A name on a list is not a presale. A construction lender wants a contract they can take to the credit committee: binding, signed, with a deposit they will recognize, from a buyer they will count. Soft holds, letters of intent, and "coming in next week" do not fill that line. The 50–70% of revenue they often want is only as good as the contracts inside it.
Ask the lender in writing before you brief the sales team that you are at 50%. Get three things: what document they will take, what deposit they will recognize, and which buyers they exclude. Your term sheet is the list that counts. A pattern from another building is a guess. Until those contracts exist, you are not on the line. You are on a list. See how many units you need to pre-sell for the percent. This page is the filter.
Reservations and letters of intent are useful. They are not usually qualifying presales. A hold with no deposit, a related-party contract, and a bulk take of the stack by one buyer are the three filters that most often cut a "we are at 50%" briefing down. Ask whether those are in or out. Do not guess from last year's project.
| Usually counts | Usually drops | |
|---|---|---|
| Document | Binding purchase contract | Reservation or letter of intent |
| Money | Deposit the lender will recognize | Hold with no deposit |
| Buyer | Unrelated buyer they will count | Related-party, insider, or bulk haircut |
Related-party and insider units are not the same demand as an unrelated buyer putting money down. Bulk contracts are often haircut or excluded because one walk-away takes a hole the size of several units. A reservation can convert. Until it is a binding contract with a held deposit, it does not move the construction draw. Ten contracts on paper can be six after that filter. See why construction lenders care about presales if you want the leftover-inventory reason. This table is the filter, not a statute.
Do not count units. Count dollars from contracts that survive the filter. List every name that has a document. Drop reservations, letters of intent, and holds with no deposit. Drop related-party and bulk deals the lender will not take. Sum the remaining contract prices. Divide by project sell-out revenue. That share is where you actually sit.
Worked example (illustrative numbers). Eighteen names on a list. Twelve have a signed contract and a held deposit. Two of those twelve are related-party. Ten count. Those ten are $4.2M on a $12M sell-out. You are at 35%, not eighteen of thirty units. Method: qualifying contract revenue ÷ project sell-out revenue. Once you have that share, see how fast you need to pre-sell to hit the construction draw for the monthly pace. Soft holds do not close the gap. If the line slips a month, size it from your loan. See how much an extra month costs. Run the calculator on your numbers.
Usually a binding purchase contract with a deposit the lender will recognize, from a buyer they will count. Reservations, letters of intent, and related-party deals usually drop out. Ask the lender in writing. The 50–70% line is percent of revenue from those contracts, not a unit count.
Usually not. A reservation or letter of intent can convert. Until it is a binding contract with a held deposit, it does not move the construction draw. Ask whether those are in or out on your sheet.
Keep only contracts that survive the filter, sum those prices, and divide by project sell-out revenue. Example: ten qualifying contracts at $4.2M on a $12M sell-out is 35%, not a unit count.
