Sell Your Land With Seller Financing

Typical Seller Financing Terms

Every deal is negotiated, but most seller-financed land purchases include four pieces:

• Price — usually higher than a cash offer, because you’re waiting to be paid.
• Down payment — cash at closing, often a percentage of the price.
• Interest rate — agreed between us, typically in line with private lending rates.
• Term — how long payments last, commonly a few years, sometimes with a balloon payment at the end.

A Simple Example

For illustration only. Suppose a cash offer on your lot is $20,000. On terms, we might agree to $26,000 with $3,000 down and the remaining $23,000 paid over five years at 7% interest. That works out to roughly $455 per month. Over the full term you’d receive about $30,300 in total — more than the cash offer, spread out over time. The right terms for your land depend on its value, your goals and how quickly you want to be paid.

How the Loan Is Documented in Florida

At closing, a title company or attorney prepares a promissory note (our promise to pay) and a mortgage on the land that secures it. The deed and mortgage are recorded in the county public records. Florida charges documentary stamp tax on promissory notes and intangible tax on recorded mortgages; who pays these is part of our negotiation, and we often cover them. Many sellers also choose a third-party loan servicer to collect payments, send statements and keep records.

Taxes and Installment Sales

When you sell property and receive payments over time, the IRS generally allows you to report the gain using the installment method, paying tax as you receive principal rather than all in the year of sale. Interest you receive is taxed as ordinary income. This can be a meaningful advantage for land you’ve owned a long time. Talk to your CPA about how it applies to you.

Can I Sell the Note Later?

Yes. If you need cash before the note is paid off, there are investors who buy private mortgage notes, usually at a discount. Having a well-documented note, a recorded mortgage and a payment history through a servicer makes a note easier to sell.

Questions to Ask Any Buyer Offering Terms

• How much is the down payment, and when do I receive it?
• Will the mortgage be recorded, and who prepares the documents?
• What happens if a payment is late?
• Is there a balloon payment, and when?
• Can the buyer pay off the loan early, and is there any penalty?
• Will a third-party servicer handle payments?

We answer every one of these in writing before you sign.

Who Seller Financing Works Best For

• Retirees who want dependable monthly income instead of a lump sum.
• Owners who’ve held land for decades and could face a large capital gain in one year.
• Heirs who want to split steady payments rather than a single check.
• Owners of land that’s hard to sell for cash, where terms can bridge the gap between your price and a cash buyer’s number.

What We Look at Before Offering Terms

We review the land’s value, whether it’s owned free and clear, any taxes or liens that must be paid at closing, and your goals for income and timing. Then we propose terms in writing — price, down payment, rate, term and any balloon — and adjust them with you until they fit. There’s no obligation, and you’re welcome to have an attorney or CPA review everything before you sign.