What Kills More Deals: Bad Numbers or Bad Timing?

Question

We've all heard about deals falling apart because the numbers didn't work.

But how often have you seen a potentially good deal fall apart simply because the financing or closing timeline didn't line up?

Which one has caused more problems in your experience?

Crystal Smith · Answer

99% of the deals we have done that fell apart it was because of the numbers. I guess we've been lucky as I have only had one deal almost fall apart because the lender missed the closing; literally did not show up. That was about 20 years ago. We were able to save the deal by delaying the closing and then closing with cash.

Michael Eskenasy · Answer

Linda, I think timing gets underestimated because people usually model the economics of the deal but not the sequence of dependencies required to close it.

A deal can have perfectly acceptable numbers and still die because title, municipal documents, insurance, appraisal, lender conditions, inspections, seller deliverables, or one missing signature all operate on different clocks. Jay’s example in this thread is exactly that: the economics didn’t suddenly change, but a city/title delay added roughly two weeks of interest expense and would have created a real problem if the contract had a hard deadline.

That’s why I’d actually treat timing as part of underwriting rather than something that happens after underwriting.

Before closing, I want to know:

• What are the true drop-dead dates?
• Which third parties control critical dependencies?
• Where is there zero slack?
• What costs start accumulating if something slips?
• Who owns each next action?
• What happens economically if closing moves 7, 14, or 30 days?

What are the true drop-dead dates?

Which third parties control critical dependencies?

Where is there zero slack?

What costs start accumulating if something slips?

Who owns each next action?

What happens economically if closing moves 7, 14, or 30 days?

The interesting part is that a lot of “timing problems” are really state and coordination problems. Everyone may be doing their job, but if nobody has a live view of what is complete, what is blocked, who is waiting on whom, and which deadline is now at risk, the deal can drift until someone realizes too late that the contract clock never stopped.

So between bad numbers and bad timing, I’d say bad numbers usually tell you not to do the deal. Bad timing can destroy a deal that you actually should have been able to close.

This is exactly the kind of transaction-state problem our system pays attention to. Feel free to reach out if you ever want to compare notes on how we structure that.

Jay Hinrichs · Answer

depending on market title or closing attorney delays in getting title back and or utl and other items that need to be cleared up can delay closings. I have one right now in W PS and its a joke been 10 days just trying to get the things that the city needs to prepare for title. If we were on a drop dead time line in the contract would be fubared .. I am the seller so I am not going anywhere but still frustrating for my client that is paying me interest for an extra 14 days or so while city / title get their ducks in a row.

Diana Khan · Answer

@Linda Murray, from what I’ve seen, timing can kill a good deal just as fast as bad numbers. I’ve worked on transactions where the deal itself made sense, but one delay with title, financing, inspections, or documents started putting pressure on everything else.

For me, the biggest issue is usually when everyone is working on a different timeline. The lender may need more time, the contract has a deadline coming up, and the buyer or seller assumes someone else is handling it. That is why I like getting the important dates clear early and making sure everyone knows what has to happen next.

I’d be glad to stay connected, @Linda Murray. I always enjoy comparing notes with other real estate professionals because sometimes the deal is fine, it is the timing around it that creates the real problem.

Emmanuel Richard · Answer

I’ve seen timing get overlooked because everyone focuses on whether the numbers work. A deal can make sense on paper, but if financing, document collection, or follow-up drags out, the opportunity can disappear before the numbers even matter. Curious do you find the bigger timing issue is financing delays, or communication/follow-up between the parties?

What Kills More Deals: Bad Numbers or Bad Timing?

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