Chances have it that you have heard of a timeshare before. Timeshares are properties that multiple parties buy into because buyers typically can’t afford them on their own. In most cases, timeshares are beachfront properties that make excellent vacation spots.
While the benefits of a timeshare resort are clear, the downsides of buying into timeshare properties are plentiful. Let’s consider a number of detriments related to purchasing a timeshare or that vacation ownership that not everyone considers before buying into them.
What are Timeshares? The Timeshare Industry explained
A timeshare is a piece of property (usually a condo, villa, or home) that is jointly owned by a group of people. Timeshares are popular vacation properties because they offer all the benefits and amenities of owning a second home without the hassle and expense of maintaining it.
Most timeshares are located in warm weather destinations like Florida, California, and Hawaii. But you can also find timeshares in other popular tourist destinations like Las Vegas, Reno, Orlando, and New York City.
How Do Timeshares and Vacation Ownership Work?
Timeshares work by allowing a group of people to jointly purchase and own a vacation property. The group then divides the use of the property among themselves according to a pre-arranged schedule.
For example, let’s say that you and nine other people purchase a timeshare condo in Maui. You would then each have the right to stay in the condo for one week out of every year. The other owners would have the remaining 51 weeks of the year to use the property.
Some timeshares are “floating week timeshare” which means that as a timeshare owner you can stay in the property at any time during the year, subject to availability. Other timeshares are “fixed” which means that you are assigned a specific week (or set of weeks) to use the property each year.
Timeshares typically come with all the amenities of a hotel room or vacation rental, like a fully-equipped kitchen, linens, and housekeeping services.
Some timeshare resorts also offer on-site amenities like swimming pools, tennis courts, golf courses, spas, and restaurants.
The various timeshare owners structures can be very complex and will vary. You can purchase a fixed week, which means that you own the right to use the unit during the same week each year, or you can purchase a floating week, which usually gives you the right to use the timeshare property during a set period of time.
Some timeshares operate on a point system. These are often referred to as “vacation clubs.” With these, you purchase a specific number of points that can be redeemed at a variety of destinations. Some plans let you “bank” unused points.
Cost varies by:
- Unit size
- Time period purchased (e.g., December versus August at a ski resort)
Timeshare properties can often feature larger and more luxurious accommodations than standard hotels and are generally located in desirable places and wow, the can be very appealing.
What are the Benefits of Timeshares and a Timeshare Resort?
There are a number of advantages to owning a timeshare. These include:
* Access to a luxurious vacation property that you could not otherwise afford and are often bigger than a typical hotel room
* The ability to use the property at specific times each year (depending on the type of timeshare you purchase)
* On-site amenities of the resort property and activities that add to the vacation experience
* The convenience of having a fully-equipped vacation rental, complete with housekeeping services
What are the Cons of Timeshare Ownership?
While there are some clear advantages to owning a timeshare, there are also a number of potential drawbacks that you should be aware of before making a purchase. These include:
*High initial cost – When you factor in the price of the timeshare, plus closing costs and annual timeshare maintenance fees, the cost of owning a timeshare can be quite high. In addition, if it is a fixed week timeshare, you will be paying the same price whether you use the property or not, and that can add up to a lot of money of the actual cost over time.
Words of Caution
When you are standing in a beautiful timeshare, looking at the perfect beach and sparkling blue water, it is easy to succumb to the sales pitch. But remember, timeshare salespeople are in the business of selling. But just because they tell you that you are getting a great deal, it doesn’t mean that you really are.
Before you buy, take some time to research the property, the timeshare unit, the resort developer, and talk to other timeshare owners. Don’t make your decision in without doing your homework and never let the salespeople rush you. That is one of the worst parts, that often the sales pitch can be aggressive, they don’t let you research all the details, and want you to commit on the spot.
Most Timeshares Have Lifelong Contracts
People who are indebted to creditors for things like credit card debt and mortgages can rest assured that such debts cannot be passed on to their children. The same can’t be said for timeshares.
Most timeshare agreements require members to sign up for life. Further, they are automatically passed on to spouses, children, and other eligible family members through parts of timeshare contracts called perpetuity clauses.
Deeded Timeshare Propertied May Lose Value
Deeded timeshare property owners who eventually want to sell may find it difficult to do so. The secondary market for resale timeshares is not as well established as that for other types of real estate and, as a result, there can be a big difference between the price you paid for your unit and the price you could get if you sold it.
The reason for this is that there are more timeshares available for sale than there are buyers and, as a result, prices have been dropping. In addition, many people who do purchase resale units find that they are unable to use them because the resorts won’t accept them.
Timeshares Cannot Readily Be Sold
Tangible, useful assets like motor vehicles, homes, and precious metals can readily be sold for cash. However, timeshares are difficult to sell. If you take a look online, there are countlessoffers for people to purchase timeshares for just one dollar!
It’s safe to say that you should stay away from all cars that are being sold for a dollar, right? The same can be said for timeshare agreements.
Interest Often Comes Along With Timeshares
Timeshares are often backed by mortgages, notes, or loans. The interest that results from these liabilities is split among all the members of timeshares.
