Timeshare resales CAN give you all the diversity and variety you count on when buying vacation ownership from a developer (the timeshare brand), yet you can sometimes buy resales at a fraction of the developer’s price. Like anything else, this is because timeshare development companies must mark up the sale of each timeshare to cover their development and sales costs.  This is perfectly normal and reasonable.  Similarly, if you buy a used sofa, you would expect to pay some fraction of what the selling price was of the sofa when it was new.   Its just common sense.  But lately, there seem to be many “re-sale” weeks available at 50%+ discounts compared to the original price. Below are some helpful tips about the realities of purchasing a re-sale timeshare.

Be prepared for a loss…Timeshare is not always an investment – You may not get back what you originally paid.

OK, the sales person may have told you that your timeshare could appreciate in value. This is simply not always true. While many fractional ownership units to re-sell for more than the original selling price, many do not.  Resale timeshares often sell for only 60-70% of the original price — some for as little as 25-35% in distressed situations.  You will generally be sorry if you buy a timeshare that is in a “distressed” situation….but there are deals out there”. The resale price of a timeshare is often the most difficult truth for a seller to bear.  But please realize, you are trying to sell something that must not have fit into your situation, ie, the week no longer fits your vacation schedule, the property next door was finished so your window looks out onto a wall or your kids are grown and you don’t travel like you used to.  ALSO, you are not a professional Timeshare salesman. Whatever the reason, after an owner has used his timeshare for 5-6 years and saved thousands vs what he would have paid to rent, it seems logical that the re-sale price could be lower than the original price.  The total cost of your ownership was marked up to cover development costs,  sales presentations, incentives etc.  In the long-run, it’s timeshare purchasers who absorb these costs.   Think about this:  If you bought a deluxe, flex week at a 4 star property for $19,900 and used it for seven years, saving over $10,000 in lodging fees and then sold that week at a 30% discount ($6000), getting only $13,900 back….have you lost money?  My answer is no, absolutely not.  You had ownership in a development, received all types of concierge services, maybe rented the week one year on HomeAway for $2,500, let your kids use it for Spring Break and now you get 70% of you money back.  I’ll take that deal.

Now, You have to be careful purchasing re-sale timeshare – there are scams everywhere out there.

Given the 2008, Sub-Prime, financial meltdown, many timeshare developers went bankrupt.  Many banks foreclosed and liquidated the inventory at just pennies on the dollar.  That has now about run its course and prices have stabilized and at quality properties in quality locations, are now going up.  With so many owners desperately wanting to sell their timeshares, it created an environment in which illegitimate companies were able to swindle hundreds of thousands of dollars from owners. There are many timeshare re-sale scams — both past and present — however, the most common involve companies that claim to have a buyer waiting. Once they have hooked you, they will charge you a fee to appraise or transfer the property, but the sale never goes through. Another common scheme is to pose as a “relief company” and charge a fee to take your timeshare off your hands; similarly, the transfer of ownership never goes through and you remain responsible for the unwanted timeshare and fees.  Just be smart, YOU KNOW WHEN SOMETHING IS TO GOOD TO BE TRUE.

DO YOUR HOMEWORK !!

1.  Make sure the HOA or POA is well organized and well funded.  Get a copy of their financials and a copy of the last few board meeting notes.  This will tell you a lot.

2. Don’t sign any transfer, purchase, sale, assignment etc, paperwork until you have read the title documents including the deed!!!!

3.  If the property is close enough, go look at it.  If not, have someone go look at it.  I once hired an UBER driver in Hawaii (I was in Texas) to drive to and walk around and video a development and email me the video so I could see what was there.   The pool was green, the bar boarded up and the security fence falling down!! No wonder the week was offered at $1,100.

4.  Talk to other owners in the development.  With AirBnB, HomeAway etc out there, its really pretty easy to find other owners.

5.  Call the real estate commission in that state and find out if all the State required forms and registrations are in place.

6.  Don’t be cheap!!  You get what you pay for.  Folks that buy 3 Star + interval ownership AND use it,  are almost always very happy and very often enjoy much higher re-sale values.

 

Chris Bounds Austin Texas