Should You Finance Your Land and Farm Sale?

If you are having a hard time selling your land and farm listing, seller financing may the solution.  Many sellers are turning to this option for some obvious benefits such as:

  • Land and farm listings that sell faster – Even buyers with good credit are having a hard time getting financing.  Offering seller financing is an added benefit that can help a buyer choose your property over competing listings.
  • Lower closing costs – When you eliminate the bank, you eliminate many of the fees such as origination fees, service fees, and more.
  • Quicker sales process –You and the buyer can close the deal as quickly as you like.

Some less-obvious, but perhaps more attractive reasons to consider seller financing for your land and farm sale are:

  • Tax incentives – With installment payments, you pay taxes over the life of the loan instead of one lump sum.
  • Cash Flow – For some land and farm sellers, a steady cash flow over several years is very attractive.
  • A better return on investment – Investing in your land and farm sale can earn higher interest rates than traditional investments like money markets.
  • A higher sale price – When you cut out the bank and closing costs, you may be able to raise your listing price while still attracting buyers.

Of course, there are some risks associated with seller financing.  If a buyer defaults on the purchase of your land and farm and decides to damage it on the way out, you will be left holding the bag for any repairs.

To lessen the risk of default, run a credit check on the prospective buyer.  Also request a larger down-payment.  This will further qualify the buyer and ensure that he or she has a larger stake in the deal.

Seller financing offers benefits to both buyers and sellers of land and farm properties.  The key is to make sure that, as a seller, you go into the process well aware of the benefits and risks.