There is an a lot of misinformation on the internet. The more one uses the internet, the more glaringly obvious this fact becomes. While some of this misinformation may be deliberate, most of it is innocent; a manifestation of the democratic nature of the internet, where everyone has a voice.
The topic of timeshare (and timeshare resales) has literally millions of webpages dedicated to it, with nearly every possible viewpoint represented. In recent years, some of the more popular pages about timeshare have been those that purport to offer “the truth” about selling timeshare. I can understand how this could be an appealing concept to many timeshare owners – learning “the truth” in one sitting. Invariably, “the truth” seems to be a rather bitter pill to swallow: Your timeshare is worth 90% less than you paid, timeshare resale companies are a scam, and selling timeshare is difficult if not impossible. It is an abrasive and cynical message to be sure, and perhaps that’s why it’s believable to those looking for easy answers. But what if “the truth” is a bit more complicated?
There are over 5,000 different timeshare resorts worldwide; some are still under construction, some are new, some have long since sold out, and some still make sales daily. It is an absurdity to think that any one version of “the truth” applies to all of these properties, or even to a majority of them. And while it would be nice to distill the multitude of truths about timeshare into a catchy webpage or blog post, it would not be intellectually honest. What I will offer here are some proven ideas about the timeshare market that can help guide you toward your truth, as is relates to the timeshare you own or want to sell.
Realtors are Great (When They Sell Timeshare)
Since timeshares are real estate, only a licensed Real Estate Broker can sell them for you on a commission basis. Many supposed “experts” will tell you to only sell your timeshare through a commissioned broker, but very few commission brokers will list timeshares. (By telling you to only sell your timeshare via nonexistent means, these experts are actually telling you not to sell your timeshare.)
The real estate brokerage business model is not compatible with most timeshares, and thus there is no economic incentive for a broker to enter the timeshare arena. That said, if you can find a Real Estate Broker that will list your timeshare, consider yourself lucky and give it a shot. Otherwise, you will have to sell the timeshare yourself – which will mean paying to advertise it for sale.
Developer Sales Drive Resale Demand
Timeshare is not a product that “sells itself.” Resort Developers spend a fortune to bring families to their resorts, where skilled salespeople show them the property and explain its features and benefits. It is this process that creates the desire on the part of consumers to buy a timeshare, and many will buy right then and there. Many others will leave without buying, but still have a serious interest in doing so – these people make up the bulk of resale buyers. As long as developer sales continue at your resort, there will continue to be people shopping for resale deals. (You could say the demand trickles-down to the resale market.)
Generally, once a resort is “sold-out” of inventory, developer sales will end permanently. In the absence of both salespeople and consumers, the only people visiting the resort will be existing owners and exchangers who own timeshare elsewhere. Demand for resales becomes practically nonexistent. Many of the people who complain about how difficult it is to sell a timeshare are telling the truth, but they fail to recognize why it is true – They waited until after the resort had “sold-out” and now there are no buyers. Had these same people acted quicker, their “truth” would have been much different.
The Real Resale Value vs. The Right-Now Resale Value
What is your timeshare really worth? Timeshares cannot be accurately appraised, so their value is inherently subjective. According to some quite popular websites, “the truth” is that your timeshare is pretty much worthless. What is rarely mentioned is the element of time – how fast you need the timeshare sold. If you need your timeshare sold right now, the self-help websites are correct and it is practically worthless.
The home my wife and I own is in the Tudor Revival style, which we both like. As is common in this style, the second floor hangs out asymmetrically over the first, the roof is steeply pitched, and the windows have diamond pattern grills. Over the years we’ve owned the home, we’d made sure any modifications are in keeping with the architecture. Should we decided to sell, I’m sure we would find a buyer – but it would not be fast, as the architectural style of our home appeals to a small minority of potential buyers. In fact, when we bought our home it had been on the market for over a year – despite having numerous advantages compared to other listings. Should we have to sell it right now, our home might be worth almost nothing. Of course, no one sells their home that way, and no one should sell their timeshare that way either.
