We get a lot of questions from readers about the market value of mineral rights. This is a common question because it’s difficult to find good information online. Today we are going to tell you everything you need to know about the market value of mineral rights. If you are thinking about selling mineral rights, this guide will set you up for a successful sale and the best price.
Myths about the market value of mineral rights
We talk to a lot of mineral owners who fall into the same trap. They believe the market value of mineral rights is based on what others got. They also do not understand that timing plays a crucial role in value. If you take away one thing from this post remember this. Market value of mineral rights is based on what a buyer is willing to pay TODAY for your property! There is simply no other measure for the market value of mineral rights.
Let’s dive a little deeper into both of the issues that make it difficult to understand the market value of mineral rights.
Rumors do NOT indicate market value
If you read mineral owner forums or browse the web, you’ll see an obscene amount of misinformation. There will be a story floating around about 1 person who got $10,000 acre in special county, North Dakota. All the sudden every mineral owner believes their property is worth the same thing. That’s simply not how it works. Even if your property is in the same county AND located very close to that property, it’s unlikely to be worth the same amount. When you based the value on what someone else received, you are setting yourself up for failure. We have seen a lot of properties sold. The numbers we see posted online are rarely even in the ballpark of what reality is.
Timing plays a crucial role in market value
Prices fluctuate extremely fast. The market value of mineral rights can literally be cut in half or double with a few months. There are a huge number of factors at play. Things like oil prices, operators in the area, recent drilling success/failure, and many other factors play a role. The market value of mineral rights can fluctuate so quickly that even if you had accurate data on all mineral rights sales you would not be able to rely on it.
No reliable source for the market value of mineral rights
Another thing mineral owners don’t realize is that there is no reliable source of information. The sale of mineral rights is not public record. This means that when mineral rights are sold the price does not get posted. When you sell a home there is a lot of information to help you out. You can look at surrounding properties, recent sales, square footage, etc and quickly determine value. It does not work like that with mineral rights. There simply is no way to find out the exactly market value of mineral rights. The best we can do is estimate the value of mineral rights and that’s purely a guess.
Maximize the market value of mineral rights
Now that you understand some of the pitfalls in figuring out the market value of mineral rights, how can you possibly maximize value? The key to selling mineral rights for maximum value is competition. With no way to gauge value ahead of time the only way to ensure a good price is competition. When you sell mineral rights you need multiple buyers competing. Mineral rights buyers love to take advantage of mineral owners. They know you don’t understand how much your property is worth. They frequently make low ball offers and many mineral owners accept!
If you want to sell mineral rights for maximum value list your property at US Mineral Exchange. It’s the only way to ensure you are getting the best price. Doing so will get your property in front of thousands of buyers. These buyers bid each other up and force the price to go higher. This allows you to pocket as much as cash as possible. Without a reliable way to determine the market value of mineral rights, listing your property online is the best option. We recommend US Mineral Exchange because they have a consistent history of helping mineral owners get the highest price.
Estimating the market value of mineral rights
We just got done telling you that it’s not possible to know the market value of mineral rights. That’s true! However, we can make an estimate of the market value of mineral rights. Keep in mind that this is just an estimate. The true market value of mineral rights can only be determined when you sell mineral rights. The estimates of the market value of mineral rights we provide should be taken with a grain of salt. Your property could be worth significantly less or significantly more. Below are the most accurate estimates for the market value of mineral rights you will find in the entire industry.
The market value for oil and gas royalties
If you receive an oil and gas royalty check each month we can estimate value with at least some accuracy. 80% of sales fall in the range listed below. That’s still a big range and big margin of error, but it gives you a rough estimate. To see the market value of mineral rights for oil and gas royalties, enter your average check amount:
The market value of leased mineral rights
If you property is leased that’s a good sign. An operator may drill soon and you will start getting royalties. The market value of mineral rights that are leased is 2x to 3x the lease bonus. This is just a rule of thumb for the market value of mineral rights. It could be more or less than that depending on your royalty percentage, when you leased, who leased it, etc..
The market value of non-leased and non-producing mineral rights
If you own a property that is not leased and not producing there will not be much demand. Buyers will need to hold your property for 10+ years to start getting royalties in most cases. Unless you have been leased within the last 5 years it may not even be possible to sell. With oil prices so low, buyers are only interested in the best possible properties.