Should you use a Real Estate Broker to sell your timeshare? It’s a question that comes up often, as owners consider the various ways to approach selling timeshare. There really is no short answer, so let’s take a look at a few scenarios where using a Broker might come up:
Timeshare Brokers That Charge Upfront Fees and Commissions
I don’t believe in “two bites at the apple” – and Real Estate Laws in most locales prohibit Real Estate Brokers from accepting advance fees anyway. If you want to sell your timeshare through a Real Estate Broker, then choose one that works on a commission-only basis. If you cannot find a Broker to sell your timeshare on commission, you’ll have to sell the timeshare by-owner. There may be (and probably will be) upfront expenses to the Broker with whom you list, but asking for money upfront demonstrates a lack of confidence that should raise red flags for myriad reasons.
On-Site Timeshare Resale Programs
For some time now, one of the most popular pages on our website is a step-by-step guide I wrote on How to Sell Your Timeshare. In it, I suggest checking first with your resort to see if there is an established on-site resale program. These programs usually begin after the resort has fully sold out, and management responsibilities have passed to the HOA/POA. On-site resales are handled by a Real Estate Broker – one who is intimately familiar with your resort, resale values, and transfer procedures. Plus, you won’t be required to pay an up-front fee.
If this is an option for you, then look no further: You’ve found someone with the means, motive, and opportunity to sell your timeshare at current market value!
(A note of caution: Many resorts will tell owners that an on-site program is coming soon… Don’t get caught up spending thousands more in maintenance fees waiting for on-site resales to materialize. Either your resort has a program, or it doesn’t.)
High-End & Niche Vacation Ownership Resales
If you own a fractional quarter-share in Aspen, an ultra-luxury residence club, or Disney Vacation Club points, then there are Real Estate Brokers who specialize in your niche, and are more than willing to sell your timeshare at a fair price and solely on commission (and you’re doubtfully reading this post anyway.) With respect to fractionals and residence clubs, the sale prices are high enough to make handling resales profitable for a Broker. With Disney points, demand is high enough to keep a Broker busy – The Timeshare Store specializes in selling DVC points resale with no upfront fee.
Selling The Typical Timeshare – By Broker or By Owner?
If you are selling the “typical” timeshare – one without an on-site resale program, and one that is not in a high-end or niche market – then you fall into the vast majority of timeshare owners that want to sell. You may find yourself unable to locate a Real Estate Broker who will take your listing, but, if you do, the decision of whether to sell with a Broker or By Owner should be based on your desired outcome.
Real Estate Brokers are men (and women) of action; I have great respect for them. Brokers are likely to work towards a quick sale of your timeshare. Brokers are likely to be working with motivated and highly-informed buyers. Brokers are likely to consider the state of the market now when suggesting a sale price for your timeshare. Brokers are likely to minimize their upfront cost on your behalf…
As has been stated in this blog, and elsewhere, postcard companies/relief companies have literally flooded the market with near-zero priced timeshares over the last couple years. If the resale value of your timeshare must be based solely on past results, be prepared to take an enormous loss at time of sale.
Choosing to sell timeshare by owner, whether by advertising on your own or with a timeshare resale company, means you decide what the asking price will be. (Your asking price should be less than current developer pricing.) Selling timeshare by owner allows you to bait the hook, and wait to catch the right buyer – one that, perhaps, just heard the developer sales pitch at your resort, and has a higher perception of value. You won’t be limited to only the most informed buyers, making only the most bottom-line of offers. Selling your timeshare with by-owner advertising is really not selling at all, in a traditional sense, it’s putting it out there in a visible fashion – where it can be found by a willing buyer.
Currently, there is no accurate way to appraise the value of a timeshare – a fact that should delight timeshare owners, as their values mustn’t be tied to the depressed market of the last few years. By advertising your timeshare by-owner, you are free to pursue a fair resale value. When an interested buyer presents themselves, you might consider bringing in a Real Estate Broker to close the deal – after all, that’s what they do.
