One of the very best ways to sell vacant land is to provide the financing. In fact, in today’s market where banks are not lending, you are cracking your field of potential buyers wide open by offering terms.
One of the best reasons to seller finance your land is the fact that you can charge market value or close to market value for the property. Cash buyers are often savvy enough to ask for a discount. Someone who is buying on terms is usually not in a position to drive a hard bargain. You can maximize the profit on your deals.
If you offer low down payments, a low monthly payment, and perhaps even a no qualifying deal, you can ask for full market value. Why? Banks don’t like to lend on land. Banks like to see a 50% loan to value on land, so it means that any buyer, even with good credit, would have to pay 50% down. If you offer a buyer a 10% or 20% down payment deal, you have just eased a large financial burden for them. In fact, you have opened up your market to people who don’t have a large down payment saved. Then you carry the balance on monthly payments. That gives your prospects more buying power. Because nobody else is willing to offer terms, you can charge a retail price for your property and you can charge a premium interest rate, too.
Here’s an example. Let’s use a lot with a nice round retail market value of $10,000.
You buy the property from a “don’t-wanter” owner for $1,000. You turn around and market that property, either using your buyers’ list, your website, online classified ads or an online auction […]