If you’re looking to buy land in Arizona, or anywhere in the Southwest, then you’re probably thinking about your budget and how you can best make the purchase. If buying in cash isn’t an option for you, then you’ll want to consider a different form of financing. Whether you call it “owner” or “seller” financing, it’s basically the same thing. In this post, we share how owner financing works and the steps to use it.
Buying any property can be costly, which is why many buyers go to the bank to get a mortgage. But a bank mortgage isn’t right for everyone, and often times, banks won’t offer mortgages to buy vacant land. Here’s where owner financing comes in. Owner financing is where the seller “sells” you the land but instead of paying one lump sum of cash, you simply pay the seller a down payment then monthly payments (like mortgage payments) until you’ve paid the full purchase price.
To you, it’s just like a mortgage; to the seller, it’s a regular amount of money every month. It can be win/win.
Here’s how owner financing works:
Step 1. Do Your Homework
Read up on owner financing and ask questions of people who know about it. Learn everything you can about owner financing, including your local laws. Every state, county, and city may have its own regulations about mortgages, real estate loans, owner financing, and legal agreements. You could also consult a lawyer, just to make sure you’re covered.
Step 2. Ask Sellers
While you’re looking at land to buy, ask sellers if they’d be interested in an owner financing scenario. Most reputable land selling companies like Southwest Land Deals already have financing options ready to go to make things easier for buyers. We are up front with our clients and will work with you to set up payment plans that work for everyone.
Step 3. Be Prepared
If you’re not working with a land sales company, you will probably encounter sellers who might be interested but don’t know a lot about seller financing, so be prepared to explain it to them and help them understand why they may want to consider it. But, if you’re buying land from a professional company, this won’t even be an issue. We have years of experience with how owner financing works and are happy to help set it up for you.
Step 4. Close The Deal
When you find a seller who is open to owner financing, create the agreement and buy that property! Make sure all parties involved are clear on the term length, monthly payments, and any initial down payments you may be required to make. Once it’s all settled and in writing, you’re good to go.