Assuming there are still developer sales going on at your resort, your timeshare is probably worth a few thousand less than the developer’s current best price – on a long enough time-line. Only 6% of Americans own timeshare, so it’s still a niche market. The truth is that it may take a few months or more for the right buyer to come along. Given the average cost of a timeshare is now over $20,000, the difference in the real resale value and the right now resale value could be substantial!
Discovering Your Truth
It would be nice if understanding timeshare resales or selling your timeshare was simple, but it’s not. “The Truth” cannot be summed up in a few paragraphs, or by a few immutable key points that apply to all owners equally – but that does not mean there is no objective truth at all. I’ve done my best in the post to share some truths about the actual timeshare resale market; things I’ve learned over nearly 20 years working in the timeshare industry. Relating these truths to your specific circumstances is something only you can do – but you can do it. Demographically, I know that since you own a timeshare you are: successful, mature, probably married, and that you value vacations. You don’t need to buy into an over-simplified, one size fits all, negative, and unempowering “truth” wherein you lose your shirt when you sell the timeshare. Think smart and walk away a winner!
The timeshare product has evolved considerably since its introduction in the 1960s: These changes, revisions, and “improvements” have been so numerous that modern timeshares bear almost no resemblance to either the original product or concept. While some owners enjoy the flexibility of the new timeshare products, many others seem to find them simply too confusing to use effectively. What’s interesting to note is the process of how timeshare evolved; a process that has some history of its own.
In the mid 1950s, Ford Motor Company began development of a car for “young professionals on their way up.” These were thought to be folks who had outgrown a Ford, but were not yet rich enough to buy a Mercury or Lincoln. In order to keep them from moving on to other products, such as a Chrysler or Packard, an “entirely new kind of car” was created: the Edsel.
During the planning stages, groups of target buyers were assembled and asked about what features they would want in a new vehicle. Feedback from these focus groups was later used in the design process. Ford assured investors that “the details of its styling and specifications were the result of a sophisticated market analysis and research and development effort that would essentially guarantee its broad acceptance by the buying public.” Thus, the Edsel became the first car to be designed by focus group… and it was a notorious flop.
Timeshare Presentation Focus Groups
In many ways, timeshare sales presentations resemble focus groups; participants are compensated for their time, they are exposed to a new product, and they are asked to provide feedback about their experience. Additionally, people who buy timeshares, and have the opportunity to use them, are later brought back on “in-house” tours, and again exposed to the product and asked to provide feedback. Timeshare developers have then used this feedback (reasons for not purchasing) to guide the creation of new vacation ownership products.
When focus group participants complained that “fixed” weeks were not flexible enough, “floating” time was introduced. When some participants thought the timeshare was just too expensive, “biennial” and then “triennial” ownerships were created. When participants refused to buy because they didn’t travel for one-week intervals, “points” came onto the scene. When some participants found the word “timeshare” to be a turn-off, non-deeded perpetual trust vacation clubs were sold as the alternative. And on, and on, and on… Now, it’s not uncommon for resorts to sell a timeshare that’s “points-based, every-third-year usage on the “B” cycle, held in a trust, mortgaged to the owner, gold membership level, with a pickle on the side.” Just kidding, about the pickle.
What I wonder is whether all this added complexity has really made timeshare better, or has it just made it an Edsel? Some of the best-loved products were created without consulting consumers: Carol Shelby said the name “Cobra” came to him in a dream. The Aeron chair was despised and considered ugly for its first two years, until it became the most popular office chair in the world.
Back to Basics/To Infinity and Beyond
In the course of my work in timeshare marketing, I spend a lot of time thinking about the Millennial Generation. For timeshare to have a future, Millennials will need to buy it, use it, and love it. They will need to “share” timeshare with their friends on Facebook and Twitter – and for this to happen, they will need to experience “pride of ownership.” Millennials are certainly comfortable with technology, and so it is possible they would take advantage of the complex systems of modern timeshare products to maximize their vacationing value. Were this to turn out to be the case, timeshare developers could keep on innovating and take vacation ownership “to infinity and beyond!”
