Why spend $150,000 on a vacation home when you could get one for $20,000?
That’s part of the premise of timeshares. By combining forces with other buyers, you can get a second home for a fraction of the price you’d pay as a solo buyer. Not to mention, you might get a better property with more amenities than anything you could afford otherwise.
Tempted yet? Before you get too carried away, you should know a few key things about a timeshare purchase, including how hard it is to resell once you’ve outgrown it.
All about timeshares
Let’s start with the basics. “Timeshare” might be a familiar term, but do you really know what it means?
As the name implies, a timeshare is a property that you share with others. Often you’re a deeded owner, and your portion of the property can be passed along in an estate or sold as with any other piece of real property. Traditionally, timeshare holders have been allotted a specific week or weeks in which they can use the property.
Nowadays, timeshares tend to be more flexible. You’re still a deeded owner, but rather than giving you a specific unit to use at a specific time, you may be allowed to change your vacation week from year to year. Others call themselves “vacation clubs” and dole out points that can be redeemed at other units or resorts owned by the same developer.
On its consumer website Vacation Better, the American Resort Development Association touts a timeshare as being a way to prepay future vacations at today’s prices. The average timeshare cost about $20,000 in 2014, it says. And, depending on where you vacation, that could end up being a bargain compared with a lifetime of hotel costs.
Here’s the rub: The purchase price is only a portion of the cost of the timeshare. In addition to what you pay up front, there are annual fees that can range from the hundreds to the thousands of dollars. Remember, you’re a part owner in the property or resort, so you’re responsible for helping pay maintenance costs, property taxes and other expenses related to its management.
And yes, those costs can increase over time.
Why you should always buy a timeshare from a current owner
Those maintenance fees are why you should always purchase a timeshare from a current owner rather than buying directly from a developer.
You see, some people are desperate to get out from under those annual fees. Their kids may be grown; their job may be downsized; they may have developed a health condition that limits travel. And yet those annual fees won’t stop coming. And selling a timeshare isn’t easy.
As a result, some owners may be willing to sell their timeshares for pennies on the dollar, especially if you’ll help cover the closing costs.
Yes, that’s right. There are closing costs. This is a property sale, after all. In addition to paying for a title transfer, you may also find some resorts charge their own transfer fees, which can tack thousands more onto your price.
All those extra fees are part of the reason you don’t want to simply bid on the first penny auction you see for a timeshare. Even if the auction price is practically nothing, you could still find yourself on the receiving end of a big bill.
5 places to find cheap timeshares — and what to ask before buying one
If you’re convinced a timeshare is right for you, you can check out these websites to pick one up at a fraction of the original price:
After spending far too much time browsing the listings on these websites, my verdict is that eBay auctions, although inconsistent, tend to be the easiest to understand and the most complete in terms of laying out what you get and what you’ll be paying. However, not all auctions are created equal, and certainly some of what is posted on the site appears vague or even shady.
The runner-up is the Timeshare Users Group, known as TUG, which has easy-to-scan listings that make it simple to find timeshares with the right number of rooms at the right price. Don’t forget to check out the bargain basement section for plenty of $1 timeshares. You can also head to their Bargain Deals forum where people are literally giving away their timeshares.