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  • Selling My Mineral Rights Royalties – What Should I Look For?

    September 17, 2018

    Selling mineral rights can be profitable for you if you follow the right procedure. Among the steps required for the successful sale of mineral rights is knowing some red flags to avoid being taken advantage of. Get the most for your interests when selling your mineral rights by staying alert for unethical tactics used by some buyers and know how to plan for a successful sale.

    1. Understand the Difference Between Mineral Rights and Royalties

    When you are selling mineral rights, beware that unethical buyers will take advantage of a seller’s inexperience and lack of understanding about this business. One such way that they do this is by using a bait-and-switch tactic pertaining to mineral rights and royalties, which are not the same thing.

    Although these terms may seem similar and are commonly confused during the sale of mineral rights, royalties are simply a cut of the production income while rights are ownership of mineral interests. Unless you are careful, you could inadvertently sell your ownership while thinking you are simply accepting a royalties payment. Contract wording is critical!

    2. Understand the Difference Between Mineral Acres and Royalty Acres

    Unethical buyers may also attempt to exploit you when selling your mineral rights by interchanging the use of the terms mineral acres and royalty acres. A mineral acre is the full mineral value of one acre of your land. A royalty acre is the amount of royalty earned from that same acre. If these words are interchanged, you could end up signing away much more than you think. Once again, contract terminology is critical.

    3. Know Fair Market Value Before You Sell

    Many owners who sell their mineral rights jump at the first offer they receive, thinking they should sell quickly to avoid losing out. This is the easiest way to end up selling below market value, since buyers always start the bidding low. Do the necessary research to learn about current market value and what your interests are worth before you conduct the sale of mineral rights to ensure you sell for what they are worth.

    4. Avoid Getting Hooked by the Bank Draft Trick

    As easy as it may at first seem when selling your mineral rights, never cash a bank check that comes in the mail suggesting that you take the money now and work out the details later. Cashing that check legally binds you to sell your minerals no matter what the letter with it says.

    Avoid the headaches and financial losses that can come with this tactic; shred those checks and throw them out. If you want to sell, find an experienced broker to work with on your own. Don’t respond to any ;blind solicitations that may come to you.

    5. Always Exercise Due Diligence

    Above all, protecting yourself when selling mineral rights involves exercising due diligence so you understand what you are selling, how much it is worth, and all the legal aspects that come with these transactions. In addition to looking out for red flag tactics that could cheat you, it is essential that you have understand the business of trading rights and royalties that you can negotiate a fair deal with someone.

    Because of the high competitiveness involved in the sale of mineral rights and the degree of expertise needed to ensure a fair trade, the best recommendation is to work with an experienced broker who can assist you. With the help of experienced industry professionals who will work on your behalf when selling mineral rights, you can get the best price for your interests without risk of falling prey to unethical buyers!

    Selling Your Mineral Rights In Texas?

    Permico Royalties Can Help With Your Sale Of Mineral Rights!

    Call (432) 242-7335!

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