Jason Parker & Bob Harkson interview Nathan Vorhees from Timeshare Exit Team.

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Below is the full transcript:


Announcer: Welcome back, America, to Sound Retirement radio, where we bring you concepts, ideas and strategies designed to help you achieve clarity, confidence and freedom as you prefer for and transition through retirement. Now here is your host Jason Parker.

Jason: All right, America, welcome back.

Bob: Wow, Michael Bolton.

Jason: America, I’ve got a little bit of a sore voice this morning, my friend and associate Bob is going to help lead this program. This is episode number 114, Bob.

Bob: Wow. That’s amazing.

Jason: The title is Timeshare Exit Strategy. We’re going to bring the guys on … Timeshare Exit Team, I’m sorry. We’re going to be bringing the guys or Nathan on the program from Timeshare Exit Team in just a minute to educate our listeners about timeshares. But, before we do we’ve a verse that we want to share. This John [inaudible 00:00:54], Bob, this comes to us from John 8 chapter 12. “When Jesus spoke again to the people he said ‘I am the light of the world, whoever follows me will never walk in darkness but will have the light of life.'”

 Then, we’ve got a joke; I‘ve just loved this one. My dog used to chase people on a bike a lot, it got so bad, finally I had to take his bike away. That’s the stupidest thing …

Bob: That was actually one of your better ones, Jason.

Jason: I just had me rolling this morning, finally had to take his bike away, Bob. All right, you’re listening to episode 114 Timeshare Exit Team and Bob if would be so kind to let our listeners know about Nathan Vorhees, he’s here, then maybe you could kick off and start asking him some questions.

Bob: We’ve got Nathan from Timeshare Exit Team, we’ve got some great questions for him and he’s going to give us some input that I think will be helpful to our listeners. Nathan, why don’t we go ahead and get started here?

Nathan: Perfect, thanks for having me on.

Bob: Hi, Nathan, tell us exactly what Timeshare Exit Team is.

Nathan: Timeshare Exit Team is a consumer protection group that specializes in getting people out of their Timeshare contracts. We don’t buy, sell, trade timeshares, we actually work directly with the resorts to get them to take them back, if we can get it done in house, then we use a team of attorneys to do so. But, basically, for those people that are either no longer using, aren’t able to use or just no longer want their timeshare, we help them, basically, get out of it.

Bob: Okay. How did this get started? How did Timeshare Exit Team get start?

Nathan: It’s interesting. Our owner actually had a need himself. He owned a timeshare that … These get bought and sold by different companies all the time, one of the timeshares that he owned actually got bought out, when it got bought out, his maintenance fees, the annual fee that you pay each year to access it doubled overnight. He wasn’t using it all that often, he’s got kids, travelling with kids can sometimes be difficult. He’s doing the math and he’s spending over 3000 dollars per reservation and it didn’t make sense to keep it. He wanted out and he tried to give it back to the resort or sell it back to then, because of course, when he bought it he was told it was worth all this money. But they had a perpetuity contract with him, which entitled them to collecting those maintenance fees forever.

 They didn’t want it back, of course, he tried to sell it on his own, realized that there’s really no market for these, on the secondary market people are trying to sell them for a penny or a dollar. Really, he had no other options. He met with thousands of people in the same position. We’ve now met with tens of thousands. It was really just, he had a need and found a solution for it. We opened up back in 2012 and I’ve been doing it ever since.

Jason: Nathan, that is really interesting. With the contract that the owner had, his fees actually doubled after the fact. The way the contract is written is your fees can double but you can’t get out?

Nathan: Yeah. Every contract is a bit different. His, actually, his contract got bought out by another company. Basically, smaller timeshare got bought out by one of the larger ones. It needed to be “upgraded” according to them. They doubled the fees to all the owners overnight.

Bob: There’s a loophole in those contracts that allows them to do that in the event it’s bought out or they have the option to raise the fees at will? Some of those?

Nathan: Yeah. I can’t speak for every contract out there, because quite frankly I haven’t seen every contract. But, pretty much every contract I have seen, yeah, there’s [inaudible 00:05:04] to what those fees can become. There’s no cap to the rate of increase that they can increase overnight. We actually just had one here in Washington that had a 28% increase just from last year to this year. Yeah, they can hop up severely or they may not hop up very much at all. Which makes it, of course, difficult to plan for.

Bob: Exactly. Why are timeshares so attractive?

Nathan: Timeshare, especially 20 years ago, they were a lot better deal. You had to be an owner in order to access the resort. It was kind of like an exclusive travel club. Everybody, for the most part, I guess I shouldn’t say everybody, but most people like that feeling of exclusivity where they’re part of something, they’re part of a club or group. A lot of these resorts you could access for 200 dollars for a week or 300 dollars for week, which in perspective was a pretty good deal compared to renting a hotel room or something like that.

