A few years ago, in a project I led in Romania, we were very close to the quarterly sales target. Very close. The sales team had worked hard, the marketing had produced quality leads, and almost all the units in the first phase were already closed. A few units remained, and a few prospective buyers remained who were at advanced stages of negotiation.
Some of those buyers were excellent. Some, and I remember this because I felt it even then, were under strain. The units that remained were relatively the most expensive in the project, and in the preliminary conversations with several of them you could hear hints. Questions about payment flexibility. Hesitation when we talked about the financing structure. A request to “check a little more” before signing the preliminary agreement.
I knew how to read those signs. I had done it hundreds of times in my role as a lawyer, from the other side of the table, for clients. This time I was on the developer's side, facing the quarterly target, and facing its team waiting to see whether we would close the phase.
I didn't stop.
Not because I didn't understand the risk. Because I wanted to help the developer and his team get the numbers to work out. I wanted to help them close the target. And at that moment, the explanation I gave myself was perfectly reasonable: “There is a preliminary agreement, there is a first payment, and if something goes wrong - we have legal tools.” And that's true. There are legal tools. But legal tools do not prevent a delay in the project. They only deal with it after it has already happened.
Within a few months it happened exactly as I feared: two of the buyers did not manage to complete the bank financing they had planned. One of them tried, on and off, for a long time, until the developer understood that we were only postponing the inevitable. The other side was as hard as you imagine: the procedure of canceling a preliminary agreement, a partial refund according to the mechanism set in the contract, and remarketing the same units, this time with less time left before the final delivery date of the project as a whole.
In the end the units were sold again. The developer didn't lose money on paper. But he lost time, he lost the team's peace of mind during those months, and I personally lost something else - the confidence that I always stop in time.
I think about this every time a developer sits across from me close to a sales target and shows me an “almost closed” buyer. The temptation to push a little more, to ignore the small hint, to give the buyer another round of clarifications instead of asking the direct question - that is not the temptation of unprofessional people. It is a temptation that arrives exactly when you are closest to success, and so it is the hardest to recognize.
Today, in the projects I accompany, as a developer or as a lawyer, I have a rule I haven't broken since: if there is a clear sign of uncertainty in the financing, I stop and ask the direct question before moving further in the process. Even if that means giving up a buyer who is close to signing. Better to give him up now than to find out after the unit has already come off the market for other buyers.
The question I would ask in your place
- Today I have a deal I am “almost closing” - is there a sign in it that I ignored because it complicates the schedule?
- Do I have a clear mechanism, written in advance, for cancellation and resale - or am I relying on “it won't happen to me”?
- When did I last look deeply into a buyer's financing ability, instead of settling for the fact that he “sounds serious”?
Stories are based on real situations, with identifying details changed. Not legal advice.
Translated from the Hebrew original. עברית