list, providing those is extremely helpful!
Absolutely not! When you inquire at US Mineral Exchange we will not be putting any pressure on you to sell. We will help answer any questions you have whether you are interested in selling or not.
At US Mineral Exchange, we take privacy very seriously. We will NEVER sell your information or use it without your consent. When you send us documentation or tell us about your property, that information does not go outside our company without your consent. Even when you list a property for sale on our website, we strictly control who has access to the information about your listing so that only legitimate buyers will be able to see property details.
Many mineral owners make the mistake of getting an offer and quickly selling. They then accept an offer far below market value because they felt pressure to sell. There is nearly always a better price available.
We have two types of listings available to help you sell mineral rights for the best price:
Auction Listing – Our auction listings are for just 7 to 14 days. If you have an offer in hand you are seriously considering, an auction listing is a quick way to get a better offer and ensure a smooth closing process. Learn more about our auction listings.
Standard Listing – Our standard listings run for 30 days. These listings are ideal if you don’t have an offer in hand or you are not in a rush to sell. Learn more about our standard listings.
The reason that so many mineral owners decide to sell mineral rights at US Mineral Exchange is access to our large network of mineral rights buyers. Our goal is to help you get top dollar for selling mineral rights by getting your property in front of a huge audience of buyers. This allows buyers to compete against one another which ensures you get fair market value for selling mineral rights.
There are absolutely no cost to list your property. When you locate a buyer by listing your property with us, we are paid a commission directly by the buyers closing agent. This means you never have any out of pocket expenses ever. We only get paid if we can get you a better price than the current offer you have in hand.
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