Article

In his latest Fractional Trade article, David Disick looks at successful fractional real estate sales.


In a thoughtful piece on this site dated March 11 and entitled Fractional Real Estate Commissions, Piers Brown concluded that:

• "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."

• A commission-only process is "a dangerous and unproven option which is flawed…;" since whole ownership commissions are much higher than fractionals.

Piers is, of course, right on.  At the same time, and while the commission structure is perhaps most important, there are three additional major factors in generating brokerage community interest and  successful participation in fractional sales:  namely—familiarizing the brokerage communities with the overall prominence of fractionals and therefore the profit opportunity for brokers who are knowledgeable in this segment;  training in the art of selling fractionals successfully and broker preparation.

This Paper will deal with all four items.

The Proper Commission Structure

There are two avenues to explore.  The first is a total in-house staff.  This can obviously result in a highly trained, well compensated sales team.  However, the disadvantages outweigh these benefits.  First, it will mean the loss of all the potential clientele that can be generated by the brokerage community.  Second, it will inevitably result in conflict with the local brokerage community if they are frozen out of your project.

The second avenue, obviously, is a combination of in-house staff with local realtors.  Implementing this is not as easy as it sounds.  The challenge is still sufficiently to motivate the local brokerage community to participate in your project.  A referral commission in and of itself will not do the trick because these commissions are still less than whole ownership referral commissions.  You need to analyze the nature of, and your relationships with, the local brokerage community and evaluate a cost benefit analysis in some form of "draw" against commissions for selected local brokers.  This can only be determined on a case-by-case basis.  I would recommend that it be combined with performance criteria.

Educating the Brokerage Community on the Overall and Ongoing Profit Potential in Selling Fractionals

As Piers correctly points out:

"there's a general lack of enthusiasm and perhaps a lethargy for integrating a fractional sales approach." 

"fractionals are perceived as a 'poor relation' to whole ownership."

"Very few [agencies] seem to be taking into account the 20% - 40% of revenues  fractional sales generate over whole ownership when marketed and sold effectively."

In our experience, this can be overcome by a high frequency, low impact campaign with local brokers.  This campaign combines brief, high impact emails to local brokers on the fractional industry generally and the progress of your project specifically, supported by personal networking by your in-house staff.  You can, by a well thought through campaign,  engender  necessary enthusiasm to motivate the local brokers to participate in your project and understand the long term benefit to them from gaining an expertise in the fractional industry.

Training—The Art of Selling Fractionals Successfully

I would respectfully commend the readers to my recent Paper in this space entitled Relationship Selling to Today's Affluent Clientele.

The fractional sale process is distinct from the whole ownership sales process.  Training is essential.

The above-noted paper is part of my company's sales training manual.  The following outline of the segments of that manual will convey a sense of its contents:

• Definition and implementation of relationship selling in the current climate
• 11 principles of relationship selling to an affluent clientele
• The 12 elements of a relationship sales appointment
• Differentiating conditions, stalls and objections
• 8 skills to use in responding to objections according to their timing.
• 16 ways to request an ownership decision
• Say this, not that—choose positive energy language
• Model scripts for responding to twenty common questions and answers and to keep the sales process on a direct track toward purchase
• Supporting the decision to own
• Anti-rescission measures
• Thanking new owners and asking for referrals

Preparation

We have a saying in the practice of law that success at a trial is 90 per cent preparation.  A similar concept applies to fractional sales.

From the combined 100+ years of experience that our team has in fractional sales, we would list the following 26 questions and topics to be expected in the sales room and for which your brokers should be prepared:

1.    “Is this a time share?” 
2.    “What’s the price?” 
3.    Turning a “stall” into a request for an ownership decision.
4.    “We don’t think we can use it enough.” 
5.    “I’m waiting for the economy to improve/for the real estate market to bottom out.” 
6.    “I’m waiting for my stocks to go up.” 
7.    “I’m concerned about the economy.” 
8.    “What if the property fails?” 
9.    “How many sales have you made?” 
10.    “Will the property appreciate?” 
11.    “Is this a good investment?” 
12.    “Is there mortgage financing?” 
13.    “I need to talk to my attorney/account/advisor.” 
14.    “Are prices negotiable?” 
15.    “Why should I buy/buy now?” 
16.    “This is too pricey for us.”   This is rarely volunteered, but words to this effect may result from exploring.
17.    “We don’t think it’s a good value for us.” 
18.    “We don’t want to be tied up in real estate right now.” 
19.    “It’s not a good investment for me.” 
20.    “The maintenance is too high.” 
21.    “The reservation system won’t work for us.” 
22.    “I want to think it over.” 
23.    “Yes, it’s the price.” 
24.    “How can I resell my membership?” 
25.    “What do the dues cover?” 
26.    “How can I assure my ability to use the property when I wish?”

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The first Fractional Summit USA, August 31 to September 1 in Miami

I would respectfully recommend that if your schedule permits, attendance at this Summit will be highly beneficial.  Piers and his team organize a comprehensive, professional, high level seminar program.  The programs feature substantive presentations as distinct from being simply platforms for the speakers to extol their virtues.  Attendance will be well worth it.

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This Article is excerpted from the sales training manual now being written for the sales staff of Club Elysée, a multi-site Private Residence Club that the author plans to launch this year.  The finalized manual is expected to be available for order from the author this summer.

David M. Disick developed the first property to be branded as a Private Residence Club, Franz Klammer Lodge in Telluride, Colorado,  the award winning property that set the stage for the wide variety of Private Residence Clubs in today's market.

Mr. Disick has written numerous articles on fractional ownership and spoken at many industry conferences.  Fractional Life has named him to its list of The Top 21 Fractional Real Estate Professionals of 2010.

Readers are invited to email the author with their responses to this Article at ddisick@msn.com

Mr. Disick is an active consultant to the fractional industry.