So you want to know how to sell mineral rights in Texas? You probably want a good price too right? You’re in the right place!
If you are thinking about selling mineral and royalty rights in Texas you’re in the right place! This free guide will tell you everything you need to know about how to sell mineral rights in Texas. But not only how to sell them, but also to ensure you sell for the highest possible value. In addition, we are going to show you how to avoid the 3 most common mistakes when selling mineral rights in Texas. If you can avoid the common traps and sell mineral rights the right way you’ll pocket the highest amount possible.
How to Value Mineral Rights
Before you attempt to sell your mineral rights, you’re probably wondering how to value your mineral rights. Unlike the housing market and stock market where there is a ton of information available, there is very little information about mineral rights! Your mineral rights could be worth anywhere from a few hundred dollars and acre to $25,000+/acre depending on where they are located. There are a large number factors that will affect the value of your mineral rights and how much they are worth.
The best way to get an accurate assessment of the value is to get your property in front of a large audience of mineral buyers! Imagine you were going to sell your home. Would you want 1 or 2 buyers to come view the property and make an offer or do you want hundreds of people to stop by and check it out? The more buyers that know your property is for sale, the more likely you are to get a fair market value. The key to getting the highest value for your property is getting it in front of a large audience of buyers. When buyers compete against each other, that means more cash in your pocket!
“The key to getting the highest value for your property is getting it in front of a large audience of buyers.”
How to Sell Mineral Rights in Texas
If you want to sell mineral rights or sell royalties, there are literally hundreds of options available. A quick google search will show you countless ads from buyers wishing to purchase mineral rights. Which one do you pick? How do I know I’m getting a good deal? It’s almost impossible to figure out where to turn! Figuring out who to trust is half the battle when you want to know how to sell mineral rights in Texas.
Here are the types of buyers you will run into when you try to figure out how to sell mineral rights in Texas:
Letters in the Mail: We speak with lots of mineral owners who received a letter in the mail to sell mineral rights in Texas. They usually accompany an offer and a offer a quick close. While you can sometimes find a good deal this way, these offers are almost always below market value. These buyers hope that you aren’t savvy enough to check out your other options! After all, why would they send you their best offer in a letter?
Local Brokers: There are a number of local mineral rights brokers who offer to help you sell mineral rights. Unfortunately, these brokers are typically “flippers” who are trying to lock you into a low price and then sell it to someone else at a much higher price. You can sometimes find a trust worthy broker who does want to help you out but how long have they been around and can they prove it? We would caution you that your local broker typically has a only a very small network of buyers which results in lower offers. In addition, they really have not been in business as long as they say they have. You can find a lot of information about a broker online. They should have a long history and it should not be hard to find.
Real Estate Agents / Attorneys: Many mineral owners make the mistake of enlisting their real estate agent or attorney to help them sell mineral rights. The problem is that these experts know a lot about housing and legal practices, but rarely know the best way to sell mineral rights. The network of people these professionals know is typically extremely limited. If you want the highest possible value, we recommend against both of these options. They are experts in their field but not in selling mineral rights.
Individual Buyer Websites: A quick google search for “Sell Mineral Rights in Texas” will yield hundreds of websites offering to purchase your mineral rights. 99.9% of the time these websites represent a single buyer. While it’s possible you could find just the right buyer for your property visiting each website and asking for an offer, it would be extremely time consuming to do this. In addition, you have no idea who you are working with when you check with individual websites.
Our Recommendation: www.USMineralExchange.com
Why do we recommend US Mineral Exchange? The reason we recommend their service is because they have helped thousands of sellers since their launch in 2012. But don’t take our word for it, a quick look at their google reviews and you can see loads of mineral and royalty owners just like you who have had really great experiences. In addition, they have thousands of buyers who frequent their website wishing to purchase mineral rights. Instead of visiting a lot of websites and spending countless hours requesting offers, US Mineral Exchange will put together a listing package and market your interest to buyers across the nation. In addition, they help walk you through the entire process from start to close to ensure you sell what you intended to sell at the price you intended to sell it for. We recommend you sell mineral rights in Texas like this for the following reasons:
- Quality Buyers: You ensure you are working with financially qualified buyers because everyone at US Mineral Exchange is pre-screened.
- Time: Many mineral owners waste hours trying to find the right buyer, submitting a bunch of information, then waiting for an offer. When you list at US Mineral Exchange, they create your listing once and allow buyers to compete for it.
- Price: The main reason we recommend US Mineral Exchange is because this ensures you get the best possible price. When buyers in the market know your property is for sale on the market, they know they have to make solid offers to compete with other potential buyers. With thousands of buyers visiting their website, you can feel comfortable that you are getting your property out there in front of everyone.