 You were able to travel. They sell you a bit of a dream. A lot of people looked at these perpetuity contracts, which can be inherited, as a generational legacy. You can leave this to your kids, where most people unfortunately found that that’s not what they wanted in the first place. They put you up in the nicest rooms when you go to these presentations, they wine and dine you, essentially, they sell you a dream, kind of a dream of travel every year. I’ve heard from people that they bought it because A, it forced them to travel, maybe the husband or the wife worked quite a bit and it kind of forced them to take a family vacation. People have bought them because they wanted a place to travel with their grandkids or their kids, a place to go every year.

 People’s lives change, circumstances change, that’s when those contracts start to get a little bit more difficult.

Bob: A lot of these timeshares have pretty significant upfront costs to buy in, is that correct?

Nathan: Yes, we’ve seen them very anywhere between … Next to nothing, I shouldn’t say next to nothing, 3 to 4 thousand dollars is a lot of money, but 3 to 4 thousand dollars, and we’ve seen mortgages as high as 350 thousand dollars for a timeshare.

Jason: That’s the upfront, that’s the one time cost just to buy in initially.

Nathan: Yeah, just to buy in.

Jason: Then, you’ve got this ongoing fee associated with it as well.

Bob: You used the word mortgage, they’re actually technically buying a slice of the pie of some properties, is that right?

Nathan: Yes, some of these are actually deeded properties, some of them you just buy a “points contract”, but yeah, a lot of them, if you can pay the initial fee upfront, then you sign up for a loan with the timeshare company. Like I said, we’ve seen some very high ones. I think people get into these loans assuming that there’ll be finance them eventually down the line. The average interest rates we’re seeing in our … I’ll be guessing somewhere between 14 and 16%. You do that on 100 thousand dollar mortgage, it adds up.

Jason: That’s insane.

Bob: Have you seen examples of seniors being aggressively targeted for timeshare sales?

Nathan: I wouldn’t say that we have exact examples of seniors being aggressively targeted, we see all different sorts of people, originally, when this business started we thought “Well, maybe this is going to be more for seniors that no longer want the timeshare or can’t travel anymore” but really we’re finding that our clientele is everybody. I had a brand new couple that just come back from their honey moon, 22 years old, they got into a timeshare. Then, I’ve had people that literally are planning for what they’re going to be leaving behind and the timeshare isn’t something that they want to leave behind.

 I wouldn’t say that we’ve seen, obviously, we’re never there in those presentations, we’ve heard some stories from customers, and we do have to consider that hearsay until we really dig into it. But, we see all different sorts of clients.

Jason: Nathan, one of the reasons that we wanted to have you guys on the program today is because I had a … We’ve worked with several people, actually, that own timeshares, I have to say some people really love them. There is this one client in particular who was sold, we feel, very aggressively some timeshare points, she already had a timeshare and she went to her timeshare and then was sold points to an excessive degree. We sent her to an attorney to see if she could get out of that. After the attorney reviewed all the paperwork, he said “Boy, these things look like they’re bullet proof” he said “I don’t think there’s really anything I can do”. Are there incidents where you run into situations where you just aren’t able to help people get out of timeshares?

Nathan: Yeah. There unfortunately are, not very many, we’re really good at what we do, it is definitely in the minority, but there have been some incidents where either the timeshares aren’t going to play ball or yeah there’s a ironclad contract and there’s nothing that we can do without going further into the legal process, without an attorney going further into the legal process.

 A lot of times, as you know, this is nothing against attorneys, it’s just that they’re not inexpensive, they’re quite expensive sometimes. It’s kind of that cost benefit of fighting them legally, sometimes, isn’t cost effective for some of the clients. But yes, if we’re unable to get somebody out of their timeshare contract the great thing about your company is, we refund you your money, 100%, even if we’ve been working on it for six months, if we can’t get you out, we give you your money back.

Jason: Wow, that’s a pretty bold guarantee.

Bob: I could imagine that are some seniors who are beyond the age of being able to travel and still have to continue these fees and some of those fees continue to grow.

Nathan: Absolutely, I had a client in my office just a couple of weeks ago, in fact, that he bought a timeshare about 20 years ago and it has been 13 since he’s used it. Each year he pays the maintenance fee, his resort, actually, had a special assessment, probably 6, 7 years ago that he had to pay an additional fee on top of this maintenance fee. With those fees going up every year, 13 years, you paying for something that you’re not using. That’s when we’re here for those clients that need or want out of those contracts.

