Owner financing is just as it sounds - instead of someone receiving a loan on behalf of land for sale from a bank, the land owner will finance the purchase. The buyer will send monthly payments to the land seller, and the seller will collect interest on the loan. Owner financing is a more feasible way to buy land for sale rather than going to the bank.

A land contract is a legal agreement, or contract used to purchase real estates, such as farmland for sale, cropland, ranch land for sale, or pasture for sale. A land contract is a form of seller financing. It is similar to a loan, but instead of using money from a financier or bank to purchase the real estate, the buyer makes payments to the land owner or seller, until the purchase price of the land for sale is paid in full. The land buyer and seller both sign the land contract containing agreed upon terms and conditions of the land sale. Upon agreement of all contract requirements, including payment of the purchase price over a specified period, the land title shifts from the land seller to the buyer.

Land Contract Beneficial for Both Sellers and Buyers

  • Pros for Land Buyers

A buyer who is interested, but may not have the secure traditional financing, is now able to purchase real estate without credit approval for a loan. Because of credit issues or additional reasons, one may not be qualified to obtain approval for a needed loan. The participants can enter into a sale by land contract so that the buyer makes monthly payments directly to the seller.

  • Pros for Land Sellers

Selling land through a land contract provides more options for potential sellers. Prices may be negotiated for a higher price on the land for sale by offering a financing through a land contract. Cash down payment deposit may be required as well.

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