3 Common Mineral Owner Mistakes that will cost you THOUSANDS of dollars
If you want to know how to sell mineral rights in Texas, you also need to know how to avoid the common mistakes mineral owners make. Here is a list of the 5 most common mistakes we see mineral owners make:
Common Mistake #1: Documentation
Many mineral owners make the mistake of not having any documentation put together. If you want to sell mineral rights for the highest possible price, you should have the follow documentation ready:
Producing Properties: If you currently receive royalty income each month, you should have the following documents ready to go:
- Check Stubs: You should have the last 3 months of check stubs
- Lease Agreement (optional): If you have a lease agreement available, this is very helpful for buyers.
Leased but non-producing: If you have an active lease agreement but you do not receive royalty income, you should pull together the following documents:
- Lease agreement: A full copy of your lease agreement including all pages. Please note that this is not a lease addendum or memo for lease. You need the original lease that shows all the terms (lease royalty rate, term of lease, etc).
- Order for Payment: When you signed your lease, they should have provided you with an order for payment. This document will tell you the price per acre (lease bonus) and the number of acres owned.
It’s impossible for a mineral buyer in Texas to evaluate your mineral rights without documentation. Asking a mineral buyer to give you an offer without this documentation is like asking someone to make an offer on your home, but only providing them with the county where it’s located.
Common Mistake #2: Not getting competing bids
The worst mistake you can make when selling mineral rights in Texas is not getting competing offers. We have watched so many mineral owners sell far below market value. This happens for two reasons:
- Mineral owners are scared they are going to lose an offer. Once you have an offer in hand, a mineral buyer may put pressure on you to accept or the offer will expire. You may just put pressure on yourself to accept it and move on! If you have an offer for $100,000, the odds you can’t find another offer for $100,000 is extremely low. A large number of mineral owners fall into this trap. They convince themselves that by not accepting the offer, they will be losing money, when the reality is the exactly the opposite. You’ll make more money by getting competing offers with a reputable broker like US Mineral Exchange who can help you sell mineral rights for the best price.
- Most mineral owners do not realize how differently mineral buyers evaluate properties. A lot of mineral owners assume it’s like selling a home. You may sell a home and get a bad deal, but it will probably be with 5% or 10% at worst of the market rate. There is plenty of information to give you a good idea of what your home is worth. Mineral rights are different. The value of mineral rights depends entirely on what buyers think it’s worth. Every mineral buyer in Texas will evaluate your property differently. You may see offers of $40,000, $60,000, $65,000, and $90,000 on the same property! Your goal is to find that buyer who is willing to pay the best price. Most mineral owners get a few offers, accept an offer for $65,000, and never realize they could have sold for $90,000!
Common Mistake #3: Not understanding contract terms
Mineral rights are complicated. There are a lot of terms people are not familiar with. It’s not because you should know all about them, it’s simply just a confusing industry. However, a lot of mineral owners try and navigate the process with no idea what they are doing. In the end, they end up signing a contract that puts the mineral buyer in control.
Let’s look at an extremely common example. You sign a contract that states you will be paid $10,000/net mineral acre assuming a 25% lease and 10 net mineral acres owned. Based on the contract, you should be paid $100,000 at closing. Simple enough. A mineral buyer will run title and confirm your ownership of 10 net mineral acres. When title comes back, they may be allowed to make adjustments based on what title shows. Some mineral buyers will purposely make an offer based on information they know is false! Why would they do that?
Using the example above, let’s say the mineral buyer knows you are leased at 12.5% and you only own 5 net mineral acres. After they run title, you’ll learn the bad news. Their offer is going to automatically adjust from $10,000/acre to $5,000/acre due to your lease being 12.5% instead of 25% (half as much). In addition, it turns out that you only owned 5 net mineral acres instead of 10 net mineral acres. What just happened to your offer? You assumed you were going to be paid $100,000 at closing, but due to adjustments, you will only get $25,000 (5 net acres x $5,000/acre). What in the world happened?!?!
If you don’t understand net mineral acres vs net royalty acres, lease royalty rates, unit sizes, decimal interests on check stubs, and how to properly structure a contract, you should not be selling mineral rights in Texas on your own.
This is yet another reason we recommend working with a reputable mineral rights broker. A lot of mineral owners try and navigate the process themselves and end up getting taken advantage of.
Selling Mineral Rights in Texas Post Covid
The world has obviously changed a lot since the discovery of the Coronavirus. At the beginning of 2020, no one could have seen the impossible situation that oil and gas would be in just a few months later. After Coronavirus hit, the demand for oil dropped substantially. At the same time, the US was producing a massive supply of oil and OPEC was disagreeing about production cuts. The caused oil to briefly trade negative.
But the good news is that as we are emerging from the pandemic, mineral and royalty buyers are putting their money back into the market. There is a renewed optimism and that is very often the best time to capitalize when selling.
With both gas and oil prices on the rise, selling now can make good sense.
Questions about Selling Mineral Rights in Texas?
Before you sell mineral rights in Texas, fill out the free consultation form below. We can help point you in the right direction. We are happy to help answer any questions you have. Whether you want to sell mineral rights in Texas or simply want to better understand your situation, fill out the contact form and we will quickly answer your questions!
