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GLOSSARYTERMS AS A CREDIT DESK USES THEM

Presales

What are presales, and why does a development lender count them?

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BY MICHAEL SHANG · SIXTEEN YEARS IN COMMERCIAL BANKING · UPDATED

// THE SHORT ANSWER

Presales are the unconditional contracts to buy units of a development signed before the bank funds construction, measured as the share of the debt — or of the units — they cover. They are the development loan's first way out: if the presold units settle at completion, that cash repays the facility before the lender depends on the open market. The desk reads the cover, the buyers and their deposits, and the settlement risk if values fall between contract and completion; a presale that does not settle is not a presale.

BASIS  Practitioner judgment from sixteen years in commercial banking, set out in How Bankers Think (Highbank Press, 2026). Every borrower on this site is a composite constructed for teaching, not a client. The market is mid-market commercial lending as practised in New Zealand and Australia; where a convention differs elsewhere, the page says so.

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