Fractional Real Estate Commissions

How to effectively sell fractional property in today’s marketplace was one of the most popular questions raised at Fractional Summit 2009 and every week we get asked the same question here at Fractional Life by developers so I thought I’d explore the fractional sales sphere more closely.

Amidst the oversupply and lack of whole ownership property sales in the market at the moment, which by default is one of the driving factors to the growth of fractional real estate in Europe, I don’t believe any developer has established an effective fractional sales agency network they can truly rely on.
True, market conditions are tough but it seems everybody has their blinkers on when it comes to real fractional ownership sales. The same ‘commission only’ agency network model so relied on for whole ownership sales is being adapted to sell fractions in the market– a dangerous and unproven option which is flawed in my view.

Talk to any overseas property agent who has the option of selling the same property either as whole ownership or as a fractional. Having little or no information prior to the potential buyer enquiry, the agent will always push whole ownership above fractional because:

Whole ownership commissions achieved are much higher.
Agents have made a decent living from whole ownership for years. Whole ownership is something they’re much more comfortable with selling It’s less hassle – the agent and client understands the whole ownership buying process. Apart from the early adopters, there’s a general lack of enthusiasm and perhaps a lethargy for integrating a fractional sales approach.

Very few seem to be taking into account the additional 20 – 40% of revenues fractional sales generate over whole ownership when marketed and sold effectively.

I don’t believe fractional will outsell whole ownership sales any time soon, but there are still too many developers and agents having entered the market in the rush to launch fractional, committing nowhere near the funds required to instill an effective sales and marketing plan for their fractional offering(s).

Because of this, many will fail or be withdrawn having not worked. An excess of developers and agents offer the fractional ownership option thinking it’s an easy sell to ‘scoop up’ those Clients who, for whatever reason do not make a whole ownership purchase – in other words, fractionals are perceived as a “poor relation” to whole ownership.

I’m always amused at the amount of developers that purport to offer fractional sales on their website using “THERE IS ALSO A FRACTIONAL OWNERSHIP PRODUCT AVAILABLE ON THIS DEVELOPMENT. PLEASE CALL US FOR MORE DETAILS” or the like, and when somebody telephones interested in a fractional ownership purchase, there’s a deafly silence on the line either because they don’t know they offer fractional as an option or they don’t know how to sell it. Either way, they haven’t been interested enough to give their product  a decent web page or two and any marketing literature is invariably non-existent.

To effectively market fractional real estate, some flexibility in enhanced remuneration packages less reliant on commissions will deliver more fractional sales, at a quicker rate and at a higher profit than whole ownership. Never before has there been the need for a continued focus on retaining quality sales people as the market continues to shake down in these challenging times. 
The fractional agent or developer who realizes this will prosper over the long term, whilst those total fractional sales commission operators will quickly wither and die.

-   Piers Brown

01/06/09

Articles

Any:
An Introduction to Fractionals

Art:
Fractional art donations prove charity starts at home

Handbags:
25 questions to ask about fractional handbag clubs

Boats & Yachts:
25 questions to ask a fractional boat operator
Fractional Boats in New Zealand
Pushing the (fractional) boat out
Boats & yachts- what's on offer?
Fractionalize This

Classic Cars:
25 questions to ask a fractional car club
Why opt for a 'fractional' classic car?
Classic Car Club Feature
Getting the most out of your fractional ownership experience
Why Not Rent?
You've Always Loved Cars?
Fractional Life hits Le Mans

Destination Clubs:
Lifestyle Asset Group: the best of both worlds
Relationship Selling to Todays Affluent Fractional Clientele
Mixed Use: Avoiding a mix up
Focus on the Registry Collection
DCs- Variety is the spice of (fractional) life
Fractional Property Glossary
Aspirational vs. Inspirational Media
Member Strategies For Lean Times
Brand Maintenance During An Implosion
What Goes Up Must Come Down...
Savings through Foreign Exchange
Fractional Finance Solutions
Destination Clubs- an alternative?
Fractional Ownership Heads to Europe
Private Residence Club Perspective Part 1
Quintess
Ultimate Resort
Calistoga Ranch
The Weybridge Collection
The Villas at The Grand del Mar
The Solstice Collection
Vacation Visions: Exceptional Exterior and Interior Designs of Residence and Destination Clubs 
Why the Boomers will change second home ownership in the US
Middle East Leisure Real Estate Market Booming
Bear Mountain Resort - A View from Paradise
New Association For Fractional Ownership
The New Vacation: A Time to Retune Re-Connect

Consultancy:
Profit Opportunities in Luxury Fractionals - A Summary

Exchange:
The Golden Rules of Fractionals

Racehorses:
A Horse by The Name of Fractional Life
Running Down a Dream

Corporate Hospitality:
So Long to the Suite Life

Aircraft & Jets:
25 questions to ask a fractional jet operator
Top tips for fractional jet travel
Jet Republic pilot applications reach new heights
Focus on Fractional Jet Europe
A closer look at fractional aviation
CoGoJets introduces jetpooling
Joining the jet set
Fly for a fraction of the cost
Flying without Wings
Can't afford that jet? Rent it
How Private Aviation Works

Legal Services:
Fractional ownership: is it timeshare in disguise?

Private Clubs:
A tale of two cities - Private residence clubs in San Francisco and London
The Italian Job: interview with Byrne Murphy of Palazzo Tornabuoni
Mixed Use: Avoiding a mix up
PRCs with added benefits
Northstars 'stay and play ' option
Private Residence Club Perspective
Fractional Property Glossary
What are the ingredients for the ideal Private Residence Club?
Savings through Foreign Exchange
Fractional Finance Solutions

Real estate:
Fractional Life in Ireland: For peat's sake!
Fractional Summit USA 2010- Speaker biographies
25 questions to ask about fractional property ownership
Fractional Summit Speaker Biographies
Fractional Property - The New Normal
Gay Community Embraces Fractional Property
Fractional Real Estate Investment Or Lifestyle Purchase?
Fractional Sales: Square Pegs In Round Holes?
Fractional Real Estate Commissions
Urban Fractionals
European Mixed-Use Resort Development in 2009
Mixed Use: Avoiding a mix up
Property- the legal issues
Fractional Holiday Getaways
Fractionals-Recession beaters?
State of fractionals
Fractional Property Glossary
Savings through Foreign Exchange
Fractional Finance Solutions
Fractional Property- the legal issues
Fractional Property Regulation
Fractional Ownership? We'll have a piece
Keep The Door Open
Why Fractional Property?
The Benefits of Fractional Ownership in Private Residence Clubs
Middle East Leisure Real Estate Market Booming
New Association For Fractional Ownership
Saving Homes, Homeowners and Banks Through Fractional Ownership?

Lifestyle:
Savings through Foreign Exchange
Convergence in the Fractional marketplace
The stock market for songwriters

Supercars:
25+ questions to ask a fractional car club
Live The High Life In A Fractional Supercar
Why Individuals Should Join A Supercar Club
Why opt for a 'fractional' supercar?
Focus on Marque II
Eco-road-warriors- How will the supercar club line-up of the future change?
Fresh metal- What's new on the supercar front?
So Why Not Buy?
You've Always Loved Cars?
Supercars- The cars of 2006/7
Let's Take The Lamborghini
Fractional Life hits Le Mans
Ascari Racing Festival Weekend
Fractional Supercars at the MPH Show
GROUP20 The SuperCar Club announce their 2007 Road Show in aid of Children In Need
New supercar club with green credentials

Luxury Motorhomes:
Denver RV show ready to roll

Wine & Spirits:
Wine