Real Estate Developer (Off-Plan Unit Sales)
A developer launches a compound of 400 flats before the first foundation is poured. A buyer chooses Flat 12, pays a 20,000 reservation deposit, signs a contract for 900,000 a month later with 20% down, and hands over forty post-dated cheques for the rest, one a quarter for ten years. The developer has to know, for every unit, whether it is free, reserved or sold, what the buyer still owes, which cheques are at the bank, and what the building has cost so far. The real estate sales flow exists because a unit sale is not one document: it is a reservation, a contract, a long schedule of instalments, and years of collection.
Who this fits
- Developers that sell flats, villas, shops or land plots off-plan or during construction, on long instalment plans, typically paid by post-dated cheques. Across Nama installations, about 1 in 18 companies sell units in the real estate module.
- About 1 in 10 companies are real estate firms. About 3 in 5 of them sell units, and about 1 in 6 lease. The off-plan, cheque-backed instalment sale is the most common shape, especially in Egypt.
- Developers usually combine this page with Contracting Company when they build their own towers, and with Multi-Company Group when each project is a separate company.
What you need
Required licences
realestate, realestate-sales (sales offers, initial and final sales contracts, handover, waivers), accounting-banks (cheques, bank portfolios, bank notices); realestate-rent for the leasing variant.
- Real Estate: the estate tree, the sales documents, collection, fines and unit cost.
- Accounting: receipt vouchers, cheques and their bank cycle, and miscellaneous invoices for construction spend.
- Contracting, only if the company builds through the contracting module.
The document flow
Follow Flat 12 from the sales office to the last cheque:
- The quotation. The salesperson prints an RE Sales offer with the price, the down payment and every instalment. It reserves nothing, so it can be handed out freely.
- The reservation. The buyer pays 20,000. An RE Reservation document records the deposit, and once its status is Confirmed Flat 12 is taken off the market. Its only entry is the deposit.
- The contract. On the saved reservation, Create Sales Document opens a Sales Contract with the unit, the buyer, the price and the 20,000 already paid. A payment plan template fills the 180,000 down payment and the forty quarterly instalments, and Create installments builds the schedule. Committing the contract marks the unit Sold, raises the receivable and books the sale. Developers that sign a preliminary agreement first use the Initial sales contract, which locks the unit and books nothing; the sales contract is then based on it.
- The cheques. When commercial-paper columns are enabled for the sales contract, committing it creates one Commercial Paper per instalment line that carries cheque details. From the contract's own buttons, the cheques due this month go to the bank on a Bank Portfolio, and the bank's answer (collected or returned) is recorded on a Bank Notice.
- Cash and transfers. Payments that do not come by cheque are collected against the contract's instalment codes on a Collect Document, which settles the instalments; its Create Receipt Voucher button raises the Receipt Voucher that receives the money.
- Late payment. A late instalment can be charged on a Real estate fine Doc, raised from the contract with Create Fine Document. The fine is a separate receivable and does not change the instalment.
- Delivery. When the building is finished, the Estate Handover records delivery and stamps the contract and the unit. If the sales term holds revenue back until delivery, the handover is the document that releases the contract's entry.
- After the sale. If the buyer resells before completion, a Waiver Document For Another Buyer passes the unpaid instalments to the new buyer; For Company brings the unit back into stock.
The whole chain, and which step does what, is on The property sales cycle.
Setting it up, in order
- Build the estate tree, then the units. Create the project, then work down with the generate buttons: blocks, buildings, floors and units, with unit models to stamp identical flats in one action. Large projects are usually imported. See projects, blocks and lands and buildings, floors and units.
- Price lists and payment plan templates. A sales price list prices each unit, and a payment plan template fills the down payment and instalments, so salespeople stop typing numbers. See price lists and payment methods.
- Fee and commission types, with their accounts. Fees and commissions take their accounts from their type records, not from the document term, so set them before the first contract. See fee, commission and expense types.
- The sales terms (توجيه). The reservation, sales contract, collect document and handover each take their accounts from their term, and an accounting pair is only booked when both of its sides are filled. Decide here whether revenue is booked at the contract or at handover. See sales document terms.
- Cheque books and bank portfolios. Set up the commercial-paper books and banks, and list the sales contract among the documents that create commercial papers in the module configuration. See cheques and financial papers.
- Units sold before go-live. Load them on Opening sales doc in the opening fiscal period, marking the instalments already paid with Fully Paid. See opening sales.
Settings and tools most companies use
- Post-dated cheques. About 3 in 4 developers record instalment cheques, and about 2 in 3 also use the cheque cancellation document when a cheque is replaced. See cheques and financial papers.
- Waivers. About 2 in 3 record resales and give-backs on the waiver document. See waivers and cancelling a sale.
- Reservations. About 1 in 3 reserve before the contract, and about 1 reservation in 3 ends in a cancellation rather than a sale. See reservations and initial contracts.
- Fines. About 1 in 4 charge late-payment fines. See fines.
- Miscellaneous invoices for construction. About 9 in 10 record construction spend on miscellaneous invoices.
- Dashboards. About 5 in 6 follow sales and collection on BI dashboards.
Variations
Straight to the contract. About two thirds of developers skip the reservation and sign the sales contract directly; the contract's estate picker only offers units that are available and not reserved, so a unit cannot be sold twice either way.
Revenue on delivery. With Create Accounting Effects For Handovered Documents Only on the sales contract's term, the contract marks the unit sold and builds the schedule but books nothing until the Estate Handover releases its entry. See handing the unit over.
Construction cost per unit. Most developers book construction spend as miscellaneous invoices tagged with the project. Those who need cost per unit enter it on the RE Cost Document instead, which spreads each cost over the units by area, price or another basis, see distributing project costs. A few build through the Contracting module, whose project cost can be pushed down onto the units, see the contracting cost bridge.
Leasing. About 1 in 30 companies hold rent contracts. The leasing track has its own chain: a Rent offer that can hold the unit, the Rent Contract that builds the rent schedule, the Rent Installment Ledger that recognises each period's revenue, collection against the contract, and Cancel Contract to end a lease. See the leasing cycle.
Decisions to make before go-live
- Reservation first, or straight to the contract. Both are supported. If deposits are taken before signing, use the reservation document so the deposit is booked and the unit is locked.
- Revenue at the contract or at handover. Set it once on the sales term and keep it; it changes every contract's journal entry.
- Cheques created by the contract, or received on receipt vouchers. Letting the contract create the cheques from its instalment lines saves keying forty cheques per sale, but the commercial-paper columns have to be enabled before the first contract.
- Construction cost on miscellaneous invoices, on the RE Cost Document, or through contracting. Pick by whether you need cost per unit.
- Migrate sold units through opening sales documents. Load the remaining schedule of each sold unit on an opening sales document rather than re-keying old contracts and their collections.
- Fee and commission accounts first. They come from the type records, so set them before the first contract.