Selling Royalties Questions and Answers
Selling Royalties Questions and Answers
Can you sell a portion of your royalties?
Yes! You can sell just a portion of the royalties you receive each month. If you get an average of $500 per month, you could elect to sell 50% of your interest or $250 per month of the royalties. You will get an upfront cash payment for the 50% interest you sold and you will still continue to receive monthly income from the royalties. When possible, it’s best to sell only a portion of your royalties so you are still entitled to future income.
How much are my royalties worth?
You can expect to receive anywhere from 1.5 years to 7 years of the average monthly amount you receive. There are a number of factors that affect the value or your royalties. Check out our more in depth article to properly calculate the value of your royalties and better understand the factors that affect the value.
Why do my royalties checks change in price or value?
There are a number of reasons you royalty checks vary from month to month. The fluctuation in value of royalties happens primarily for two reasons. First, the production of the well can vary month over month causing the amount of royalties paid out to increase or decrease based on the production. Second, your royalties value may go up or down because of the price of oil and/or gas. As oil and gas prices fluctuate, it changes the amount you are paid out in royalties.
How do I sell my royalties?
There are a number of ways to sell your royalties. You may have received letters in the mail offering to purchase your royalties, spoken with a broker, or found a website online offer to buy your royalties. While there are many options available to sell royalties, the best way to sell your royalties is by allowing as many buyers to compete to pay the highest price possible. If you were selling a house, would you want one person to see the house or 100? The more people that have access to see your royalties and make an offer the higher price you will receive.
To get the most exposure for your property, we recommend listing your mineral rights online with US Mineral Exchange. We recommend their services because they get your property in front of thousands of potential investors while also looking out for your best interests.
I got letter in the mail to sell royalties, is it legitimate?
In most cases, a letter received in the mail offering to purchase your minerals is legitimate. However, these letters almost always represent an offer that is far below market value. There are a number of companies who offer to purchase your mineral rights well below market value so they can then resell them for an event higher market price. If you receive one of these letters, we highly recommend contacting us to discuss the offer and consider the terms.
When should I sell royalties?
Determining when to sell your royalties is generally a personal question. During the year, there is no good or bad time to sell royalties. At all times during the year, the average price you have received recently will be the single biggest indicator of the value. Selling your royalties during a specific time will typically not have an impact on the value. However, you should consider taxes when selling your royalties.
Should I find someone to manage my royalty income?
If you are having a difficult time managing the tax portion of royalties, concerned you aren’t getting your fair share, or unfamiliar with royalty payments, having someone else manage your royalty income can be a viable option. A royalty manager will keep track of tax implications so there are no surprises at tax time, help review your payments to ensure they are correct, and help you keep track of royalty related income.
I inherited royalties but I’m not receiving a check, what do I do?
If you have inherited royalties but are not receiving a check, usually the reason is that the Oil and Gas company has not processed the appropriate paperwork on their side. Your best option is to gather all documentation and proof that you are now the owner of the royalties and then contact the “Division Orders” department of the Oil & Gas company that operates the well you should be receiving royalties on. You can provide them with the paperwork you have and that should speed up the process of getting any royalties you are entitled to.
Should I sell my royalties?
Are you trying to decide if you should sell your royalties? There are a number of things to consider when you decide to sell your royalties. Our “Should you sell royalties” article covers this topic in depth. In short, it’s best to hold onto your royalties when possible but sometimes there is a need for immediate cash. We recommend trying to sell just a portion of your royalties.
Where can I sell my royalties?
If you do decide to sell your royalties, it’s important to get the highest value possible when you sell. Although there are a number of options for selling royalties, we highly recommend the services of US Mineral Exchange. The reason we recommend US Mineral Exchange is because they work to get you the highest price possible for your royalties. By listing with US Mineral Exchange, your property gets exposure to thousands of oil and gas investors around the country ensuring that you get the highest price possible.
What is a royalty percentage?
The royalty percentage determines how much share of the production you will receive. When you sign an oil and gas lease, you will typically be paid a lease bonus up front and also agree to a royalty percentage. The royalty percentage in your lease will determine how much cash you receive from the production since your share will be calculated based on this number. As a mineral owner, you want to negotiate the highest royalty percentage possible.