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Looking for a timeshare or vacation plan? You won’t have a hard time finding one. The American Resort Development Association says in 2010 – the last year the information was available – there were 197,700 timeshares at 1,548 resorts, and 8.1 million “intervals” under ownership. An interval is usually defined as one week at a vacation destination, sometimes two.
But while getting into a timeshare will prove easy, don’t expect the same when it’s time to get out. Timeshares often plunge in value. Plus, the resale business is riddled with scams and when economic times are tough, that’s the toughest time to sell.
In the video below, Money Talks News founder Stacy Johnson has four tips for selling a timeshare fast, and another for buying one cheap. Check it out, and then read on for more tips on both buying and selling a timeshare…
Now let’s flesh out that advice and add more. First, if you’re thinking of buying a timeshare…
1. Skip the developers
As Stacy says in the video, you can buy a timeshare for a fraction of its initial value – sometimes pennies on the dollar – if you buy through an owner rather than the development company. Use timeshare resale sites like The Timeshare User’s Group and My Resort Network to connect with motivated sellers.
2. Pay in cash
The interest rates on timeshare mortgage loans typically run higher than traditional mortgages – between 12 and 18 percent on average, according to Professional Timeshare Services. But the main reason cash is king is resale: Like a car, the vast majority of timeshares depreciate in value. Which means, like a car, a big loan means you’ll probably be upside down and unable to get out.
3. Understand the extra costs
You won’t stop paying for your timeshare at the closing. Most timeshares come with annual maintenance fees that run into hundreds of dollars annually. In 2010, timeshare holders in the United States paid an average of $731 a year in maintenance fees overall, ARDA says. And don’t forget travel: Plane tickets to and from your timeshare could also add hundreds to the cost.
4. Don’t buy with a plan to sell
Only buy a timeshare if you expect to hold onto it. Timeshares don’t appreciate – in fact, depreciation is the norm. It’s unlikely you’ll get more than your purchase price, and odds are good you may not be able to sell it at all. Before you even think of buying, read as much as you can, including the Federal Trade Commission’s Time and Time Again: Buying and Selling Timeshares and Vacation Plans.
Now let’s tackle selling…
1. Sell where you bought
In the video, Stacy suggests starting with the company you bought your timeshare from. Some timeshare companies have a resale program. Others may provide you with a list of interested buyers. But most won’t help you at all. These people are in the business of selling new units, not helping you resell yours.
2. Sell to other owners
Ask the timeshare company who has the “interval” in your timeshare before and after you. Offer to sell your time to those owners. They may want to buy the timeshare from you to extend their stay.
3. Use a local broker
A licensed real estate agent might sell your timeshare for you, but you’ll probably pay a higher commission rate than you would on the sale of a house or a condo. According to the ARDA, the real estate company may charge you a commission fee of 10 to 30 percent. Before you sign up with a real estate agent, ask about the agent’s marketing plan and experience. Don’t pay commission to an agent who will only post an ad online, since you can do that yourself. Look for a licensed agent experienced in selling timeshares.
4. Sell online
You can sell your timeshare online yourself. Some websites specialize in reselling timeshares. Check out:
Post a free classified ad on a local buying and selling site like Craigslist or the online classified section of the local newspaper where your timeshare is located. By posting an ad in the timeshare’s location, you’ll attract buyers interested in that area.
If you need to sell quickly, use an auction site like eBay. Starting an auction on eBay costs $70 – including a $35 insertion fee and a $35 final value fee. The auction can run from one to 10 days. Here are some tips for writing that ad…
- Find your selling point: Research other timeshares and hotels in your area and find something your timeshare has that other vacation options don’t. Use that as leverage when you post an ad. Make your timeshare stand out and you’ll draw in more buyers.
- Price competitively: As Stacy pointed out in the video, timeshares in the same resort can be nearly identical. Check local ads for other timeshares for sale in your building and price yours lower. When buyers have several to choose from, they’ll obviously choose the cheapest unit first.
- Time your sale: List your timeshare a month or two before the start of the vacation season. That is when the majority of buyers will be looking and you stand a better chance of selling your timeshare quickly.
5. Watch out for scams
Timeshare resale scams are always widespread, but scammers really start coming out of the woodwork during tough economic times. In 2009, the Federal Trade Commission received 819 complaints about timeshare resale. By 2011, that number was more than 5,000, according to USA Today.
Horror stories abound. In an article called Selling your timeshare? Look out for scammers, the Virginian-Pilot recounts a story of one couple called by a resale company that had a definite buyer for their unit – they even had a signed letter of intent from the buyer. All the owners had to do was send $375 to the company and the sale was done. They sent in the money, then never heard from them again.
Watch out for resale companies that offer to “take the timeshare off your hands” or want large sums of money upfront – they’re likely a scam. For other companies, do your research before signing up. Contact the Better Business Bureau to see if the company has any complaints against them. Compare prices with other resale companies and get everything in writing – including contract terms, marketing plans, refund policies, and costs – before you agree to anything.
And check out another useful FTC Web page: FTC Warns Consumers to Exercise Caution When Selling a Timeshare Through a Reseller.
Bottom line? If you want to buy a timeshare, make sure it’s something you’ll be able to use, enjoy, and afford for life. And if it passes that test, don’t buy it from a high-pressure on-site salesman. You’ll find plenty of hapless people like the one in Stacy’s story looking to get out and willing to sell cheap.
And if you’re planning on selling, tread carefully and keep your expectations low.