The Fractions Abroad model has been designed to sit along side your traditional sales operation. It is a powerful tool in allowing clients to either buy into your development that could not afford to or to upgrade to a much more expensive property. A number of units are set aside to be sold on a Fractional basis. This may be as little as two or three or as many as ten. All the other units on site are available to be sold through your established full ownership routes. The properties set aside for the Fractional sales will be a good mixture of what is available on your development, giving a reasonable choice. The contracts are drawn up for the Fractional sales and these properties are then distributed to the sales networks. Once a Fractional unit is successfully sold it is then replaced by another.
Our model works on the principles of four to eight fractional owners per property. We have established this to be the best ratio when you consider the factors of overall price, speed of sale, profitability, usage for purchasers, share of maintenance costs, share of management costs etc.
When a property is sold using a fractional model the real estate value needs to rise to compensate for the extra work involved by the developer or the agent. Too many fractional purchasers and the increase in price becomes prohibitive and will no longer reflect good value for money for your purchasers. Too little mark up and there is no extra sales revenues to compensate for the extra work and incentivise the sales teams, whether they are developer or agent run. Our model dictates a maximum of a 20% mark up on the real estate value which gives an excellent return on sales but keeps the prices of the property at a realistic level helping to promote sales.
As these are fractional properties they are sold differently to a traditional full sale. As there are multiple purchasers you will not be able to give clients choices on finishes, colours, furniture etc. These choices have to be made by the developer and included in the property and priced accordingly. The specification of finishes has usually been dealt with at an early stage by the developer and the architect so this will be pretty standard throughout the development. The fractional property has to be sold fully furnished and ready to go. The furniture package offered has to be of a good quality and very comprehensive providing everything a client would require down to the knives and forks. The price of the furniture is also added to the real estate value. Not only is the client now able to buy the initial property at a drastically reduced price but the furniture also.
