Seller Carry Explained: Land Purchase Strategy That Works

Seller financing—also known as a seller carry—is an increasingly attractive option for buyers looking to purchase land, especially when traditional lenders are hesitant to finance raw or undeveloped property. Whether you're an investor, a future builder, or simply looking for a place to hold, seller carry terms can create a win-win scenario: the buyer gets flexible financing, and the seller earns steady returns with the property as collateral. Below is an example of how a seller carry deal might be structured on a $100,000 piece of land, complete with common terms and a breakdown of what both parties should expect.

1. Purchase Price:

$100,000

2. Down Payment:

Land purchases usually require a higher down payment due to increased risk and lack of improvements. A common range is 25% to 50%, depending on the seller’s comfort level.Example:

• 30% Down Payment = $30,000 upfront

• Buyer brings $30,000 cash at closing

3. Seller-Carried Loan Terms:

• Loan Amount: $70,000

• Interest Rate: 8% to 10% is typical for land, since there’s no home to secure the loan

• Term: Often 3 to 5 years with a balloon payment

• Amortization: Can be interest-only or amortized over 15 to 30 years

• Balloon Payment: Full remaining principal due at the end of term

Example Monthly Payment (Amortized):

• $70,000 at 9% interest, amortized over 15 years

• Approx. $711/month (Principal & Interest)

• Balloon payment due at end of 5 years

4. Additional Terms:

• Buyer is responsible for property taxes, insurance (if applicable), and any maintenance

• Late payment clauses and default remedies outlined clearly

• Typically includes no prepayment penalty

• Recorded Promissory Note and Deed of Trust or Land Sale Contract depending on state

• Seller maintains lien on the property until paid off

5. Due Diligence:

• Title search and title insurance recommended

• Buyer may need to show basic creditworthiness or proof of funds

• Survey, zoning check, or development feasibility may be important depending on intended land use
  

Key Notes:

• Seller carry on land is common when banks won't finance raw or undeveloped property.

• Higher interest rates reflect increased risk and lack of structures.

• Balloon structure gives buyer time to improve, entitle, or hold for appreciation before refinancing or resale.

• Seller retains security interest via deed, protecting their investment.

When done correctly, seller carry offers a creative and practical path to land ownership. It can simplify the transaction, open doors for buyers who might not qualify for traditional loans, and give sellers an opportunity to earn passive income while retaining control over their asset until it’s fully paid off. As always, both parties should involve qualified professionals—such as real estate agents, attorneys, or title companies—to ensure the agreement is fair, legally sound, and properly documented. With the right structure in place, a seller-financed land deal can be a smart move on both sides of the table.

This content is for educational purposes only and should not be considered legal or financial advice. Please consult with a licensed real estate professional, attorney, or financial advisor to determine if seller financing aligns with your specific goals and circumstances.