If you’re thinking about selling mineral rights, you might be considering a mineral rights auction in North Dakota. Before you do, it’s important to weigh all your options. Mineral rights are a little different than most property. Compared to a home, a car, or even personal property, mineral rights are very unique. The value of each individual property is very different from one another. There is no standard for how to value mineral rights.
What does this mean for you? It means that a mineral rights auction is not the best way to sell. The reason is that getting the best price means finding the right buyer.
Disadvantage of a mineral rights auction
Selling property via auction is a common way to get rid of property. It generally works well because you have a property where the value is established. Buyers will come in and bid the property up around the known established price, and you’ll walk away with a ballpark price point that’s reasonably fair. Mineral rights are very different. There is no established value. Getting the highest price involves two things:
- Getting the property in front of the largest number of buyers
- Negotiating the best possible price among those buyers
A lot of auctions have very limited reached. They may attract a handful of buyers at best. You have to get lucky in two ways when you auction mineral rights in North Dakota. You have to select the right company to auction your property with AND hope that the right buyer shows up within the set period of time. Timed auctions simply don’t work well with mineral rights. Some properties need more time than others. If you force your property to sell in a very specific period of time, you may find yourself selling below market value. The right buyer may simply not be around at the time you wish to sell. This can have a huge impact on price.
Another key to getting the best price is negotiation. If you leave the process up to chance and let buyers bid without negotiating, you open the door to all sorts of problems. There are terms that are involved with every sale. The closing process, due diligence period, is it an option or a purchase and sale agreement, escrow, and many more. Every buyer does it differently and these points are all negotiable.
Beware phantom auctions
There are a number of mineral rights auction companies who are simply phantom auctions. A phantom auction is when a company claims to be auctioning your property, but there is no auction. They simply gather your information as any other buyer would. They then buy the property themselves or market it to a select group of buyers they know who give them a big kick back. It’s easy to spot a phantom mineral rights auction. Look through their website and you will find that no actual auction exists. There are no properties listed and no bids taking place with current pricing displayed. There simply is no actual auction taking place.
Alternative options to a mineral rights auction in North Dakota
A mineral rights auction in North Dakota simply isn’t the best way to get your property sold for the highest value. We recommend working with a reputable broker like US Mineral Exchange. They will get your property in front of thousands of buyers. These buyers compete against one another to drive up the price. This ensures you are paid the best price possible. There is no forced time limit on the sale so you can wait until the right buyer comes along so you aren’t forced to sell! In addition, they will negotiate on the best possible price on your behalf.
