My sourcing client told me he does not care what the agreement says if the deal makes sense, and I have not been able to stop turning that over since Tuesday.
That sentence should probably scare me more than it does. I have been on the capital side long enough to know that "it makes sense" is doing a lot of lifting for a guy who has walked three deals in a row because the numbers were close but not right. Close is not right. And when the deal does not make sense, which is when the agreement actually matters, I am not confident we have the same memory of what we shook on. I am sourcing in a market I know reasonably well, the mid-Atlantic, and even here I have seen the "it makes sense" standard shift depending on what rates did that week. The sourcing agreement I have in front of him spells out cap rate floor, geography, max deferred maintenance estimate at time of presentation, and a thirty-day decision window before I can show it elsewhere. None of that is complicated. He read it and basically said sure, fine, but really what matters is the deal. I think what he means is that if I bring him something that obviously pencils he is not going to haggle over whether the ARV estimate was mine or his appraiser's. But there is a version of this where I spend four months in markets he cares about and then he decides post-presentation that the deal made sense to him at a number I never agreed to work for. Has anyone sourcing for a single repeat client figured out how to get them to treat the written terms as actual terms and not just a formality they signed before the real conversation started?