Lately I’ve been hearing ads on the radio for TimeShare Exit Team. I haven’t bought a time share but I know a few people who have, with varying results. I am also the survivor of a timeshare presentation. A timeshare is a fractional ownership stake in a resort complex where people are usually allotted a week per year. They pay to buy it, plus they have to pay maintenance fees every year.
I find the industry fascinating. I watched a show called “The Queen of Versailles” about the Siegel family from Florida made very wealthy by through the ownership of Westgate Resorts. It followed their tough times in the recession of 2008. It had an interesting aside where one of his employees mentioned something about needing to close some deals so they could get some more maintenance fees in order to keep the company alive.
I have a family member who briefly worked in the business and that was a real eye opener. They’d meet people arriving at the airport and give them flowers and invite them to a pitch. The lack of morals were distressing to my relative as she learned that the best salespeople really were psychopaths in the sense that they had no empathy and didn’t care that they were preying on the elderly who might not be the best fit for a timeshare, so long as they could close the deal. Not all of the timeshares her company sold were duds. If you knew which category to buy and which weeks of the year were best, you could actually rent it out and make money with it. But most of the weeks they were selling weren’t so great and it probably wouldn’t be a great investment.
The maintenance fees are the problem with timeshares, since you have to pay maintenance whether you get to stay in your place that year or not. Many timeshares belong to agencies like RCI or Interval International which give you the ability to exchange your week so you can stay in another resort in another part of the world. Some people are quite happy with this and the system works for them.
I can understand why the pitch works. The properties can be beautiful. They are nicer than typical hotel rooms and generally include full kitchens, which is great for family holidays. They go to all kinds of extreme measures to reel in people on holidays and take them on tours, show them the best (and most expensive) suites, and get them imagining how wonderful it would be to be able to own that unit for a week every year. They dazzle the attendees with photos of all the gorgeous properties that are part of the exchange network
There is a reason why they won’t let only one half of a couple attend the presentation: it is far too easy to back out of a pitch by saying you need to talk it over with your spouse. They want to be able to do the hard sell to both of you and show you how much better your life would be with such a fabulous investment for your holiday every year. Then they apply the icing on the cake about how they are giving you a special price that is good for “today only”.
For starters, an investment is supposed to appreciate in value. A search of Ebay or Craigslist will often show timeshares available for $1 as owners are desperate to dump them and be done with the maintenance fees. I can’t remember what the price was in our pitch, I think it was somewhere around $15,000. Maintenance was about $1000 a year for the entry level. This would have been for one week. Granted, the property we saw was gorgeous, it was the Marriott Beach Club in Hawaii. The pool was fantastic, the suite was huge with a beautiful, granite-countered kitchen.
This is a great article which suggests that one CAN break even with timeshare ownership over 10 years, of course assuming that people go on a resort vacation for a week every year.
One of the arguments against buying a time share is that new ones keep being built every year, while the demand for older ones lag, and then special assessments get levied for major upkeep as the properties age.
The TimeShare Users’ Group listings of places for sale in Hawaii is very interesting. The Marriott in Hawaii that we were pitched has 2 bedroom suite resales listed between $7,500 and $25,000, with maintenance fees of about $2,000 for one week’s holiday (it doesn’t seem to matter what the cost of the timeshare unit at that same resort is, the maintenance fees are the same). Timeshares in the Orlando area are quite a bit cheaper to purchase, with many listed for $100 or less, and maintenance fees of at least $500 a year. Properties at Marriott and Westgate resorts tend to be the more expensive ones, with prices listed above $10,000. I was surprised to see that Westgate had such a high resale value, to be honest, after having seen the documentary.
Timeshare Users Group is really good reading for anyone interested in TimeShares. TimeShare Exit Team’s blog makes for great reading, too. They point out that many people get shackled because the properties ARE in expensive resorts and are meant to give the average family access to a luxury vacation home which they otherwise wouldn’t be able to afford. You can only use it during your allotted week every year unless you find someone who will trade with you, and the maintenance fees tend to increase every year.
It is very hard to dispose of a timeshare since the market of people looking to buy one secondhand is small and the resort company that sold it to you won’t ever buy it back (though they might say they well at the sales pitch). Apparently there are some qualities that give your timeshare a decent chance at being saleable:
- Maintenance fee of less than $250 a year
- A Marriott or Disney property (though timeshare exit team says they see them sell on EBay for $1)
- Located in Hawaii
If it has none of those features, it will be very hard to find a buyer.
Timeshare Exit team is interesting reading, they say that they look to get your contract dissolved in order to get you off the hook. It sounds like they present a convincing argument that the way the company coerced you into buying the timeshare was based on lies, fraud and deceit, making the contract unenforceable, using a consumer protection approach.