Too good to be true? Why buying a resort timeshare may be a bad idea
As the world opens up again post-Coronavirus, many families are finding their vacation dreams dashed. With countless rental properties forced off the market, options have shrunk. Competition for the properties that remain is fierce and costs are high.
Familiar, big-name companies such as Disney and Hilton are taking advantage of the crunch. Promising security and flexibility, they’re marketing resort timeshare properties to desperate consumers. Don’t let the marketing fool you, however.
Timeshares are still a bad idea. Keep reading to learn why and how you can avoid falling for popular timeshare scams.
What Is a Timeshare Resort?
On the face of things, timeshare resorts look simple and straightforward.
- You choose a resort property in a desirable location
- You buy an “interest” in or share of the property for a set amount
- You agree to pay annual maintenance fees
- Your share entitles you to an annual stay at the property
In traditional models, shareholders have use of the property during a set period of time each year. The standard duration is one week. During the rest of the year, other shareholders rotate through the property.
Under updated models, shareholders tend to receive “points.” They can spend these points toward their stays. Higher-demand weeks cost more points than lower-demand ones.
In theory, this offers shareholders more flexibility. In practice, securing the property when you want it can be challenging and expensive.
Timeshares can seem appealing because they appear to blend the benefits of a vacation home with a resort hotel. For example, most offer a buffet of amenities. Shareholders are not responsible for any upkeep or maintenance.
Properties are often owned and managed by big-name companies shareholders know and trust. Moreover, shareholders can rely on their ability to visit their favorite vacation spots each year. This creates a sense of consistency and security.
Unfortunately, these perks too often blind consumers to timeshares’ very real dangers and drawbacks.
Buying a Resort Timeshare Limits Your Options
One of the biggest selling points for 5-star timeshare resorts is that families can keep going back to their favorite places year after year. At first glance, this sounds ideal. Long term, though, it often proves to be more of a drawback than a benefit.
Families discover too late that their vacation needs and preferences evolve over time. As kids age, their hobbies and interests change. The sites and amenities that excited them as children may no longer be relevant when they become teenagers.
Similarly, empty nesters may long to explore new places once their kids are grown. If they are still saddled with expensive maintenance fees on a timeshare property, they may be less able to indulge those desires.
Moreover, the amenities and area around a property can change. This can make a property less attractive to shareholders and decrease its perceived value. Unloading it in favor of going somewhere else can be a nightmare, however.
You Can Buy in but You Can’t Get Out
Nearly 10 million Americans own shares in a timeshare resort. A shocking percentage only continue to own those shares because they cannot get rid of them.
Buyers tend to assume that purchasing a share is like any other real estate transaction. Yet this is not at all the case.
Timeshare property shares have no legal value. They are worth only what other people are willing to pay for them.
In most cases, this means that they are impossible to sell in the second-hand market. When owners can sell them they receive only pennies on the dollar.
Due to the costs involved, charities and non-profits also will not accept them as donations. Thus, owners who no longer want their timeshares usually find they literally cannot give them away. This forces them to continue carrying the burden of their shares and the associated costs indefinitely.
To make matters worse, timeshare contracts may contain hidden snares. For instance, most contain clauses that state that the original buyer is responsible for contract costs in perpetuity. If the owner sells the share and the new buyer defaults, legal responsibility reverts to the original owner.
Consumers can force timeshare companies to “repossess” their shares by refusing to pay their annual dues. This almost always wrecks the shareholder’s credit, however. Many owners resort to hiring specialized attorneys to divest themselves of their timeshares when they no longer want them.
Can You Sell Your Timeshare Back to the Resort?
In rare cases, timeshare companies may agree to buy back a share. But this uncommon and shareholders receive far less than they paid to buy in.
As if all the other drawbacks weren’t bad enough, scams are rampant in the timeshare industry. From the initial sale to the challenge of selling off a share you don’t want, scams abound at every step.
Timeshare marketers are notorious for using high-pressure sales tactics. This can leave buyers feeling stressed and guilty, prompting them to sign contracts they don’t fully understand.
Sellers may also misrepresent or redirect buyers’ attention away from common aspects of a contract such as how:
- Fast maintenance fees will rise
- Hard it is to unload a share when it is no longer wanted
- Unlikely it is that families will secure use of the property when it is convenient to them
Shareholders suffocating under the costs of a timeshare they cannot afford or struggling to sell face other scams. Fake companies may take a shareholder’s money with the promise of ending their timeshare contract and then not deliver. Fake buyers might purchase a timeshare contract and then default, leaving the former owner on the hook for huge bills.
The list of scams is almost endless. For their own safety, every consumer must educate themselves on how to spot a timeshare scam before attempting to buy, work with, or sell a resort timeshare interest.
Make Smart Vacation Choices
Skipping the resort timeshare trap and spending your vacation money on unique trips your family will love doesn’t have to be a headache. Explore our Travel and Tours section for all of the latest tips, deals, and trends you need to make planning your next get-away easy and exciting.