According to the LANDTHINK Pulse results, 36.3% of our audience said that a phone call to a local loan officer is the preferred way to begin the land financing process. Yep, that’s right- our results indicated that when it comes to a complex transaction like a loan, the lowly phone call is making a comeback. The rise of the internet has opened up new possibilities for communicating, from emailing and web chats to mobile video chatting and messaging apps. Lenders have the ability to communicate with land buyers across multiple channels, but when tackling something as complex as seeking financing for a piece of land, buyers prefer to take it offline.
Last month, the January Pulse asked: How are you most likely to begin the land financing process?
January Pulse Sponsored by
Recent technology has allowed Americans to get away with as little verbal communication as possible, and in the last decade people developed a real distaste for phone calls. But based on last month’s Pulse results, buyers want to speak directly with a qualified expert when making a significant decision, such as applying for a loan to purchase rural land. Buying land, making improvements to existing land, or purchasing a farm or timber operation is a major undertaking, and one of the first steps is deciding how to pay for the purchase. There are many methods to fund a land transaction, as Robert King covered in his LANDTHINK article, Funding Your Land Investment, but most choose to take out a loan to finance their purchase.
Land is usually bought with cash and a loan, with the buyer paying a decent amount of cash down and financing the remaining balance. The amount of cash required as a minimum down payment is at the discretion of each individual lender. Most land buyers looking to secure a land loan most provide at least 20% down, although it’s not unheard of for lenders to require 50% or more on rural land.
Most any land agent will tell you that local lenders (local to the property) are a good source for land loans as well as Farm Credit institutions. Buyers should keep in mind that lenders have strict requirements in place for those seeking approval for a land loan. Those looking to purchase should not be discouraged from attempting to obtain a land loan. Lenders and land agents will work closely with buyers and do the best they can to help buyers obtain financing for land.
“Applying online” came in a close second (28.0%) as the way buyers would most likely begin the land financing process, followed by “visit a local branch” (21.0%). So, this month’s results beg the question, “Which is better, picking up the phone, applying online or making a visit to a local branch?” If you’re communicating with the SAME local lender by phone or in-person versus online, there is not much difference; working with a lender that understands land and land issues is what’s important. The purchase of land is often one of the biggest decisions a person will make in their lifetime with significant long term financial implications for the buyer. Most people want to be able to meet (and shake the hand of) the loan officer they are dealing with to close the transaction.
It’s often difficult for a buyer to find the right property that meets their unique needs, and in the current competitive land market, buyers should be ready to proceed and move quickly when they find land they want to purchase. Last year, LANDFLIP made it easy for buyers that visit their network to connect with a lender early in the search for land online, joining forces with Farm Credit institutions throughout the Southeast to help buyers gain access to land financing.
The results were all over the board, but it seems there are still certain tasks that a majority of people just don’t feel comfortable doing online- such as applying for a land loan. Some buyers would much rather speak with a local lender on the phone than click back and forth between web browsers. The internet has made the world a smaller place in so many ways, but real-time, authentic human interaction through phone calls and face to face meetings is still an affective way lenders can serve potential buyers and earn their trust.
The LANDTHINK audience certainly expressed mixed opinions on how they would begin the land financing process. The results of our informal online survey were all over the board, but the largest percentage (36.3%) indicated that would most likely make a call to a local loan officer, followed closely by 28.0% of our audience, who indicated that they would prefer to apply for financing online. Only 21.0% of respondents said that they would visit a local branch to initiate the financing process. Only 14.6% said they would ask a friend for a recommendation.
We were pleased with the large number of Pulse responses, and we thank everyone who answered the Pulse and shared it on social media with friends and connections in the land industry. LANDTHINK would like to extend a big thank you to First South Farm Credit for sponsoring the January Pulse and for coming up with a very interesting question to pose to our audience. As a part of the national Farm Credit System, First South Farm Credit has been financing rural America since 1916. First South has nearly 50 locations throughout Alabama, Louisiana and Mississippi and are ready to help make your dream of land ownership or farming your own land a reality.
Become a Pulse sponsor! It’s a great way to ensure your brokerage is the first one buyers and sellers call when they have a need to buy or sell property. You’ll get insane exposure on Social + Email + Web. That’s 500,000+ monthly eyes on you! Once you have it, you won’t want to give it up! Pulse sponsorships are offered on a first come first serve basis and are subject to certain limitations. If your business would be interested in sponsoring a Pulse question, please contact us soon.
Do you have a Pulse question you’d like to suggest? Submit your question and we might choose yours!
We want to know what you think about our February Pulse question, chosen and sponsored by National Land Partners. What are the TOP 3 amenities you would look for when searching for property in a rural community? Answer now.
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