Posts filed under 'Relief Companies'

Are Timeshare Owners Dummies? Part 5, Selling Your Timeshare for Less than Zero

The continuation of our series examining the battle for timeshare owners’ hearts & minds: As fraudsters of all varieties work in the shadows to exploit the timeshare owner, it’s clear that some see timeshare owners as dummies, but are they? HelpTimeshare.com doesn’t think so.

Less Than Zero – No, It’s not the popular Bret Easton Ellis novel I’m referencing, it’s the value of your timeshare…  At least, that’s the value according to the latest fad to hit the secondary timeshare market like a storm: The “Relief,” “Exit,” or “Transfer” company. These firms have been quietly traveling the nation, advancing a notion that defies all logic. The Relief/Exit/Transfer crowd doesn’t just think your timeshare is worthless, oh no. These companies think your timeshare has a negative value – try -$3,000. (or if you prefer, -$5,000 – That’s a lot less than zero!)

At this point most owners probably think I’m joking, and I wish I was. After all, your timeshare is essentially just a 1/52 share of actual real property. In a mathematical feat exceeding those of even the savviest politicians, Relief companies are buying timeshares from owners every day for thousands less than zero. How many timeshares have been sold for less than zero? No one knows for sure, but well into the hundreds of thousands per year! To put this into perspective, ARDA reports the average sale price for one interval of timeshare was $20,468 in 2009, and there are 7.2 million intervals currently owned by Americans. That places the retail value of all timeshares owned by American citizens at over $140 billion. If the Relief companies succeed in “relieving” Americans of the “burden” of timeshare ownership, they will have “transferred” up to $160 billion in real estate and cash from hard-working timeshare owners to themselves… Bernie Madoff’s got nothing on these guys.

Once your timeshare mortgage is paid-in-full, the lender (usually a subsidiary of the resort) must file a “Satisfaction of Mortgage” or “Release of Deed of Trust” in the jurisdiction where the property is located. Once this document enters the public record, the Relief companies send you a postcard inviting you to a meeting. (Some even state they will be “buying timeshare” at the meeting.) What happens next remains a closely guarded secret. According to a WFTV Orlando investigation, owners are told the resale market is bad, maintenance fees are going up, and if you die with a timeshare your heirs will be stuck paying for it. Elsewhere, owners have reported being shown slide-show presentations of timeshares for sale on eBay for $0.01. The bottom line: In short order, owners are coerced into believing their timeshares are worth less than zero, before paying thousands to be “relieved” of them.

Why haven’t you heard this story? The State of Florida issues a flamboyant press release every time it succeeds in fining a small-time boiler room operation with dubious timeshare resale practices, while numerous Relief companies, far more damaging to consumers, operate with impunity. It could even be argued that the success of Relief companies in Florida is the reason why resale companies there are failing at selling timeshares for market prices.

A Victimless Crime?

Okay, disgusting as this scheme is, if a timeshare owner wants to pay thousands of dollars to transfer their timeshare, who does it hurt?  On the surface, it may appear to be a victimless crime, but that’s only half the story. All of these freshly transferred timeshares don’t just disappear – they are, after all, deeded real estate. What exactly does a Relief/Transfer/Exit company do with the timeshares it collects? As largely privately held companies, they don’t have to say… What is clear from public records is that they don’t hold onto them for long. Remember those slide-shows of timeshares on eBay for a penny? You know, the Relief companies’ “evidence” of how worthless timeshare is. Maybe it’s just coincidence, but the larger the relief companies get, the more penny timeshares appear on eBay. Insidious is an understatement; the relief companies liquidate valuable timeshares for pennies, thereby reinforcing their assertion of worthless timeshare. So, who does it hurt? If you own timeshare, the answer is you.

We all know the real estate bubble burst, and many of us are anxiously waiting for homes in our neighborhoods to start selling again – without recent “comparable sales” it’s nearly impossible to know what your home is worth. What would it do to your home’s value if your neighbor sold for negative $50,000? The same is true for your timeshare property. The ramifications are even bleaker if you want to sell your timeshare: Even if you ask just a fraction of retail value, you cannot compete with Relief companies selling for a penny.

Let us Not Forget, There is Hope.

All is not lost. Many of what we consider “high-line” timeshare properties already have “First Right of Refusal” clauses. These require owners that want to sell, first allow the resort to buy at the agreed sale price. (Hopefully your resort will not turn down an offer of -$3,000.) If your resort does not yet have such a policy, attend a HOA/POA meeting and suggest one. This is the single best protection against poor/non-existent timeshare resale values. Check auction and classified sites for resales at your resort priced at near-zero; if you find a listing, contact your resort immediately.

States’ Attorneys handle all types of civil and criminal cases, with few if any having specific knowledge of timeshare. Contact the Attorney General where you live, or where your resort is located, and ask why they are not pursuing Relief/Exit/Transfer companies – Take a few minutes to help them understand the problem. ARDA (the American Resort Development Association) is hard at work drafting misguided legislation aimed at regulating timeshare resale companies. If the Relief/Exit/Transfer companies are not stopped, they needn’t worry: there won’t be any timeshare resale companies left to regulate. How do you compete with a penny?

Lastly, be careful! There are scams in every industry: You need to fact-check and investigate any company before doing business with them. Legitimate businesses have nothing to fear from you taking a few moments to investigate their practices. Pressure to act right now is sure sign of trouble.

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2 comments July 21st, 2010


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