When Looking At Land For Sale, Owner Financing Should Be A Top Priority

When people start looking at land for sale, owner financing isn’t typically one of the first things that come to mind. They often think about where they want the land to be located, how much it will cost, and how practical it is for the purpose they have in mind. Sometimes people want to find a piece of land where they can build their own dream house or they may have something different in mind, such as starting a new business. No matter what the goal is for the property, meeting the financial requirements of the down payment and the monthly payments will make a big difference for a long time to come. The worst thing anyone can do is over-extend themselves with the hope that they will figure out a way to cover their finances when they have no real plan in mind. In contrast, owner financing can be advantageous to the buyer and seller, providing you with the lower payments you need.

Owner financing works by paying the owner of the property in place of a bank or finance company. A promissory note is used, just as with a traditional purchase, stating the amount that you will pay until the balance is cleared, interest rate, and any consequences that you will endure if you should fault on the loan. In many cases, the loan for the land is for a shorter period of time than a mortgage, often for five years.

Advantages of Buying Land for Sale with owner financed land for sale

Depending on a number of factors, such as the housing market and the economy, mortgages may be difficult to obtain. Under these circumstances, the owner of the land may be willing to do their own financing to make it easier to sell. As a benefit, they will get to collect interest on it just like the bank would. If they are selling the property to obtain the money for the purchase of a new property, they aren’t as likely to agree to owner financing. However, they do have the option to sell your loan and obtain cash. Regardless of whether they maintain the loan or sell it, the buyer has the advantage of getting financing that would otherwise be a problem for them.

More often, you will see land for sale and owner financing together than with properties that have structures on them. Undeveloped land is often purchased as an investment and when the owner finances it, they will continue to gain interest. On the flip side, banks and finance companies are less likely to offer mortgages on undeveloped land.

Advantages for the Buyer

Taking advantage of land for sale with owner financing can offer a few advantages to the buyer. They may have lower closing costs and a lower down payment. Closing is also a much faster process without the loan officers, legal departments and underwriters trying to fit their jobs into the mix. While somewhat unconventional, this method of selling land can be a win-win for buyer and seller alike.