caribbeansun

I don't think it makes any difference whether it's a flat fee or a % - if a fee is credited back it's the $'s that matter not the manner inwhich it was calculated.

Veras Group Jim

Hi Fcclax, thank you for your patience--no internet access this weekend, so just reverting now.

The answer to your question is, absolutely. In fact, our first two clients will almost certainly be joining clubs that we do not yet have agreements set up with.

I don't think The Veras Group has quite as much power as you seem to think, to tell you the truth. Our clients make the decisions, from whether to join a club at all to which club to join. We simply provide a great deal of comparison information, make the process easier by streamlining data gathering (imagine having to call 4 different clubs and set up all kinds of conversations, tours, etc.--it takes a lot of time), and provide information on the ways you can evaluate destination clubs. We answer questions about terminology, and are simply a resource. Picture a traditional real estate buyers agent--do they pick the home you end up buying, or do you?

All that said, Fcclax, as Kage has noted, you are more than welcome to pay us the fees we would receive from your membership, if you have a genuine concern about our bias. We will agree not to take any fees from the club in question, in this case. Clubs will love this, as it saves them a great deal of money. We're absolutely fine with it too!

We don't have a separate process for our clients paying our fees, though. Each club's reservation process is still the same, their homes are still the same and in the same locations, the costs are still the same, availability is the same... no matter who tells you about this information. Whether you pay us or clubs pay us, this information stays the same. And we go through the exact same process with you, regardless of how we are paid.

I do appreciate your points, Fcclax, in no small part because I am sure others have them and simply haven't asked. I have always felt you learn more from a healthy critique than from praise. So, thank you! Standing by for your additional questions and/or thoughts,

Jim

__________________
Jim Pippin
Co-Founder & Managing Partner
The Veras Group, LLC

Kagehitokiri

the question remains - for clubs that are not currently paying you, what happens when a client ends up going with one of them?

Veras Group Jim

Hi Caribbeansun,

Good questions and healthy points! Can I clarify something, first? To the best of my knowledge, there are only two ways to buy a destination club membership right now--through the club in question, and through The Veras Group. Are you suggesting that, because we are paid by the destination clubs, we are more biased than their internal sales forces? Or just that we don't meet an absolute standard of objectivity, and we may be perceived as still trying to "sell you something"?

As a clarification, we are biased in that we believe destination clubs are a GREAT way of traveling. We tell everyone who works with The Veras Group that. In fact, the cover letter of our collateral begins with this statement:

"We admit it: The Veras Group is biased. We are biased in our belief that destination clubs offer a compelling travel option for the right people."

Full disclosure on this point: we love this industry, and have seen it benefit many, many people. So, that is how we are biased. But, if we speak with a client, and they don't like traveling to different locations, and mainly just want a place in NYC, we aren't going to tell them DCs are right for them.

Good questions. I do really appreciate the thought you are putting into this.

There are two main parts to why we are compensated by destination clubs, at this point. First, although we work with relatively high net worth individuals, the costs of attracting, educating, and enrolling members in a destination club is expensive. To be candid, we simply don't believe clients will be willing to pay these fees, on top of their club membership.

Particularly at the beginning of the process, when people aren't sure of the value we will provide. Curious for your thoughts on this, CS (maybe we will change based on your feedback!). As a point of reference, this is very similar to how buyers agents work: have you ever paid substantial, perhaps 5-figure even, fees to begin working with one? I am not saying your suggestions shouldn't be our model, especially to maintain the highest standards of client-focused integrity--but, have you or any of your friends/colleagues ever operated under this payment structure with a real estate evaluation and purchase? I am willing to be convinced otherwise, but I'm not sure our clients would do this, right now.

Second, because every destination club has a budget for attracting and enrolling each new member--a dollar cost that works for their model--they are already set up to pay for acquiring new clients. Most people have still not heard about destination clubs, and clubs spend a LOT of money in advertising, events, mailings, promotions, PR, travel, company publications, DVDs, and so on, in order to attract new members. They then have to have professional sales people who can answer questions and help the new member enroll. Those salespeople need support staff to handle detailed financial questions, and technology people to support internet presentations, develop members only websites, etc. It is a lot of cost, for companies that are trying to plow all the member revenues into real estate, services for members, etc.

We have reduced these costs, which is good for the club, the client joining the club, and for us as well. But, although we have reduced these costs, it is still a similar order of magnitude and costs a significant amount. Since clubs are already used to paying these expenses, and our clients are not used to paying fees for real estate advising & purchasing services, we thought it made more sense to us to operate under this structure.

