Beware of Mineral Rights “Flippers”

Here’s a dirty little secret of the mineral rights business.  Many of the companies sending letters and offering to buy your mineral rights do not actually intend to own your minerals for more than a couple of days.  In fact, some of them don’t even have the money to complete the purchase when they send out the letter.

(If you’re interested in tracking the value of your mineral rights over time, you might find our Mineral Rights Price Index interesting.  Updated monthly, our Mineral Rights Price Index tracks the monthly price changes for mineral rights in West Texas and North Dakota, Wyoming, and Colorado based on hundreds of data points for actual transactions in these areas.)

How mineral rights flipping works

Mineral rights flippers usually start off by sending you letters offering to purchase your mineral rights.  You won’t know they are flippers when they contact you.  In fact, their letters usually talk about how they have lots of money to spend and how they frequently buy minerals in your general area to add to their “fund.”  While some of these letters may be accurate, the truth is that many of these folks are just looking to make a little money “flipping” your minerals to someone else.  The flipping process works like this (all numbers for illustrative purposes only).

  • Mineral Flipper knows that Company X is paying $5,000 per net mineral acre for minerals in the area where you own minerals.
  • Mineral Flipper sends out hundreds, and possibly thousands, of letters offering $3,000 per net mineral acre.
  • Some mineral owners who receive the letter decide to sell to Mineral Flipper for $3,000 per net mineral acre.
  • As soon as your sale to Mineral Flipper has closed, Mineral Flipper immediately sells your minerals to Company X for $5,000.  This nets Mineral Flipper an instant profit of $2,000 per acre – money that should have gone into your pocket and not Mineral Flipper.

As you can see, mineral flippers have one key piece of information that unsuspecting mineral owners do not.  They know how much the “end buyers” for minerals, who truly do buy minerals and hold them for decades, will pay for your minerals, and they pay you less than that amount.  This results in a profit for them … and a loss for you.

How to avoid mineral rights flippers

It is obvious that mineral owners are leaving a lot of money on the table when they unknowingly sell to mineral flippers, but how can a mineral owner cut out the mineral flipper “middleman” and instead sell straight to the “end buyer” who will pay the highest price for your minerals?  The problem is that there is no way for you to know whether you are dealing with a flipper instead of an end buyer.  Until now…

Let Shale Marketplace help you.  Our market is made up of end buyers, rather than flippers.  That means our buyers pay higher prices than flippers.  If you’ve got an offer from a flipper, there is a near certainty that we can beat it because we can connect you directly with the end buyer.  Contact us today – it is completely free to you, and you’ll never pay us a fee.

Helpful Resources for Mineral Owners