What makes things worse is that participants often don’t pay more than what they’re legally required to pay, resulting in tons of interest fees being accumulated.
A Timeshare Is Not an Investment
A timeshare is not an investment. Investments are designed to appreciate in value, generate income or do both. A timeshare is unlikely to do either, despite what the salesperson says.
The huge volume of used timeshares on the market, the appeal of buying new versus used, and the marketing muscle of the firms selling new timeshares all work against the idea that you will make a profit reselling your used timeshare.
You Better Visit Timeshares Every Year
This isn’t an exaggeration – skipping just one year of vacationing at a timeshare property can mean you end up overpaying for that timeshare. People who can’t visit every year without fail should never consider timeshares.
These problems and many others are all common reasons behind why searches for things like timeshare cancellation are so popular. Don’t get involved in the same mess as so many others have.
What you Need to Know Before you Purchase a Timeshare?
Now that you know some of the cons of timeshare ownership, you may be wondering if there is anything you can do to protect yourself if you still decide to purchase a timeshare.
The first step is to do research before signing on the dotted line. Make sure you understand all the fees associated with and required of timeshare ownership.
You’ll also want to read the fine print of your contract carefully before signing. Remember, once you sign a timeshare contract, you’re generally stuck with it. So, if there’s anything in the contract you’re not comfortable with, don’t sign it!
Things to research before purchasing the timeshare:
- The property – Is it in a location you would actually want to visit?
- The timeshare unit – What kind of accommodations are you getting?
- The resort developer – Are they reputable? Have they delivered on their promises in the past?
- Other timeshare owners – What do they have to say about the resort?
- The contract – What are you actually signing up for?
American Resort Development Association (ARDA) is a good place to start when research timeshare companies. This website provides resources and information for timeshare buyers, as well as a listing of ARDA-member companies.
If, after doing your research, you should still know that there are many timeshare scams out there. If you still decide to purchase a timeshare, there are a few things you can do to protect yourself:
- Purchase from a reputable timeshare company
- Get everything in writing including the full timeshare cost
- Don’t sign anything you don’t understand
- Pay with a credit card
- Research the company’s cancellation policy
Most Popular Timeshare Scams
Now that you know some of the cons of timeshare ownership, as well as how to protect yourself if you still decide to purchase a timeshare, it’s important to be aware of the most common timeshare scams.
Some popular timeshare scams include:
- High-pressure sales tactics
- Deceptive advertising
- Free gifts or prizes
- Misrepresentation of the timeshare property
- Bait and switch tactics
- Unsolicited phone calls or emails
- Freebies and gifts
- The bait and switch
- The resale scam
- The rental scam
If you’re ever pressured to make a decision to buy a vacation property on the spot, told there’s only one unit left, or offered a free gift or prize in exchange for attending a timeshare presentation, beware! These are all common high-pressure sales tactics that timeshare scammers use.
It’s also important to be aware of deceptive advertising practices with the timeshare company. Be sure to read the fine print carefully before signing any contract. Remember, if something sounds too good to be true, it probably is!
If you’re thinking about purchasing a timeshare, be sure to do your research and be aware of these common scams. Don’t let yourself be taken advantage of!
The most popular timeshare companies are include:
- Marriott Vacation Club
- Hilton Grand Vacations
- Wyndham Destinations
- Diamond Resorts
- Bluegreen Vacations
- Welk Resorts
These are all well-known companies with a good reputation in the timeshare industry. However, there are many other reputable companies out there as well. Just make sure to do your research before signing any contracts!
What Are the Steps to Buying a Timeshare?
If, after doing your research, you’ve decided that purchasing a timeshare is the right vacation option for you, there are a few steps you’ll need to take to make sure the process goes smoothly.
Step 1: Choose a Location
The first step is to choose a location. You’ll want to consider things like climate, proximity to activities and attractions, and whether you want a urban or rural setting.
Step 2: Select a Timeshare Developer
Once you’ve chosen a location, you’ll need to select a timeshare developer. As we mentioned earlier, there are many reputable developers out there, so make sure to do your research before making a decision.
Step 3: Attend a Timeshare Presentation
The next step is to attend a timeshare presentation. This is where the sales pitch will happen, so it’s important to be prepared with questions and aware of the pressure you may feel to purchase a timeshare on the spot.
Step 4: Read the Contract Carefully
If, after attending the presentation, you decide that purchasing a timeshare is right for you, make sure to read the contract carefully before signing. As we mentioned, once you sign a timeshare contract, you’re generally stuck with it, so it’s important to make sure you understand and are comfortable with everything in the contract before signing.
Step 5: Make Your Purchase
Once you’ve read and understood the contract, you can go ahead and make your purchase. Congratulations on becoming a timeshare owner!
Finally, be sure to shop around the timeshare sales before making a purchase. There are a lot of timeshare companies out there, and not all of them are created equal.
Some timeshare sales companies will offer better terms than others, so it pays to comparison shop before making a decision.
Now that you know some of the pros and cons of timeshare ownership, as well as what you need to do to protect yourself if you still decide to purchase a timeshare, you can make an informed decision about whether or not a timeshare is right for you.