Fractional Sales: Square Pegs In Round Holes?

While the buzz around fractional property ownership continues to grow, it’s inevitable that there will be some bandwagon jumpers who see the fractional model as a sticking plaster to apply to developments with a surplus of unsold stock.

Les Milton, chairman of The Fractional Ownership Consultancy says developers who see fractional as a magic wand to conjure up sales are heading for disappointment. “If a property is un-saleable outright it is unlikely to be saleable on a fractional basis. Fractional ownership should be a lifestyle purchase.  A property which is clearly unattractive, either because of its location, surroundings, or size will always be difficult to sell, even at a heavily discounted price. Fractional purchasers are buying into a dream and the developer needs to bear this in mind when he is planning the resort. Since there is no substance in the notion that fractional buyers are content to buy ‘bin-end’ deals, I don’t see any reason that developers should have any expectations of success.”

June Matthews of the Fractional Agents Network agrees: “Fractional ownership is not a method for disposing of poor stock. Consideration must be given to the location, style and qualities of the development – fractional developments should be carefully selected on the basis of year-round usership with the correct facilities, infrastructure, high quality maintenance, property qualities and of course, location.”

As well as developers, it is also essential to make sure that any agent selling fractional is specifically trained and suitably versed in the complexities of fractional sales.

Marina Palmerio of Castello di Casole in Tuscany, says that not all mainstream agents have the required knowhow yet. “Some do, and with time and education I definitely see mainstream agents being able to sell fractional property ‘correctly’. That said, they need to have a dedicated representative on the developer’s side to act as coach and provide information and updates in a timely manner.  It also depends on the agent’s country of origin, and of course, their familiarity with the fractional concept.”

There has been some scepticism in the industry over whether agents charged with selling both fractional and whole ownership properties on the same development will put sufficient effort into fractional sales, with potentially lower commission rates. But it appears there are several ways to address this.

“It’s all about finding a compatible partner, which sometimes involves kissing a few frogs before a prince is found. Regardless of the lower commission percentage (and based on the way that we work with third party agents) this is basically just a referral or introduction fee. We do not expect agents to ‘sell’ the property for us, but to merely introduce a qualified potential prospect.  If the agents’ referred client purchases, they receive a commission at closing for simply making an introduction. We do all the work,” says Marina Palmerio.

Roger Still of Palheiro Real Estate in Madeira says: “Good agents will bring the same levels of effort and professionalism to fractional sales as they do to whole ownership.  It is likely that accepted levels of sales commissions will be higher for fractional sales than for full freehold, thus compensating the selling agent for lower value per sale. Speaking as a developer, this seems reasonable.”

Les Milton asserts that dedicated fractional sales teams are the way forward: “In our experience, fractional property is best sold by teams that have accepted the concept and are eager to specialise in this new and growing area. Agents or sales people in general who are responsible for both outright and fractional will always gravitate to what they know best – outright sales.”

- George Sell - Fractional Life

Articles

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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:
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Aircraft & Jets:
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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
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Lifestyle:
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Convergence in the Fractional marketplace
The stock market for songwriters

Supercars:
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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?
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New supercar club with green credentials

Luxury Motorhomes:
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Wine & Spirits:
Wine