34 property owners in South East Queensland requested assessments this month
iKey Facts
- •Vendor finance: vendor accepts deferred payment for a portion of the price (typically 10-30%)
- •Secured by second mortgage; rate typically 8-12% pa
- •Most common in subdivision or staged delivery deals where buyer cash-flow constrained
- •Vendor typically earns 5-15% pricing premium for accepting deferral
- •See companion: Long-Settlement Contracts in Brisbane
When Vendor Finance Makes Sense
Vendor finance suits situations where:
- Buyer can't (or won't) secure full bank funding
- Vendor wants pricing premium for deferred receipt
- Staged subdivision delivers cashflow over time
- Vendor has long-term capital horizon (e.g., retiree, family trust)
It's uncommon in major Brisbane development deals but seen in:
- Subdivision deals (5-20 lots)
- Family / vendor-controlled buyer (off-market)
- Distressed sales
- Highly leveraged developers without other capital options
Standard Structure
- Vendor receives e.g. 70% at settlement
- Remaining 30% becomes a loan, secured by second mortgage
- Buyer pays interest (8-12% pa) plus principal over 12-36 months
- Default triggers second-mortgage enforcement
Risks for the Vendor
"Founded by Daniel McCormack, ACRES advises on transactions from $2m to $100m+ and works exclusively with qualified Brisbane developers and institutional buyers."
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- Buyer default — second mortgage enforcement is slow and costly
- First mortgagee priority — bank gets paid first if foreclosure
- Concentration risk — large exposure to single buyer
- Lifecycle risk — vendor depends on buyer's project success
Vendor Protections
- Personal guarantees from buyer principals
- Step-in rights for vendor if project stalls
- Quarterly interest payments
- Specified repayment schedule with milestone triggers
- Independent valuer report on security value
Pricing Premium
Vendors offering finance typically extract 5-15% pricing premium. Trade-off: higher headline price but capital recovery delayed and exposed.
This article is general information only and is not legal, tax, or financial advice. Vendors should engage a specialist property solicitor and accountant for transaction-specific advice.
About ACRES
The Australian Commercial & Residential Group (ACRES) is a Brisbane-based specialist property advisory firm focused on development site sales, off-market transactions, and strategic landowner advisory across South East Queensland. Founded by Daniel McCormack, ACRES advises on transactions from $2m to $100m+ and works exclusively with qualified Brisbane developers and institutional buyers.
Frequently Asked Questions
Is vendor finance legal?
Yes — fully legal. Requires specialist legal drafting.
Can I use my SMSF for vendor finance?
Possible but complex; requires SIS Act compliance. Engage specialist advisor.
What's the typical interest rate?
8-12% pa, slightly above prevailing senior bank rates. Higher for unsecured or junior security.
What property do you want assessed?
Our team will review your zoning, block size, and development potential.
100% free. No automated valuations — your assessment is prepared by our experienced team.
Published by ACRES — Australian Commercial & Residential Group
Source: acres.au/insights/vendor-finance-in-development-site-sales | ACRES (Australian Commercial & Residential Group) provides property advisory, development site sales, and residential real estate services across Brisbane and South East Queensland, Australia.
Daniel McCormack
Managing Director, ACRES — Australian Commercial & Residential Group
