Getting The Most From Owner Financed Land For Saleby Robert F. Read My Articles, Learn More... Owner financed land for sale is a very common way to handle a land deal, but buyers should be aware that there are many different ways for the financing to be set up. Each method offers advantages, and one of them will no doubt be right for you.
Getting a conventional mortgage loan from a bank for raw land is difficult. Banks understand the value of raw land, but they prefer not to deal in real estate that has no structures in place. Banks are more likely to offer mortgages on land that has utilities or sewerage in place, but even that might not be enough to get the same kind of terms as you would if there was a building on the property.
Banks will be more interested in land loans if the land is already zoned for future construction and the plans are in place and approved. The bank really doesn’t find the land portion of the deal more attractive, but will offer to finance the land as part of the overall project to spread the risk over the whole project.
A Great Alternative to Third Party Loans
When you purchase land you’ve found through intermediaries like Landzilla.com, owner financed land for sale is a great way to avoid a lot of the paperwork necessary for third party financing. Because the owner is selling it to you, they already know all the details of the value of the land, and have a vested interest in helping you to purchase it. You won’t need a registered survey, title search, title insurance, third-party appraisal, or attorneys unless you want them. That can save you a lot of money and a lot of time.
Flexible Financing with No Qualifying
Owner financed land for sale makes perfect sense for the seller. They already own the land, so accepting it as collateral on the loan is not a burden to them. If the buyer is unable to follow through with the terms of the loan, they’ll recover the land and be allowed to keep any money they received from structured payments. That allows them to offer financing without a lot of pre-qualifying information.
A Down Payment Should Be Enough
Owner financed land for sale deals are normally offered to anyone that is willing to place a substantial down payment on the property. No matter how large the required down payment is, it will probably be much less than the down payment required by a traditional lender. Getting a mortgage from a bank for raw land might require 50 percent down. Owner financed land sales usually require little more than a token down payment, followed by steady payments.
Land Contracts and Trust Deeds
Owner financed land for sale deals can be structured like traditional loans or a contract. Land contracts are an agreement that requires regular payments, usually with a balloon payment at the end. The buyer doesn’t have legal title to the land until it’s finally paid off. Trust deeds turn over ownership of the land to the buyer immediately, but the seller holds a mortgage on the property like a regular bank would. The land acts as collateral on the note and the transfer is permanent unless the buyer defaults on the payments.
Created on Dec 31st 1969 19:00. Viewed 0 times.
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