Why Sell Mineral Rights
Mineral owners with oil rights, gas rights, and mineral rights may have second thoughts about putting these rights up for sale. After all, it is possible that individuals on an extremely successful or productive well could make more money in royalty income by retaining these rights. Unfortunately, however, situations like this are hardly the majority. In far too many instances, mineral owners retain their mineral rights and never receive the economic payout that they’re hoping for. Many landowners sell their mineral rights for several reasons, but finding the right reasons for you is most important.
Guaranteed Money and Less Financial Risk
By selling mineral rights now, however, you are guaranteed a lump sum payment for your rights, and you’ll know and agree to the price in advance with a few mineral buyers, removing the financial uncertainty that comes with retaining these rights. Even if your well turns out to not be productive and doesn’t provide royalty payments, that financial burden will be passed on to the buyer, and you are still guaranteed the full amount of the market value when you sell for an agreed amount.
Why Sell Mineral Rights Now
In addition to the guaranteed payout that selling mineral rights can provide, for mineral owners, there is also considerable benefit in taking action sooner rather than later. One of the greatest reasons to consider selling mineral rights now, rather than waiting to sell your rights or land for development, is to have cash in hand almost immediately. Whether you need money now, or you want to save up for a rainy day, selling your mineral rights will provide you with quick and reliable money, giving you financial protection in the event that unexpected financial needs arise.
Timing Is Key
Another great incentive to sell mineral rights now is that the timing has never been better. The United States is currently experiencing an energy and natural gas boom, meaning that buyers are willing to pay top dollar per royalty acre to capitalize on this ever-increasing market. However, as history has shown, energy booms do not last forever, and so striking while the proverbial iron is hot is a must for anyone who is looking to truly capitalize on the potential financial value of their oil, mineral, and gas rights.
The Future Market Value for Selling Mineral Rights
The reality of America’s energy future is that more and more oil and gas companies are going to increasingly spend their R&D budgets developing renewable energy sources. Oil and gas, while experiencing a boom, are non-renewable resources, and all signs point to an increasing scarcity of these resources. Not only does this contribute to the present oil and gas boom in the U.S., but it also means that sitting on oil and gas rights, or other royalty interests, is likely not a smart long-term play. As companies begin to successfully develop long-term, renewable energy solutions, the value of oil and gas deposits will drop significantly for landowners, as well as monthly royalty payments. As such, if you wait too long to sell your mineral rights, you could find yourself facing market trends that no longer favor fossil fuels, and subsequently, a once-valuable asset may no longer have enough buyers.
Should I Sell or Lease my Mineral Rights?
Mineral owners may view a lease as a long-term investment through mineral ownership, it can actually be a gamble more often than not. It can take years for development to start on your land. And once development starts, decades can pass before you start seeing royalty interests become profitable. There is also the possibility that as the years pass, the fair market price for the oil, gas, and minerals being produced from your property will decrease, causing your investment to whittle down in value.
As a mineral owner, the best way to ensure that you are getting the most money for what your property is worth is by selling your mineral rights for an upfront sales price. There are significant tax benefits that can be reaped from selling mineral rights. Most sellers qualify for long-term capital gains taxes of gas, oil, and minerals, whereas those with leased rights have their ‘investment’ burdened with additional income taxes and tax penalties.
Financial Incentive for Selling Your Mineral Rights
Many mineral owners are hesitant to sell mineral rights because they view it as a strategic long-term investment, hoping that by allowing production to take place on their land, they’ll make more money in the long run as opposed to selling these rights upfront for a known price. While, yes, there are some people for whom this strategy works, the truth is that far too many people hold out for this dream only to find out that their wells are not productive or that it takes far too long for development to start on their land for it to be economically beneficial.
Selling Mineral Rights can have Positive Tax Benefits
If you sell mineral rights to an eager buyer, however, you can significantly reduce your financial risk in the long-run, all while still securing a significant financial payout. Additionally, individuals who sell their mineral rights stand to receive notable tax benefits. For many mineral owners, selling gas, oil, and mineral rights can qualify as a long-term capital gains tax, whereas people who lease these rights to developers are conversely saddled with higher tax penalties, as money secured by leasing their land is treated as regular income. Nevertheless, there are ways to turn your mineral rights into a promising investment opportunity.
The whole process that directly follows the decision to sell your oil, gas, and mineral rights can be exhausting. Most mineral owners want to know what takes to turn your mineral rights into a financial gain. In order to get the maximum value from your mineral rights, you need a large network of buyers bidding against each other for your mineral rights. This is why you hire a mineral brokerage service to help you sell your mineral rights. Using our thorough experience, we have provided an outline of the steps it takes to sell one’s mineral rights:
1. Is it a good time to sell?
Assess the risks and benefits of selling your specific asset in the current market. If you wait, will your minerals decrease or increase in value? If you inherited mineral rights, for example, you may want consider multiple opinions.