But I’m not so sure Millennials will see the appeal in timeshare presented as a cutting-edge efficient solution to their vacationing needs (whether it actually is or not.) In their fascinating work on Generational Theory, Williams Strauss and Neil Howe suggest Millennials have a strong sense of community, and are civic-minded. These tendencies may actually make timeshare attractive to Millennials – if the timeshare industry can stop making Edsels and get back to basics. When timeshare was sold as a fraction (1/52) of a whole property, a shared ownership so to speak, it was a much more tangible product. Owners would expect to be involved in HOA matters, and to know each other personally. Certainly, Millennials will value the ability to exchange through RCI or Interval International, but the appeal of knowing their “neighbors” when returning to their home resort could be equally important.
Even though the Edsel turned out to be a failure, Ford actually sold quite a few of them: over 63,000 in the first year. Likewise, the modern “Edsel” timeshare continues to be sold at a decent pace. One could argue that the lessons learned from their Edsel experiment helped Ford become the company that made the Mustang. It’s time for the timeshare industry to build our Mustang – let’s get to work!
It has been said that there’s no such thing as bad publicity, and perhaps that’s true for David Siegel, self-proclaimed “Timeshare King” and CEO of Westgate Resorts. After all, how many other CEO’s of timeshare companies can you name?
What is not so clear, however, is to what extent publicity received by Siegel has negatively affected resale values of Westgate timeshares. Perhaps this is one the reasons most timeshare developers prefer to keep a low-profile.
When Siegel and his wife Jackie decided to build America’s largest private home, a 90,000 square foot palace aptly named “Versailles,” they attracted the attention of filmmaker Lauren Greenfield. Over the course of three years, Ms. Greenfield filmed interviews with the Siegels and their staff – including behind-the-scenes footage of Westgate Resorts operations. The resulting documentary film, The Queen of Versailles, was well received; winning the U.S. Directing Award at the 2012 Sundance Film Festival. (Now available on Netflix.)
The timing, of both the construction of Siegel’s home and the filming of the documentary, happened to coincide with the recent financial crisis; turning what might have been just another story about the excesses of the rich into a saga of survival. Ezra Kline, of the Washington Post, dubbed The Queen of Versailles “the single best film on the Great Recession.” When Siegel is unable to procure financing for Westgate Resorts’ receivables, construction on Versailles is halted and the very fate of the company appears to hang in the balance. In a candid moment, Siegel declares, “this is almost like a riches-to-rags story.”
Needless to say, The Queen of Versailles became a PR nightmare for Westgate Resorts. Siegel was so concerned about negative fallout that, the day before the film’s premier, he sued the filmmaker for defamation; claiming Westgate Resorts was depicted “in an array of defamatory, derogatory and damaging ways.” According to Siegel, by the time filming concluded Westgate Resorts was as profitable as it ever had been. The lawsuit has since been dismissed, but Siegel remains in damage control mode; appearing earlier this year on CNBC with his wife to announce “record profits” for Westgate Resorts and continuing construction of “Versailles.”
There’s no reason to doubt that both Siegel and Westgate Resorts are now financially solvent, but numerous other timeshare developers have gone bankrupt over the past 5 years. (e.g. Celebrity Resorts, Consolidated Resorts) When timeshare developers fail, the underlying real estate (individual timeshare interval) is not directly affected, but the resulting negative “buzz” often has lasting effects on perceived resale value. And speaking of perceptions, The Queen of Versailles portrays Westgate timeshare owners as victims of the same predatory sub-prime lending practices blamed for crashing the economy. Overall, it’s easy to conclude that Siegel’s PR mistakes have damaged the value of timeshares owned by hundreds of thousands of Westgate owners (at least temporarily.)
That said, now may well be the perfect time to buy a Westgate timeshare resale. Westgate Resorts makes a terrific product: Its timeshares are really, really nice. The properties are located on prime real estate. The maintenance fees are reasonable. And, for now, the prices are artificially low! Take this Westgate Lakes Resort and Spa resale, for example, located on some of Orlando’s best real estate and featuring leather furniture, granite and stainless kitchen, private patio, lock-out floor-plan, and large jetted-tub in master – priced thousands under cost.
Siegel has described Westgate Resorts as the “Rolls Royce of timeshare companies,” designed to allow ordinary Americans to “vacation like a Rockefeller.” Love him or hate him, if you’ve stayed in a Westgate timeshare, you have to agree with him.