First land deal and a lender just asked you to wire a fee before closing? Stop. NEVER pay a lender or broker anything before closing. Not for an appraisal, not for underwriting, not to lock a rate.
If this is your first land deal, asking a lender "is this legit?" can feel paranoid, or even rude. Ask anyway. A real lender expects the question and has easy answers. A fake one gets vague, pushy, or in a hurry. Here is how I would check any land lender, including us.
Should I Ever Pay a Lender Before Closing?
No. A real lender's fees show up on the settlement statement and get paid at closing through title.
On a private land loan, the lender's fee, your title costs, and recording fees are all listed on the settlement statement. The title company or closing attorney collects the money and pays everyone at closing. If a lender asks you to wire a fee to them before that, for an "application," "underwriting," or "to lock the rate," treat it as a red flag.
Scams tend to follow the same pattern: a quick approval, a great rate, and then a small fee that has to be wired today. Once it is sent, it is gone. We never collect anything before closing. Every dollar we charge is on the settlement statement.
Takeaway: money moves at closing, through title, not by wire to the lender.
What Are the Most Common Up Front Fee Scams?
A fake "appraisal fee" and a broker fee paid up front, by someone who then disappears.
I hear about these all the time. The borrower gets a fast approval and a great rate. Then comes a request: wire money for the appraisal, or pay the broker's fee now so they can "submit the file." The money goes out, the phone stops being answered, and the deal never closes. My rule is simple: never pay a lender or broker anything before closing.
The appraisal fee scam. The "lender" says it needs an appraisal and asks you to send the fee directly to them, often by wire, Zelle, or app. No appraisal ever happens. On our loans there is no appraisal at all; we value the land ourselves from recent sales.
The up front broker fee scam. A broker promises to place your loan and wants a fee first, for "processing," "underwriting," or "to lock the rate." A real broker gets paid at closing, on the settlement statement, out of the loan. If they want to be paid before there is a loan, there may never be one.
Other names for the same thing: application fee, commitment fee, rate lock deposit, loan insurance, fee to release funds. Different words, same scam.
Takeaway: if anyone wants money before closing, walk away.
Already sent money? See what to do if you were scammed by a lender or broker. Working with a broker? Read how to avoid loan broker scams.
Is This Lender Legit? Quick Check
Answer six questions about the lender or broker you are talking to. Nothing you enter is sent anywhere.
- Did they ask for any money before closing (appraisal, application, underwriting, deposit, or broker fee)?
- Do they want it by wire, Zelle, Cash App, crypto, or gift card?
- Did they approve you without asking about the land, the price, or how you will sell?
- Can you find their company on the state's business entity search?
- Did a title company you looked up yourself confirm they close loans with this lender?
- Did they contact you first on Facebook, LinkedIn, or by text?
How Do I Check That a Lender Is a Real Company?
Look them up in public records and call people who have closed with them.
A real lender leaves a paper trail: a registered company, a title company that knows them, past borrowers, and recorded mortgages or deeds of trust in county records. Checking takes a little time, and it is the cheapest due diligence you will do on the deal.
- Look up the company on the state's business entity search, in the state where it says it is formed.
- Call the title company the lender says it closes with. Find the phone number yourself, not from the lender's email.
- Ask for two past borrowers or title references and call them.
- Search county records for mortgages or deeds of trust recorded in the lender's name.
- Be careful with lenders who found you first on Facebook or LinkedIn, especially if they only want to talk by text or app.
Takeaway: a real lender is easy to verify, and happy to help you do it.
What Offers Are Too Good to Be True?
Anything that skips the land, skips your plan, or asks for a wire.
Real land lenders take risk on dirt, so they ask about the dirt: access, comparable sales, what you paid, and how you will sell. An offer that never asks those questions, or that beats every other lender by a mile, is selling something other than a loan.
- 100% financing on raw land with no other collateral
- Rates far below what other land lenders charge
- "Loan protection insurance" or a "fee to clear funds" paid by wire
- Approval with no questions about the land or your exit
I would avoid any lender that shows even one of these.
Takeaway: if the lender is not asking about the land, it is not a land lender.
What Fees Are Normal on a Land Loan?
A closing fee, interest, and sometimes an exit fee, all written down before you sign and all on the settlement statement.
Fees vary by lender, but you should see every one of them in writing before closing, and nothing should be collected outside of closing. Here are ours as an example, so you have something concrete to compare against.
- $600 closing fee
- Interest only at 14% (loans of $100K and up) or 16% (under $100K), paid monthly
- 5 month minimum interest
- 2% exit fee when the loan is paid off
- $25 a month servicing
All on the settlement statement. Title, recording, and any county taxes are separate and go to those parties, not to us.
Our fee on an $800,000 loan: $600.
Line 801 is our fee: $600 flat, on an $800,000 loan. No appraisal, no points at closing, no prepaid interest. Everything else goes to title, the closing attorney, the notary, and the county. Line 1304 is a county deferred (rollback) tax on land coming out of farm use, not a lender fee. Interest is paid monthly, and a 2% exit fee is due at payoff, so neither shows up here.
Takeaway: if a fee is not on the settlement statement, ask why.
How Can I Verify Damen Capital?
The same way you would check anyone: call us, look us up, and ask for references.
Damen Capital Fund is a Delaware LLC, founded in 2020. We have funded 500+ loans and over $50M in financing. You can reach me at 302-526-0200 or eric@damencapital.com. Ask for title company references and we will send them.
And because we never collect money before closing, there is nothing to send us up front. You can read more about me on my author page.
Being careful is not being rude. The right lender wants you to check. If you have a land deal and want a real number, I am happy to give you one.
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Get a Free Quote →Real Land Lender FAQ
Should I pay a land lender a fee before closing?
No. A real lender's fees are listed on the settlement statement and paid at closing through the title company or closing attorney. A request to wire a fee to the lender first is a red flag.
Should I pay an appraisal fee or broker fee before closing?
No. Never pay a lender or broker anything before closing. Fake appraisal fees and up front broker fees are two of the most common loan scams. A real broker is paid at closing on the settlement statement, and on our loans there is no appraisal at all.
How can I tell if a private lender is legitimate?
Look the company up on the state business search, call the title company it closes with using a number you find yourself, ask for past borrower or title references, and search county records for mortgages recorded in its name.
What are signs of a fake land lender?
100% financing on raw land with no other collateral, rates far below other land lenders, a "fee to clear funds" or insurance paid by wire, and approval with no questions about the land or your exit plan.
What fees are normal on a land loan?
A closing fee, interest, and sometimes an exit fee, all in writing before you sign and all on the settlement statement. Ours are a $600 closing fee, 14% or 16% interest only, a 5 month minimum interest, a 2% exit fee, and $25 a month servicing.