Do Not Sell Your Mineral Rights Without Reading This!
December 21, 2017
Selling mineral rights to make a good profit is an attractive idea to many owners of mineral rights. Yet it is important for you to learn as much as possible about how to sell your mineral rights and what mistakes to avoid before doing so. Consider the valuable information below before you attempt to sell mineral rights in order to find the right buyer for a successful deal.
The Process of Selling Mineral Rights
Selling mineral rights involves a somewhat lengthy process as well as a good deal of research and planning. You should consider the following things before you begin the selling process:
- Legal Requirements - Before selling your mineral rights, you must first handle all legal issues concerning actual ownership of the minerals, legal descriptions of properties, current leases, and other details proving you have the legal right to actually list these rights for sale.
- Market Research - Mineral values fluctuate depending upon demand, product quality, and many other details. To generate the most profit from your sale, you need to understand what your minerals are worth today and how market price fluctuations could affect the price. Gauge the current market carefully to determine when is the best time to sell.
- Attracting Buyers - You want to sell mineral rights to reputable buyers who will give you a fair price. Attract the best buyers by advertising widely for the most exposure. Provide GIS maps of your deposits that show interested parties exactly what they are bidding on to increase buyer interest.
- Negotiating and Finalizing the Deal - Once you find the right buyer, you must then negotiate contract terms that include surface rights and how you will be paid. You will need to draft a Purchase and Sale Agreement (PSA) and your buyer must present a deed for the minerals. After both documents have been signed, your buyer will pay according to the terms of the PSA.
Avoid Common Mistakes When Selling Mineral Rights
As easy as this process may seem on paper, selling mineral rights can be challenging if you are not properly prepared. Common mistakes made by many novices who are looking to sell mineral rights can negatively affect results. Some of these mistakes include poor judgment of the buying market and losing out on higher prices by waiting too long to sell. Gauging the buying market accurately requires some experience in dealing with these type of sales.
When you do decide to sell your mineral rights, avoid accepting the first offer. You can attract better offers if you work at reaching more interested buyers. Connecting with more buyers also increases the chance they will bid against each other, which can help get a more competitive price. That will lower the risk of selling below market value to a shrewd flipper who will just turn around and sell to someone else for a higher price. If you hold out for the right buyers and do not rush a transaction, you will get the most for what you have to offer.
To be successful when selling your mineral rights, you must be able to do all the legwork up front to make good decisions. As competitive as the open market can be, you may be able to sell mineral rights for more money if you work with a broker who is experienced in buying and selling mineral rights. With a good understanding of market conditions and a network of reputable buyers, sales agents can help you obtain the most profit from your mineral rights!
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