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How to persuade real estate agents to refer fractional prospects

15th March 2012

David Disck Fractional Real estateThe latest in a series of articles by David Disick.

“East is East, and West is West, and never the twain shall meet.”
The Ballad of East and West, Rudyard Kipling (1865-1936)

In vacation home real estate markets, even though whole ownership and fractional agents hold the same basic license, each professional specialty seems to inhabit its own separate world, and the two worlds seem rarely to meet.
How, then, can a fractional real estate developer bridge the two worlds, reach out to whole ownership agents and win referrals from them?

Let’s start by analyzing the mindset of whole ownership agents and examine three stumbling blocks to overcome in soliciting their co-operation.

Product Knowledge
To varying degrees, whole ownership agents are unfamiliar or uncomfortable with specific issues relating to fractional property, such as ownership structure and reservation systems.  Not wishing to make an error, they avoid presenting a property when they are uncertain of the facts.

Whole ownership agents think it’s not economic for them to commit valuable time working at the lower price points of fractional real estate.

Whole ownership agents in luxury markets prefer to deal with the sort of people able to afford owning an entire home.

Referral Game Plan
So, now equipped with insights into how whole ownership agents think, what can a fractional vacation home developer do to attract their attention and persuade them to refer qualified prospects to the fractional property?

First, of all, determine how many sales, if any, may result from the referrals of local agents.  Even if one can “fly solo” without supplementing the efforts of the in-house sales team, it is still appropriate to make efforts to reach out to other agents.

If you don’t manage the image of your business, other businesses (i.e., competitors) may do this for you, and what they say may not be as favorable as one would desire. Depending on the particular local situation, the following public relations efforts that reach out to the real estate and local community can prove effective: 
Listing property information with the local real estate board (if feasible)

• Preparing a Powerpoint presentation for use at parties and meetings to explain the benefits of fractional ownership and those of the property

• Holding Open Houses for agents

• Hosting parties (breakfasts, luncheons, cocktail hours or dinners) for agents and community influencers

• Having fractional sales team members make presentations at weekly meetings of agents and encourage referrals
• Emailing the Powerpoint presentation to agents, upon request

• Using the established email broadcast system to local agents to communicate regularly on the progress of the development and ask for customer referrals

• Becoming involved in sponsoring local events and donating to local charities

Issuing frequent press releases on the company’s public activities to create a favorable company image and generate positive coverage in the press and “buzz” in the local community. But more is needed than simply meeting personally and informing local agents about property facts.  Whole ownership agents need to understand why it is to their advantage  to refer their clients who are not ready to purchase a whole property:

Fractional Owners Are Highly Qualified Financially

In many cases, fractional owners qualify for whole ownership, but choose not to allocate their time and resources to just one vacation property.  For this reason, fractional ownership real estate should not be considered as a “drop product” offered to prospects unable to afford whole ownership. 

Rather, it is an ownership alternative directed to a similar market segment that prefers more flexible vacation experiences.

Long-Term Value of a Referral Customer

History has shown that many purchasers find fractional ownership an easy entry-level way to become acquainted with a resort area.  Afterwards, fractional buyers may go on to purchase land or whole homes in the area and refer friends and family. 
This means that a referring agent can earn a commission not only for the initial fractional sale, but additional future sales commissions that might otherwise have been lost had the client purchased a fractional property at a competing resort.
Make a Referral Offer That Agents Find Hard to Resist

An attractive commission can be offered to whole ownership agents for referring just the name and email address of prospects who close on the property.

After whole ownership agent register a prospect willing to be contacted, subsequent follow-up is handled by a fractional agent.  Referring agents are  involved as much or as little as desired.

Of course, referring agents are copied on all emails and is personally notified periodically of the progress of the sales process, including on-site appointments.
Referral Guidelines. 

Whole ownership agents will want written assurances in the following areas:

• Time of Commission Payment.   Commissions are paid to referring agents after their referral buyers have closed on their fractional purchase.

•  Non-Competition.   The fractional sales team will not offer whole ownership properties to the prospects referred.

• Protection of an Agent’s Client Referral.  Referrals must be registered in writing and are attributed to the first agent to provide a particular name.

Attractive Commission

So, what constitutes a commission that would catch the attention of whole ownership agents?
There are no set rules.  To compensate for lower fractional price points, the commission should probably be more than the average amount of a referral fee, but less than the average split commission fee, where the buyer’s agent actively participates in the entire transaction.

Cost Considerations
The amount paid for the referral of a name of someone who ultimately closes may also depend on the current value of a real buyer in the local market and what the budget of the fractional property can tolerate.
From the perspective of a developer, perhaps it is best to evaluate the bottom-line value of increasing sales velocity, reducing marketing and other fixed overhead expenses and paying off debt faster.
Obviously, individual developers will calculate differently. But, in contrast to other line item expenses, referral commissions are success-based and are paid only once a sale is closed.
In conclusion, building bridges to local agents and to the local community is beneficial both from public relations and sales points of view.  Even if the bulk of purchasers result from the efforts of the in-house team, budgeting for the possibility of paying a few or several referral commissions to whole ownership agents is a wise step in the financial planning of the development.
What measure does your property take to co-operate with local whole ownership agents?  Please share your ideas.  We’d like to hear from you.
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David M. Disick, Esq. is the author of Fractional Vacation Homes:  Marketing and Sales in Challenging Times.  His book contains more valuable ideas and tips for fractional development success.  He consults in the US and abroad.  Contact him at:

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