The Question Nobody Asks Until It’s Too Late
Most people involved in a real estate closing focus on one question: will this deal close on time? It’s the wrong first question. The right one is: what happens if this deal has to survive a change nobody expects?
I get asked plenty about deadlines, checklists, and how to keep a transaction moving. Those questions matter. But they skip over something more useful, which is whether the structure you’re building can bend without breaking. In affordable housing finance, where deals often stack multiple layers of financing on top of each other, that question decides whether a project actually gets built or stalls two years in.
Why The “Will It Close” Question Isn’t Enough
A transaction can close and still be fragile. I’ve seen deals get to the finish line with financing structures that technically satisfy every party’s requirements on paper but leave almost no room for anything to shift. Interest rates move. A tax credit investor changes its return requirements. A local funding source gets delayed a budget cycle. None of that is unusual. What’s unusual is planning for it ahead of time instead of scrambling once it happens.
So the question I think people should be asking is: where is the give in this deal, and where is there none at all?
What “No Give” Actually Looks Like
A deal with no give usually has a few things in common:
- Every source of financing is timed to close on the exact same day, with no sequencing flexibility.
- Subordinate financing terms assume the senior debt terms never move.
- Nobody has mapped out what happens if one piece of the capital stack falls through.
None of these are dramatic failures. They’re just decisions made under time pressure, because closing dates tend to create their own gravity. Everyone wants to get to the table. Fewer people want to spend the extra hour asking what breaks the plan.
Building In Room To Move
When I look at a financing structure, whether it involves tax-exempt bonds, secondary financing from a state or local source, or layered soft debt, I try to identify the two or three assumptions the whole deal depends on. Then I ask what happens if any one of them is wrong.
That’s not pessimism. It’s the same instinct a good contractor has when framing a building for weather it hasn’t seen yet. You don’t design for the day you’re building. You design for the years the structure has to stand.
Practically, this means:
Sequencing matters more than speed. A closing that happens in the right order, with contingencies built in, is worth more than one that happens two weeks earlier but locks everyone into a single path.
Ask who absorbs the risk if a source of funds is delayed. Someone always does. It’s better to know who that is before the closing than to find out after.
Read the subordinate documents as carefully as the senior ones. The senior lender’s paper gets the most attention because it’s usually the largest piece. The subordinate and secondary financing terms are often where the real constraints live, especially when several public and private sources are stacked together.
The Habit Worth Building
None of this requires a different skill set. It requires a different order of operations. Before I sign off on a structure, I try to walk through it as if something has already gone wrong: a rate lock expired, a tax credit price dropped, a local appropriation got pushed to next year. If the deal still works, I know it’s sound. If it doesn’t, that’s the moment to fix it, not the moment after closing.
I’d rather spend an extra afternoon stress-testing a structure than spend three months later working out how to save a deal that never had any flexibility built in. The first version of that work is quiet and doesn’t show up anywhere. The second version is loud, expensive, and usually avoidable.
If there’s one habit I’d pass along to anyone working in transactional real estate, it’s this: don’t just ask if the deal closes. Ask if it survives.