Timeshares on Sale
How to find a bargain in the most popular locations.
Bruce and Nancy Robinson were on vacation in Hawaii in 1992 when they attended a timeshare presentation in exchange for luau tickets. By the end of the pitch, the Huntsville, Ala., couple had agreed to pay $16,000 for one week in a two-bedroom unit at the Kona Coast resort that they could trade for properties around the globe.
Then, five years ago, while scanning timeshare listings on eBay, they noticed a highly desirable week for sale in a Key West resort that they had unsuccessfully tried to trade into in the past. The asking price was more than $20,000, but the bidding had stalled at less than a third of that. They ended up buying the week for just $6,000.
The Robinsons have made good use of both timeshares -- trading them for other units and renting them out when they're unable to go themselves. But the Key West deal was definitely the better value. "Knowing what I know now," says Bruce, "the only way to buy is resale."
Where to find them
When you can buy a resale timeshare at a discount of 50% or more to the developer's price -- and without sitting through a high-pressure sales presentation -- you have to wonder why more people aren't buying this way.
One reason is that many people don't know where to look for resales. Developers spend a lot of money on big ad campaigns, but current owners pushing resales must rely on Internet listings and auction sites or print classified sections. A number of brokers handle resale timeshares, too.Two good sources are TimeSharing Today magazine (www.tstoday.com; $14 a year) and the Timeshare User's Group (www.tug2.net; $15 a year). Their Web sites have ads for timeshares and links to resale brokers. Both also offer background for newbies, and the forums on TUG can answer just about any question you have.
What you save depends on where you buy. With brand-name developments, such as Disney, Marriott and Wyndham, you typically pay 30% to 50% less than the developer's price. But because many people in the secondary market feel more comfortable buying in a brand-name resort, prices have started to creep up.
You'll save more money buying from a lesser-known developer -- probably 50% to 70% off the property's price when it was first put on the market. The best deals are on older timeshares and units that are difficult to trade. "Many people call me and literally want to give them away," says Syed Sarmad, a resale broker for Advantage Vacation. Owners may want to unload their units to be free of annual maintenance fees. But fire-sale prices -- for example, weeks listed on eBay that start at $1 -- could also indicate problems, such as a bad location or an overload of assessments.
Watch your back
"Why are you selling?" should be your first question. Much of what is on the resale market is there because the unit isn't attractive for trade, says Lisa Ann Schreier, author of Timeshare Vacations for Dummies (Wiley, $20). "If trading an off-season week in Alabama didn't work for them, it won't work for you." Other questions to ask: Are the maintenance fees paid up? (Typical fees range from $200 to $600 a year.) Are transfer fees included in the closing costs?
Hiring a resale broker is one way to help protect yourself because brokers are required to tell you all the details of the sale (just make sure the brokerage is in good standing with the Better Business Bureau or the American Resort Development Association). Another safety net is the closing company, which will review the sales agreement, check to see whether the developer has a right of first refusal on the property and handle all the paperwork. Sarmad also recommends getting a title search and title insurance to make sure the mortgage is completely paid and the deed is free of liens.
Although the seller usually covers the broker's commission, the buyer is generally responsible for closing costs. Escrow fees, title insurance and recording fees will run about $750. The developer charges an additional fee for transferring the unit; the fee can run from $25 at domestic Marriott resorts to a few hundred dollars elsewhere.
The flip side
Is there any reason to buy from the developer? Sometimes, says Kim Kavin, author of The Everything Family Guide to Timeshares (Adams Media, $15). For example, some developers offer the right to buy an extra week at a discounted price when you buy from them; others offer special bonuses with travel rewards programs. If you buy a resale, some of these benefits may not transfer. Another perk of buying from the developer is better consumer protection, says Howard Nusbaum, president of ARDA. You have the right of rescission -- to change your mind -- for up to ten days, depending on the state. You are also assured that the deed is clean.
A compromise between buying new from the developer and buying resale is purchasing a developer resale, although the market for such units is tiny. You won't find a resale if the company is still selling new weeks. But once the resort is sold out, timeshares become available when an owner wants to switch to another resort, or in the case of death or divorce. And because you seek out the developer, rather than the other way around, you won't get the hard-sell pitch.
You'll almost certainly pay more than in an owner resale, but you get the added value of consumer protections and the perk of converting your week into points. One of the few active developer-resale programs is through Marriott Vacation Club International. If the price is right, you get the best of both worlds.
Swap your week
Both resale and developer-purchased timeshares trade through one of two exchange companies: Interval International (www.intervalworld.com) and RCI (www.rci.com). The annual membership fee for Interval International is $84. RCI's fee is $89 for its weeks program, and $99 for the points program, which lets you trade your week for points that may be used for airline tickets, car rentals, hotel stays and more.
Many developers include the annual fee for the exchange company, either with the first year or two wrapped into your purchase price or as a part of your annual maintenance fee. If you buy a resale, that membership may not transfer, so be sure to ask.