Jason: Nathan, you were talking about that what you guys charge to help people, is that just a flat fee regardless of their situation or does it change based on personal circumstances? How do you guys bill for that?

Nathan: Yeah, you would know the fee after the initial consultation, because every timeshare is different, so no, it’s not a one fee for every customer out there. When we meet with you, we review your portfolio, see exactly who your timeshare is with, what type of contract do you have, whether do you still carry a mortgage on it or not, whether it’s paid in full, all those go into our system and that factors into our pricing. We input what you have into our system and it calculates the pricing out from there.

Jason: Is this just a little nuance, is there a window of time where you guys have the ability to do this and it could go away because the timeshares are going to start revising their contracts and making them more ironclad so that people can’t get out of them? Have you guys just found a loophole at this point?

Nathan: The nice thing is we found, I don’t know if I can say 100 different ways out of a timeshare contract, but there’s several different ways of getting out of a timeshare contract. We may have to use a combination of those in order to get out. It’s essentially our secret sauce, but no, timeshare sales are up, we would have to grow … We’re a large company, we have over 40 offices between the U.S. and Canada, it’s not like we’re a small company by any means, but we’d have to grow five or six times larger just to keep up with the new inventory coming in from people buying timeshares each year.

 I really don’t see that right now, we’re a big fish in our pond, we’re the leaders in our industry, but to the timeshares, some of these are billion dollar companies, are multi-billion dollar companies that I don’t see anything changing at this point.

Bob: What happens when somebody decides to default on the payments or can’t make the payments because they don’t have the income, what happens?

Nathan: It starts as the normal “What happens when you don’t make your payments?” Get sent to collections, we’ve seen people, obviously, coming to our office that are already in collections, but we’ve actually seen timeshares take it further as well, we’ve seen liens be put on property, we’ve actually had clients come in here with wage garnishment. There’s really no cap to where some of these contracts, again, I can’t speak to all of them, but we’ve seen it all the way to wage garnishment.

Jason: Do you see the industry changing at all to become more flexible so that people, if the need to make a change, they have a life event, are timeshares making it easier for people going forward?

Nathan: We’re not seeing that, if anything it’s almost going in the other direction. These companies have attorneys that write very good contracts. You are, most of these people are stuck, when people, say have a life event, we have people that come in for all different reasons, whether it be a significant other spouse dies, somebody retires, maybe there’s a divorce, a loss of job, a sickness, we’ve seen them put, maybe, temporary holds on their account, maybe they don’t charge them for a year, 18 months, but we, very rarely, see an instance where a customer just says “Hey, X, Y and Z happened and I can’t afford this anymore” where they’re actually let out of the contract.

Jason: Nathan, I just wanted to ask real quickly, because I want to ask this before we get too far into the interview. You guys have a website, I’m assuming you also have the ability for people to request additional information, would you share with our listeners if people are in a timeshare and they want to get out, would you share with them the best way to contact you guys and learn more about the work you do?

Nathan: Yeah, absolutely, timeshareexitteam.com is our website, pretty simple there. If you go on there you can actually request information for a consultation or just some additional information about our company. All of our consultations are free consultations. If you have a timeshare, you’re interested in getting out, absolutely you can sign up via web, our telephone number is on there as well, you can call in directly. Again, we have over 40 offices between the U.S. and Canada, we just opened up a few more this past week. Whether we can meet you in your area, for some customers we don’t have an office nearby, we can meet you via webinar as well, we can meet digitally. We’ll take a look at your timeshare and see if that makes sense to you.

Jason: That’s great. Folks if you’re just tuning in, you’re listening to episode 114, this is Timeshare Exit Team. You can remember that all of these programs are archived online at soundretirementplanning.com. Nathan, how long from start to finish, from the time somebody consults with you and says “Yes, let’s go” until they’re out of their timeshare, how long does that usually take?

Nathan: We quote 9 to 18 months. It’s a bit of a process in getting somebody out, as is any legal or financial transaction. But we’ve seen them go a lot faster them that as well. I hate to quote our fastest exit, because then almost everybody would expect that, but we have them happened within two months, then we have some of them take up to 18 months. It depends on the way that these contracts are set up, the timeshare that we’re dealing with, there’s probably 1000 different timeshares out there.

 Each one is unique and each contract is unique as well. We quote 9 to 18 months to give kind of a vague outline. Because we really don’t want to overpromise and under-deliver, we’d rather do the opposite.

Bob: Nathan, I’ve got a question, we’ve mentioned fees and how they could be raised, but you also brought up assessment, do you want to tell us what those are?

