Why does the lot absorption rate I underwrote feel completely disconnected from what the broker is actually telling me this week

The broker's number and the underwrite are both guesses, which is the uncomfortable starting point. Absorption rate, meaning how quickly individual lots sell once they hit the market, is a local and time-specific figure, and it shifts faster than most underwriting cycles catch.

A few ways to stress-test it before terms are set:

Pull actual recorded deed data, not listing history. County recorder offices in Georgia (and most states) timestamp the sale, not the listing. The gap between those two dates on comparable lots in Forsyth County right now tells you more than any comp sheet a broker puts together, because brokers are often working from MLS velocity data, which counts days to contract, not days to close and record.

Talk to the builders buying lots in that submarket directly, separate from the broker. A builder who bought two lots in that corridor in the last six months can tell you whether their buyers are financing quickly or sitting on approvals. That is a leading indicator the broker may not be seeing yet.

Model three scenarios before setting the participation terms: the broker's number, something 40% slower, and something 60% slower. If the deal only works at the broker's number, that tells you exactly how much risk is sitting inside the return. The interest reserve gap your contact is staring at came from building the model on a single scenario.

The one thing worth naming: absorption in 2021 was driven by rate-incentivized buyer urgency that does not exist in the same form today. Any comp set that leans on that period needs a discount applied before it touches a model.

On the Indianapolis deals you mentioned, did those underwriters have access to the slower-absorption scenario and discount it, or did it simply never get built?

The gap you are describing is a data sourcing problem before it is a modeling problem. Lot absorption in a county like Forsyth is visible in public permit pulls, not in closed MLS sales, and the two numbers frequently diverge by exactly the magnitude your colleague is seeing. Cumming and the surrounding Forsyth unincorporated area have been issuing single-family permits at a pace that slowed materially from 2022 into 2024 as builder starts contracted, and a broker quoting one lot every seven to eight months is almost certainly reading that builder demand signal, while the underwrite was almost certainly built on deed transfer comps from a period when builders were absorbing land as fast as it came available. The test I would run before any participation terms are set is a trailing-twelve-month permit pull from Forsyth County's building department cross-referenced against active lot listings in the submarket, and then divide active supply by the permit run rate to get a months-of-supply figure. Say you find 40 lots actively listed and 36 permits pulled in the last twelve months, that is roughly thirteen months of supply at current absorption, and you price the hold accordingly, not optimistically.

The assumption doing the most work in your colleague's model is almost certainly not the absorption rate itself, it is the interest reserve calculation that was sized to the optimistic scenario with no cushion for slippage. On a five-lot split, if participation was priced assuming a 20-month exit and the carry is actually 36 to 40 months, you need to know whether the deal still pencils if you add 16 to 20 months of interest carry to the cost basis before the first lot closes. Take a simple example: if the carry cost on the capital is 1,500 dollars a month per lot and the reserve was built for