That said, we could have set up a different organizational structure, I suppose, CS, that would have been more of a professional services corporation. Pay us an hourly rate, etc. The reason we opted not to is because people often have many, many questions about destination clubs, and I hate to "keep the clock running" while I'm on the phone with you. I would rather really get to know your family, your travel interests, etc, without the hassle of billing you by the hour. I have met many of my past clients personally, and we prefer to operate more along the lines of a concierge, who you are always free to reach out to, ask questions of, etc.

Again, I am eager for your opinions & questions, CS. We are perfectly willing to let our clients vote with their dollars on these points--if you want to pay our fees, by all means, please contact us. No worries. Our interest is solely in helping you understand the industry, and make good decisions for you and your family.

__________________
Jim Pippin
Co-Founder & Managing Partner
The Veras Group, LLC

Veras Group Jim

Appreciate it, pwrshift! Very interesting discussion.

I am curious for your thoughts on something. Here is a theoretical example, on which I would enjoy your comments and thoughts.

Say a client works with us and pays us a $10,000 fee to do so. They then decide to buy a membership for $200,000. Now it gets a little tricky. Should we try to negotiate that price down to $190,000, since the client is paying for their own "sales and marketing expenses"? What if some clubs agree to do this, and others don't? This is somewhat likely, as clubs (particularly those who get audited by members or have member boards) don't like to have new members joining at different prices, even perceived different prices, at the same time--kind of the same experience as sitting next to someone on a plane, and finding out that they paid $500 less for the same ticket as you... can be a tough issue. What if we raise our fees to $12,000 next year--will clubs agree to the increased discounting?

Or, should it be entirely separate, so that the client is really paying $210,000 for the same membership? That is probably the only way to keep the perception completely independent. But, will clients work with us, knowing they are only increasing their costs substantially? My experience is that many DC members love to have a good deal, a nice incentive, etc. I'm not sure a client would pay $210,000 for a membership, if they knew they could get it for $200,000--even if they thought they would be better educated as a result.

Pwrshift, I am sure you are about as educated a consumer in this industry as there is. I believe I recall, from reading your prior posts, that you may be interested in considering a DC membership, when one comes up that fits your needs. We can help with that, and there may already be a club or two that fits all your criteria. We are happy to accept an initial fee from you to begin offering our services, even if it takes a year or two, or never. Or, you are welcome to work with us in our traditional no cost fashion.

But, our services are the same no matter what, and the information available on the industry is the same no matter what. We can't really change that, nor can we convince you to buy a membership with no homes in Los Cabos if you love Los Cabos, or to buy a membership for $400,000 if your pricepoint is $200,000. We can save you time, the hassles of gathering lots of data, calling different clubs, perhaps save you money, provide you with detailed comparison data on club homes (for example, Club A's homes in destination X are larger and located on the golf course, wheras Club B has two homes on the golf course, but they are a little smaller, and 3 homes closer to the beach), and more.

My personal opinion is that, the only way to really have clients comfortable with objectivity and a genuine focus on their needs, is purely and simply, to operate with integrity and a genuine focus on their needs.

So, again, if you don't like our service, feel our advice is biased, incorrect, pushy, or just plain not valuable--don't buy a membership through us. Simple as that. Buy it from the club directly, or don't buy one at all. No hard feelings! FYI, most people I work with don't buy memberships. Maybe I'm not that good of an advisor...

Just some thoughts on your point. Take care,

Jim

__________________
Jim Pippin
Co-Founder & Managing Partner
The Veras Group, LLC

Veras Group Jim

Fair question, Kage, thanks. We love the idea of doing this--no better way to begin a relationship with a company than to bring them an excited, happy new member. We would help the member enroll in the club and use it as an opportunity to discuss and finalize our agreement. Many clubs pay referral fees to their members who refer new members so we would probably earn that at least.

Really, I'm not concerned about being paid by destination clubs, though. Our agreements, and the discussion surrounding them, are much more surrounding the information we receive from clubs, and how we distribute that (confidentiality agreements, client website protection, how we talk about one club versus another). This is the big discussion point with DCs--not the fees. As a matter of fact, we worked with 3-4 clubs in developing this fee structure, and the pricing has almost unanimous appeal.

More questions? Hope so and thank you. Standing by,

Jim

__________________
Jim Pippin
Co-Founder & Managing Partner
The Veras Group, LLC

Tedpilot

Jim - Interesting set up. Having worked the HR aspect of the top 5% of my organization for a few years I understand your position. I use to make an analogy for many of the people I recruited and found jobs for. It is simple and they all get it. I would act as a "sports agent" finding the best position on the "right team". I see you doing a lot of the same. It is difficult at times to data dump years of knowledge in a single sitting with someone to help guide them into the right choice - some get it and some don't but they start to ask a lot of questions rather quickly!! No doubt part science and part art to make it work smoothly. Good luck to you all, I think you're providing an excellent service to the industry.