Nathan: Yeah. Your annual maintenance fee is the fee that you pay every year to access the timeshare, regardless of whether you use it or not. Special assessments are fees, they’re really one time fees that can be charged multiple times, I know that sounds strange, but let’s say something as simple as the elevators need to be replaced in the hotel or it needs to be upgraded or the pool needs to be re-tiled, they can send you out fees on top of your maintenance fees in order to pay for the additional work that needs to be done.

 Say something that’s a little bit more severe comes through, say a hurricane comes through, a lot of these resorts are on the water and they have a water intrusion from storms all the time where the insurance doesn’t cover at all, as an owner you’re liable to pay for the damage as a lot of the times, you can see fees for even gaps in coverage, to cover some of these expenses.

 What we’re seeing a lot though, is that some of these timeshares are older, 20, 30-year-old timeshares. Siding needs to be redone, roofs need to be redone, windows. In order to stay competitive in the travel industry you need to have the latest and greatest, nobody wants to stay in a 30-year-old looking hotel when they’re on vacation. If there’s gaps in their budget or if sometimes if the budget it’s just mismanaged, the owners can be responsible for that, we see those all the time.

Bob: I know that there’s been kind of an underground market for people who can’t use their timeshare one year and they put it on these websites for other people [inaudible 00:20:44] for the maintenance fee or some fee rent their condo. How effective is that? Is that even an effective strategy for pushing off some of those fees if you’re not using it one year?

Nathan: Yeah. For some people it works, if you’re pretty computer savvy and you’re able to get on and book the “good weeks” at the timeshare. Unfortunately a lot of the good inventory is gone so quickly that if you’re not right on top of the bowl, you don’t get it. Maybe, you’re stuck travelling to Arizona in July, nothing against Arizona in July, but it’s hot.

Bob: I’ve been there, I know. Nevada, Arizona.

Jason: Sounds kind of good right now, actually.

Bob: 104, it was, oh god.

Nathan: Yeah, exactly. It’s not, maybe, the ideal location, in fact, I had a customer that came in, believe it or not, bought on the secondary market, thought she was getting a deal of a lifetime, bought 52 timeshares on EBay for 200 dollars, for basically nothing. Thinking that “Oh, I can rent them out each week and I’ll make money each year”. Unfortunately she was stuck with over 35 thousand dollars worth of maintenance fees each year, she was really only able to recover about half of that in rentals. Maybe you can’t rent it out, maybe you can’t … If not each year, maybe you can only rent it out every three years or something. What happens is special assessments come up on half of those properties and your rental fees don’t even come close to covering it.

 Some people are able to make it work, they’re able to rent out their weeks, if own on Memorial Day weekend and you happen to own that specific week, which most contracts aren’t set up that way, if you did, then yeah, you’d probably be able to rent it out. But, most of the time it’s very difficult to, but some people have found success in it.

Jason: Nathan, knowing what you know now about timeshares, what would be the number one tip you give people before they enter into a contract like that?

Nathan: Read the Fine Print. These presentations are set up for 90 minutes where they show you the resort, they show you all the good things, they generally feed you a very nice meal, show you the top rooms, but really, as any contract, I feel like most people don’t read the contract to the extent that they should. Some of them are in that nobody really understands anyway, read the Fine Print, see what you really buy in, for liability reasons, take a look at what you’re signing up for. Is it a life time contract? Is there a cap on the maintenance fees year by year? Is there the chance of receiving special assessments? What’s the booking process look like?

 The big thing is I would take a look at some reviews on the timeshare, see what other people are saying, see if it’s available on the secondary market, although there are some risks there, do your homework, make sure that you’re ready for a commitment, because I’ve told people “When you get married you’re entering into a lifelong commitment” unfortunately people have found it’s a lot easier to get out of a marriage than it is out of a timeshare.

Jason: Nathan, with that we’re out of time, but thank you, this interview has been really helpful, we appreciate you, thank you.

Nathan: Not a problem at all.

Announcer: Information and opinions expressed here are believed to be accurate and complete, for general information only and should not be construed as specific tax, legal, or financial advice for any individual, and does not constitute a solicitation for any securities or insurance products. Please consult with your financial professional before taking action on anything discussed in this program. Parker Financial, its representatives, or its affiliates have no liability for investment decisions or other actions taken or made by you based on the information provided in this program. All insurance related discussions are subject to the claims paying ability of the company. Investing involves risk. Jason Parker is the president of Parker Financial, an independent fee-based wealth management firm located at 9057 Washington Avenue Northwest Silverdale, Washington. For additional information, call 1-800- 514-5046 or visit us online at soundretirementplanning.com.