2. Learn about the Legal Requirements for Selling
This step might also involve encountering or generating legal descriptions, leases, and check stubs.
3. Compile GIS Map Data
Begin the process of compiling data from Geographic Information Systems (GIS) maps and other relevant databases. You will use this data to frame your mineral interest as particularly desirable to prospective buyers.
4. Advertise your Mineral Rights to Mineral Buyers
You will want to reach as many potential purchasers as you possibly can to make sure you find the best price.
5. Assess offers as they come in
This step can be particularly difficult because many owners are not market specialists and are therefore unable to identify the best offers easily. Is the highest price you have been presented so far the highest you can get? How can you tell if a buyer is credible and trustworthy? Should you keep advertising or move on to the next step?
6. Draft a Purchase and Sale Agreement
Once you have settled on an offer, you can draft a Purchase and Sale Agreement (PSA). The PSA legally specifies the terms of the sale.
7. Sign Buyer’s Deed
The buyer will present a deed before closing, another legal document that finalizes the sale.
8.Close the Deal and Get Paid
If all goes well, after both parties have agreed on the PSA and the deed, the buyer will pay you.
Although these steps make it seems like selling your mineral rights can be simple, the process rarely goes this smoothly. Often, there is a lot of back and forth between potential buyers and the seller’s representative so that the maximum possible price is reached. When you call on the help of our experienced mineral rights brokers, the process becomes our number one priority, and we work to get you the maximum profit available.
Do I Need a Mineral Rights Broker?
If you own a property and have even thought about selling or leasing the mineral rights, you need a mineral rights broker. The reason is that it is unfortunately very easy for potential buyers to undersell you. Buyers can find out how many people are looking to purchase or lease your rights, so without competition, you won’t be getting what your rights are worth. The necessary process to accumulate buyers can be difficult as well without the help of someone densely connected to the industry.
Mineral buyers are nationwide and sometimes international, so breaking into the market requires skilled networking and is oftentimes too much for a single seller to handle, especially if they have no experience. The most important benefit to hiring a broker, however, is the amount of time and effort it’ll save you overall. We do all the research, the paperwork, and the preparation needed to get your rights the highest possible financial return for you.
Why Should I Choose The Mineral Auction to Handle my Mineral Rights?
At The Mineral Auction, we know that your livelihood and the future of your family could largely be connected to you getting a great price for your oil rights, gas rights, and/or mineral rights. As such, we care just as much about getting you a great price for these rights as you do. In order to make sure that the price offered to you is both competitive and generous, we don’t just look for one or two potential buyers when we go to sell your mineral rights. Instead, we tap into an established, vetted network we’ve culled of over 7,000 quality buyers who are ready to pay top dollar for your mineral rights.
Auction your Rights to the Best Buyer
Additionally, we don’t just approach these buyers individually – we put your rights up for auction so that all of these interested buyers will be in direct competition with each other for your mineral rights, driving up the price. Finding a reputable individual buyer who won’t try and take advantage of your position is extremely difficult, so why even bother with that risk and that hassle? Let our experienced team bring reputable, interested, and vetted buyers to you, alleviating the difficulty that can often accompany selling mineral rights and help you get an outstanding price on your interests.
Save Time with a Mineral Right Broker
When it comes time to finalize a sale or draft up a lease, there is often a sizeable stack of legal paperwork that needs to be filled out and appropriately filed. We can even offer the service of filling out the paperwork and all contracts for you free of charge, depending on the circumstances.
Additionally, our fees of service are directly tied to the price for your property, which puts a competitive edge on us. Our paycheck is proportional to your financial payout, so we want to get you as much money as possible. Our primary locations of business include the oil reserves in the Permian Basin and Eagle Ford Shale in South and West Texas. We also do work in Oklahoma, North Dakota, Pennsylvania, West Virginia, and Ohio. We provide a free initial evaluation for potential clients.
Sell Your Mineral Rights Today
If you are interested in pursuing selling mineral rights, whether it’s gas or oil, you need a broker you can trust. We can help you make an informed decision on whether to sell. You also need a vast buyer network and an experienced team with you knowing which offers best reflect the maximum value of your property. The Mineral Auction is the premier name when it comes to a listing your mineral rights on the market. As a mineral owner, you could be sitting on your retirement, next family vacation, or a significant boost to your net worth. Call us at (512) 698-2802 to get a free initial evaluation of your property.