I had quite the experience going to one of those Timeshare Promotions with the promise of a $40 American Express card, a trip for two to Las Vegas for 3 days and 2 nights (airfare and hotel included) or a trip for two to a cruise leaving a nearby port, plus either a $49,000 BMW, $1500 shopping spree, $500 cash, or a romantic getaway for 5 days and 4 nights for two.
While I chose to not purchase the Timeshare, in the process of doing my own research I found some really neat websites and resources for people looking to sell their timeshares and get out of their contracts, or people wishing to purchase or rent a timeshare at a fraction of the cost.
Considerations When Selling
Most timeshares come with maintenance fees that you need to pay each year, and if you are no longer using the property, then you are wasting money. Your best option is to sell your timeshare as resorts typically will not purchase them back from you. Unfortunately, most timeshares sell for 25-50% of the original price you paid for it. If you are still paying on your timeshare loan, you may not be able to pay off what you owe by selling, which means you will have to put money into the sale. If you cannot afford to sell the timeshare, Tug2 suggests trying to refinance to get a lower interest rate (for mortgage-type loans). For consumer timeshare loans, you may be able to sell without owing anything. In the meantime, you can list your timeshare week(s) to rent and recoup some of the maintenance fees. Another great idea offered by Tug2 is to donate your timeshare and take a tax deduction should it not make financial sense for you to sell it.
Finally, be wary of any sites that charge a large upfront fee in order to list or sell your timeshare. Any fees you incur upfront should be between $10-$50.
How to Sell a Timeshare
There are several auction sites where you can auction off your timeshare week. Bidshares has a free membership and is fee-free as well. EBay has become a popular place to sell timeshares; just be aware that you will have to pay a $70 fee to do so and other fees may apply. You can also hire a broker to sell your listing. Try finding a timeshare broker on Licensed Timeshare Resale Brokers Association.
If you wish to make your own listing to sell your timeshare, make sure you competitively price your timeshare. Conduct pricing research by looking at listings on eBay timeshares or BidShares. Consider a contract with your buyer that includes all of the specific information involved with your timeshare, such as maintenance fees, the week(s) it includes, the selling price, deeds, etc. You will also have to involve your timeshare company so that the property title can properly be transferred (you will owe all maintenance fees until the title is transferred). In order to cover all of your bases, you may wish to use a timeshare closing service, such as Timeshare Transfer, Inc., or JRA Services, Inc., which will cost you approximately $350.
Timeshare Rentals and Resales
You are in luck: purchasing a timeshare resale from other owners will save you roughly up to 75% off of the costs if you were to purchase one through a timeshare presentation. While shopping around on any of the sites listed above, be aware that you will also be responsible for annual maintenance fees and add this into your total cost to see if it makes financial sense for you to purchase one.
Also, carefully look into all of the details of the timeshare you are purchasing. Is the timeshare linked with RCI, which allows you to exchange your timeshare week for one in hundreds of different countries? This could add considerable value to you.
Once you find a timeshare that you want, it is in your best interest to have a contract with the seller. The contract should specify all of the details of your timeshare. You may also wish to have an escrow account involved for a smooth transfer of funds, deed, and title.
Timeshares have a bad rap, earning the timeshare scam name, for reasons such as the way they are sold, the exorbitant upfront cost, the maintenance costs, etc. But if you could purchase one at a severe discount, it may make financial sense for you and your family, if a vacation home isn’t what you are looking for. And for those of you stuck with a timeshare contract that you purchased for full price, there are ways to unload your property or at least produce a little rental income in the meantime.
Does anyone own a timeshare? What are the pros and cons for you and your family?
I do not own a timeshare and never will. There is too much that is out of my control. Similar to a condo, you can get stuck with an assessment or rising maintenance fees. Besides, why would you want to buy something that has such terrible resale value even if you bought it at a discount. I would rather have the control and variety of deciding when, where and how much I will pay based on where I will be going on vacation. Is it a lean year where I can go on a discounted vacation near my home, or is it a good year where I can splurge for a bed and breakfast with spa included? Or maybe this year I decide to stay in a luxury hotel with all the amenities but next year I decide to go to Florida and stay with my buddy who lives there. I understand you have choices of when where etc, but I think with a timeshare, overall you will always spend more than you would otherwise. But you have to understand that I am one to take frugal vacations so I might be coming from a different place than someone who takes more expensive vacations. They may have another take on it.
I have been to several presentations and get offers for timeshares all the time. I also know many people who own one. I have also looked at and bid on vacation rental real estate, including condos, as a comparison. A time share is really a pretty complicated transaction disguised as a real estate deal. Frankly, as a real estate deal, every single one that I have ever seen stinks terribly. Even buying one at a huge discount is typically not a great deal because the yearly fees eat you alive. I think what sells people is really the “dream” of taking vacations in exotic places, and their “purchase” of the time share is really more of an expression of a desire for that dream than a realistic analysis of investment principles. They also typically assign a large value to the alleged ablity to trade the time share – typically without first doing their homework with regard to how such an option should really be valued. (Hint: usually not much). As an interesting fact, note that many charities will not accept the donation of a time share because in practice it has negative value. Frankly, I have never seen a timeshare deal that I would accept even if the “timeshare” were free – the ongoing costs are just too high.
My family owns two timeshares, and my dad gets one through the federal employee vacation program (allows him to buy extra weeks for the price as if he owned it). Since in our family we take vacations about 2 to 3 times a year (my parents once or twice and my family once or twice) the timeshare option does make sense for us. Typically we take two week vacations where we travel around some country for a week, staying in very frugal hotels/motels, and spend the last week at the timeshare. Typically it ends up costing us $500 to $800 for a week, including yearly maintenance fees, which isn’t too bad considering we stay in luxury 2 to 3 bedroom resorts. It’s even more financially sound if we bring friends to occupy one of the extra bedrooms and split the cost.
However, this makes sense for us because we actually travel, and spend around $3000 every year on vacations. If you rarely travel, or prefer to travel on a very tight budget, there’s obviously no way a timeshare would be able to beat out, say, a 6 night stay in a $45/night motel in Orlando, especially after maintenance fees. So, it does make sense, but only if vacation and expensive travel are a regular part of your life already. It’s not a good idea to use as a motivator to get to that life.
If timeshares are a good idea and they fit my lifestyle, how would I choose from so many timeshare companies in the market? Are some timeshare systems better than the others? What are your recommendations for timeshare companies?
Hello Phi Cha!
I must admit, I do not know what the best companies are and would not feel comfortable recommending one in particular. Whichever company you choose, I would make sure they are affiliated with RCI International, as this will open up lots of options for you if you want to visit other locations. Perhaps this is a good topic for a follow-up post.
Sorry I could not be of more help!