The way I've heard this working is: you approach the landowner with a really good bid for his land ($5m for his property worth $4m). He agrees to sell, but you have trouble coming up with the money, and ask him if he can keep the offer open for a year or so. He isn't thrilled with this, but you offer him $250k up front, to be forfeited if you don't come up with the rest of the money. This makes the $250k look more like a token of good faith and less like an undervalued option, but it comes to the same thing.