Timeshares are one of those things people love to hate. Sort of like network marketing or President Trump. Lots of bad press, but enough positive aspects and flashy hype that people keep coming back wanting more. But are they really as bad as they seem?
While the days of extensive browbeating, high pressure sales tactics, waterboarding and long hours detained in a hotel meeting space still exist, the perks of timeshare ownership have improved. Yes, you still have to listen to an endless sales pitch about the glories of owning two weeks’ of time at a 5-star hotel or condo until you finally break and sign your life away (when you were really just holding out for the flat screen TV they promised you “just for listening”). But now there are better location offerings, at least. Yet, even with the smarmy reputation of timeshare ownership, new generations of people keep showing up to listen to the pitch.
While the days of extensive browbeating, high pressure sales tactics, waterboarding and long hours detained in a hotel meeting space still exist, the perks of timeshare ownership have improved
Today’s timeshare world looks somewhat different, however, as a more savvy generation does their research, is skeptical to begin with and is leery of commitment. So understandably, many people come into the process with their dukes already up; in fact,the American Resort Development Association noted that timeshare buyers aren’t elderly nor as easily duped, as in days gone by, saying:
“[Today’s buyers] are nearly 10 years younger than typical timeshare owners. Thirty-nine percent are Gen Xers and thirty percent are Millennials, with the median age of thirty-nine. Forty-two percent are African American or Hispanic. They are also highly educated, with seventy-two percent being college graduates and twenty-three percent of those having graduate degrees.”
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So, is timeshare ownership a smart financial move, or is it a siren’s song luring would-be vacationers to a permanent financial commitment?
According to Investopedia, “A timeshare is an ownership model in which many customers own allotments of usage in the same property. The timeshare model can be applied to many different types of properties, such as condominiums, homes, campgrounds, recreational vehicles and private jets.” One of the draws of timeshare ownership is being able to own a piece of something you would otherwise not be able to afford. That’s cool.
But know this: Sales reps for timeshares work for property developers who want some quick and residual money as a return on their investment. They’re not interested in the returns on your investment, in fact- it’s not an investment at all, but they’ll make sure you think it is.
One of the draws of timeshare ownership is being able to own a piece of something you would otherwise not be able to afford.
Says Investopedia, “The prices that developers charge are many times more than what a buyer could get on the secondary market, and the extra money goes toward commissions and marketing costs. In addition, timeshare salespeople may conceal the true cost of timeshare ownership and exaggerate potential benefits.” Still interested? Keep reading.
You bought a timeshare to own a little piece of vacation. And who doesn’t like vacation, right? Now, you feel like, amid all the brown slushy snow and frigid winds of winter, you’re guaranteed vacation because you just bought vacation- for life! Alas, “for life” is the part most people forget about when they’re packing their linen Hawaiian shirts. In fact, buying a timeshare “is often an emotional and impulsive decision,” says Forbes contributor Ron Keleman. (That’s what the sales team is counting on, by the way.)
Even so, MarketWatch reports that “about one out of every 12 Americans (7.9%) owned one in 2014, up from 7.2% in 2012,” and that timeshares “generated $8.6 billion in annual sales in 2015, up 9% from a year ago.” So, you’re not alone at least.
Keleman notes that timeshare ownership can be advantageous to those looking to pay only for what they actually use (as opposed to, say, owning a property that may sit vacant half the year), who love the option to return to a place they love when they want to, or have the flexibility to trade with others, and rent it out or share with family and friends.
(Psst. Want to know what yours is really worth? Sharket.com has a tool that may help. Hint: Use it before you buy.)
If you decide to purchase a timeshare simply because you want to own your two weeks each year and you’ll legitimately use it- take one step forward. If you want to own a timeshare because you think it’s a smart way to hold onto a piece of real estate of actual value, take two steps back. If you want to invest in a timeshare because you think you’ll be able to realize a return when you sell it at some point in the future, go back to Start, do not Pass-Go, do not collect $200.
A timeshare is a lifestyle purchase, not a real estate investment, says Fox News. Want to cash out? Be prepared to eat the loss, and bring your appetite.
A timeshare is a lifestyle purchase, not a real estate investment
Notoriously, timeshares are difficult to unload. Did you know that 8 out of every 10 buyers, on average, never uses their timeshare? Add to that depreciation, yearly increases in maintenance fees, limitations on swapping locations or dates, and hidden language in the contract restricting your options (especially if your timeshare is overseas), among other things – you’ll finally appreciate those talk radio ads from places like TimeShareExitTeam.com– groups who specialize in helping untangle you from the vacation that never ends. #thestruggleisreal
MarketWatch notes, “There’s a million laws they break on a regular basis during the sales pitch and buying process [and] most timeshare companies prefer to release individual owners out of their contract rather than go to court and risk losing,” but these services aren’t free. Expect to shell out upward of $3,000 to escape the tentacles of a timeshare contract. Gulp.
But be wary when planning your exit strategy- the potential for fraud abounds with these businesses as well. In June of 2017, the FTC refunded over $319,000 to victims of a timeshare resale scam. Information Management Forum, Inc., which also did business as Vacation Property Management, was sued by the FTC and Florida Attorney General Pam Bondi; the court found that they “lured consumers into paying ‘registration fees’ for their services by making unsolicited telemarketing calls to timeshare owners and falsely claiming to have renters or buyers lined up for the timeshare property.” Know that the exit process can be just as fraught with fraud as is the initial buy.
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The Federal Trade Commission has some pretty specific thoughts on how to approach a timeshare if you’re interested in owning one. Read up, and consult an attorney if you don’t understand the language.
Here’s the gist: Due diligence is your responsibility and if you regret your purchase, there aren’t many options, so know what recourse you have. Keep emotions and impulse out of the equation, it’s what will cost you the most in the end. They’re counting on your desperation and ignorance. Know what you want, get it in writing, have enough money to make the purchase in cash, make sure you understand all the legalities (there are a lot), rights and restrictions and the resale market, set your budget, stick to your guns and be prepared to walk away if necessary, especially if you feel pressured. Assume you’re being lied to.
There’s a reason why the general sentiment in the timeshare world is, “You can check out anytime you like, but you can never leave”.
Alicia Purdy is the Managing Editor of Columnists at FinancialPoise.com. She holds a Master's degree in Journalism and has spent over a decade working as a freelance writer and editor in finance, politics and government and business.
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