Ted

caribbeansun

Heavens no, it was the absolute standard of objectivity that I was referring to.


Very good and valid points - thank you.

I must admit that I was thinking in terms of a professional service organization model and NOT a real estate model. Why is that? I guess because I don't believe that any club is structured in a way that it is truly providing a real estate investment. I consider it to be a consumable product as opposed to an investment and thus I didn't go down that road. Your buyer's agent point puts that into perspective though and it's more understandable and acceptable from that point of view.

Re hourly billing - nope, think value pricing via fixed fee and that removes your "on the clock" objection.

One thing for your consideration - without some investment in the process your clients have no motivation for acting as in people don't value that which is free. I know this is contrary to my initial posting but you've got me thinking down a different avenue now. I've always felt that there's something worthwhile in qualifying your leads and the best qualifier is cash - write me a check and I know you're serious. What about charging a nominal fee of say $1,000-$2,000 which is refundable if they sign on with someone - you get compensated for your time albeit less than you'd like but you something at least, the client literally gets some buy into the process and it doesn't present a sufficiently large barrier as to make it a deal breaker.

Full disclosure around fee generation would seem to be an important part of your business plan regardless of the model that you base it on to remove the objectivity issue.

Interesting discussion - thanks for that.

Veras Group Jim

Thank you, Ted, we very much appreciate your comments and kind words. You do have, I think, an exact grasp of what we are doing. Sounds like you have some very similar personal experience!

Absolutely agreed about data dumps, etc. A lot of our initial client work is about sifting through the mounds of information and presenting the best compilation for a client's needs and interests. I also completely agree about this type of activity being art and science. We are building, as we speak, a host of proprietary comparison tools for our client's site, which will be useful for the real number crunching types and data analysis people. On the other hand, some people don't want to really think about data, but prefer to talk through everything. Makes it very interesting, and although we have an overall process that works well, we approach each client of ours from a very personal point of view, and consider how they want to evaluate their purchase.

Thank you again for the support, and please do keep in touch.

Jim

__________________
Jim Pippin
Co-Founder & Managing Partner
The Veras Group, LLC

Veras Group Jim

Got it! In that light, I agree, and we openly embrace the bias we have--that destination clubs are a great format, for some people. Relatively speaking, The Veras Group is more objective than purchasing directly from a destination club (for obvious and completely understandable, I think, reasons). In fact, perhaps outside of the forums themselves, we are the most objective source available for information on destination clubs.


Very good, CS, thank you. As a point of interest, there are several options that are structured so that it is a SEC-governed real estate investment, either a REIT or an investment fund. Those certainly aren't the majority of clubs, though, and our latching onto the "buyers agency" format simply seemed the most straightforward model. Particularly in making our service accessible to the traditional new destination club member--someone who is likely looking at vacation real estate or fractional interests, and used to working with realtors.

There are still some issues with the buyers agency format, of course, but we are working to minimize and/or eliminate them as much as possible. For example, our process is a service & education process, not a sales process like some realtors/agents. We are growing The Veras Group into a healthy mix of buyers agent, trusted concierge, and perhaps even a bit of an auditor/reporter as well.

It's great to have this conversation, CS, because this is exactly the debate my partners and I engaged in when launching The Veras Group.

In fact, our planned fee was $2,500, to begin working with us. When you purchased a membership, we would apply the fee to your purchase. If you didn't, it was for our time as professional advisors. Great to see you came to exactly the same place we did--always nice to have validation of concept!

We decided that, initially at least, we would make our service complimentary to our clients, in order to attract a larger client pool right away. We felt that any fee would disqualify some people who were good potential members of a DC, simply because they weren't sure whether or not DCs were right for them. And in our role as agent to the entire industry, we feel our role is to bring DCs to a wider market, educating new clients on their benefits.

So, charging a fee just adds an obstacle to the process that (potentially) could disqualify people right from the start who could, with a little education, become highly satisfied members. We'll see if that proves true! We are currently keeping up with the client work while also developing the business, but we intend to keep monitoring our growth and see if a fee becomes a good idea, for just the reasons you suggest.

Full disclosure for our clients: absolutely. Has to be that way, I agree.

Thank you for your discussion as well, CS. Very helpful, interesting, and I appreciate your points! Always happy to answer more questions.

Take care,

Jim

__________________
Jim Pippin
Co-Founder & Managing Partner
The Veras Group, LLC