Banks love houses. Land, less so. Land loans typically mean fewer lenders, bigger down payments, and higher rates — which quietly shrinks the pool of buyers who can reach your property. Owner financing flips that: the seller becomes the bank, the buyer pool widens dramatically, and the seller often collects a premium price plus years of interest income.
How it works in Tennessee
The structure is old and well-tested. The buyer signs a promissory note for the financed amount, secured by a deed of trust recorded with the county register of deeds. The buyer takes title and possession; the seller holds a lien. If the buyer defaults, Tennessee permits non-judicial foreclosure through the trustee under T.C.A. § 35-5-101 et seq. — no lengthy court case required, which is a large part of why seller financing is workable here.
The terms that matter
- Down payment — enough that the buyer has real skin in the game; on land, 10–20% is a common range.
- Rate and term — many land notes run 5–20 years, often with a balloon; the interest is income to you.
- Taxes, insurance & upkeep — spell out who pays what, and mind greenbelt status: a use change by the buyer can trigger rollback taxes.
- Servicing — a third-party note servicer keeps payments, records, and payoffs clean for both sides.
When it makes sense — and when it doesn't
Owner financing shines when you don't need the full proceeds at once, want an income stream, or own a property whose best buyers — homesteaders, young farmers, recreational buyers — are exactly the people banks underserve. It's the wrong tool if you need cash now, or if the down payment offered doesn't compensate for taking the risk. We model your net proceeds both ways — cash sale and seller-financed — so the decision gets made with real numbers.
One more thing: have a Tennessee real estate attorney paper the deal. Note terms, the deed of trust, and — if a dwelling is involved — federal lending rules all deserve professional drafting. On raw land the structure is simpler, but this is not the place to reuse a form off the internet.
This guide is general information, not legal, tax, or lending advice. Have any seller-financing arrangement drafted and reviewed by a Tennessee real estate attorney.