Sitting on Mineral Rights Can Be a Bad Investment

If you’ve got land with significant gas, oil, or other mineral rights, you may think your best financial option is to just sit tight. You may just want to keep the land as an insurance policy against future financial difficulties. You may also think that you’re likely to get a better deal somewhere down the line when prices are sure to go up.

The truth is, though, that you may very well be limiting your ability to protect yourself financially by refusing to sell now.

To begin with, there’s no guarantee you’ll get a better price tomorrow than you get today. At the same time, by leaving so much investment in your land, you limit your ability to get the liquidity required to truly diversify your investments in a way that will protect you in the case of financial difficulties.

Where does that leave you, then?

It leaves you in a position where you probably need to sell in the near-term instead of the long-term, but you also want to get the most for your land possible so you have the most income to invest in the best and wisest ways.

To get the most for your land, you’ll probably want to work with a mineral rights broker. The Mineral Auction points out several very compelling reasons for this, including:

  • You’ll get the best evaluation before going to sale: Without the help of a broker, you may not get a fair evaluation, meaning you’re leaving money on the table and exposing yourself because of your lack of personal expertise.
  • You’ll get more investors looking at your land: There’s only so much you can do on your own to attract investors. You may have to deal with just the first company that approaches you for your land rights. You’re obviously more likely to get a better deal when you have multiple parties trying to get your land. A mineral rights broker has the ability to bring in more offers to drive the price up.
  • You’ll get a guide through the whole process: Selling mineral rights isn’t necessarily very straightforward. There’s more preparation involved than you might think, and missing out on that early work may cost you a better deal. Working with a mineral rights broker can keep that process on track so that when the right offer comes in, you’re ready.

There’s nothing wrong with trying to handle your mineral rights on your own, or waiting for the market to meet your valuation, but you should recognize that you are taking a risk in doing that. Your land can be a great investment, or it can prove a poor one, just like anything else.

As always, the best security is in diversification, and to diversify, you’ll probably need to sell. And to sell, you will probably need a mineral rights broker. It’s really that simple. But the choice, of course, is yours.

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