I was recently asked by a buyer friend/client about whether the owner of an un-built lot that interests him would consider seller financing. Here are some things to consider:
-most banks don't offer land loans. It makes sense when you consider risk from their perspective. Unimproved land (lots) are more risky because without homes on them, they are far less liquid than properties with homes on them (improved).
-smaller local banks are more likely too; they "know" what they are lending on better than the bigger guys.
-most sellers want to sell because they want a lump-sum payment in order to buy something else, fund retirement, etc. While there are some exceptions – people who don't know where they would put cash if they get it because they don't want to buy more real estate and don't like stocks/bonds – most sellers turn to seller financing as a 2nd option. That is, if they can at least get someone to pay them a down payment and then monthly payments, they'll be getting some value out of their asset, but…they'd rather avoid the hassle and get the money quickly.
-so, if they think you can get approved by a lender, they will prefer that.
-and if they think you can't get approved by a lender, they will consider you a higher than normal risk, and will want to charge you more for the loan (higher rate).
-so, most buyers who are able to get loans end up doing so.
-call with questions!