January 25th, 2011
One of the goals of writing this blog has been to spark conversations about selling timeshare, and the timeshare resale market. I believe that by exchanging ideas, both within the industry and with individual owners, a path forward will emerge – one that facilitates stronger resale values for owners, and fosters a more positive view of timeshare ownership. It’s in this spirit that I dutifully read the blogs and articles about timeshare resales that appear in my feed reader. Sadly, most of what’s out there is either spammy auto-generated nonsense, or simply a rehash of news stories appearing elsewhere. That said, times they are a changing…
Recently, some thought provoking dialogue has been taking place on the Wall Street Journal Online Community boards – an effort spearheaded by Richard Marquette, a commission-only timeshare broker. Topics have included resale values, ownership transfer procedures, and avoiding timeshare scams. Mr. Marquette is a vocal opponent of paying any fee to advertise your timeshare – a great concept if your timeshare can be listed on a commission only basis. (Timeshare brokers often limit themselves to high-line properties like Disney, Hilton, etc.) Overall, though, the dialogue has been informative and positive thusfar.
Elsewhere on the internet one of my favorite timeshare commentators, Mark Silverman – Timeshare Examiner, has been hard at work producing an exhaustive analysis of the secondary timeshare market. Mr. Silverman is a print journalist and radio commentator with a real love for the timeshare product that shows through in his perspective. He’s also probably also the only person talking about timeshare that can be reasonably considered unbiased. (Which is why we’ve linked to his website since the start of this blog.) Take the time to read his series of articles on the timeshare resale market and you won’t regret it!
There will always be conflicting ideas about how timeshares should or should not be sold, and that’s okay. Anyone with the courage of their convictions shouldn’t be threatened by an opposing viewpoint. What’s needed is an honest and open dialogue about the industry’s struggles. We can start with the common ground: timeshare owners should not pay a company that calls and tells them the timeshare is already sold, relief companies (or postcard companies) are poisonous to resale values, and timeshare owners deserve a robust resale market. Beyond that, only good can come from having more intellectually honest discussions about selling timeshare.
January 20th, 2011
State laws regulating timeshare sales have brought legitimacy to the industry; reassuring consumers by mandating rescission periods, and fostering an environment where flagship hotel chains could enter the market without risking their brand equity. It would stand to reason then, that state regulation of timeshare resales would have a similarly positive impact on the timeshare after-market. Although, on closer examination, many regulations aimed at the timeshare resale market actually make timeshares harder to sell, and place undue burdens on consumers. Attorney General Bill McCollum has been the point man in Florida’s fight to regulate timeshare resale, “actively pursuing timeshare resellers as part of a statewide initiative that started in 2009.” A March 2010 press release from McCollum’s office seems to indicate consumer complaints about timeshare resales actually increased during this initiative, surpassing “mortgage-related complaints as the most commonly reported complaint.” Ultimately, McCollum has failed Florida’s timeshare owners with his divisive approach to resale, just as his negative campaigning failed to win him the GOP primary in Florida’s 2010 gubernatorial race.
No one familiar with timeshare resales can deny there are some bad companies in the industry; some who simply lack the required skills or knowledge, and some that are basically just common thieves. These outfits should be dealt with, and they are. Free market forces are sufficient to eliminate most of them, and existing State and Federal laws already allow for prosecution of fraudulent companies of any kind. That said, the vast majority of timeshare resale companies want to succeed, which requires they actually do what they promise: As a timeshare resale company is simply an agent of the timeshare owner, success for one necessarily means success for both. The real tragedy today is that politicians like McCollum have distorted perceptions to the point timeshare owners find themselves aligned against the timeshare resale companies working to help them. (When observing stage magic or political theater, it’s advisable to watch the other hand.)
Some Background on Timeshare Resales
Timeshare is sold by developers with a basic premise: That if someday in the future the owner’s needs change, they will be able to sell the timeshare. Most developers do not infer “investment potential” when selling timeshare, except to say that “a deed is more valuable than a box of receipts.” Owners who eventually decide to sell their timeshares are confronted with a unique set of obstacles: no “for-sale” signs are permitted on the grounds of the resort, owners are allowed access to their unit only one week per year (making showings nearly impossible,) and demand for the product itself is driven by the developer sales team, not the free market. Further complicating matters, commissioned real estate brokers are only permitted on property after all on-site developer sales are complete – usually around 20 years, but potentially indefinitely for multi-resort chains conducting points-based sales and upgrades.
The only option left for an owner who wants to sell is to advertise the timeshare. While there are some no-cost options available, most advertising is pay-as-you-go. With no guarantees of success, the owner can quickly spend hundreds (if not thousands) of dollars on advertising before finding a buyer.
Enter the Timeshare Resale Company: By combining the advertising dollars of multiple timeshare owners, effective resale companies are able to advertise to a broader audience and for a longer length of time, and hopefully leave room for a profit. Many timeshare resale companies simply guarantee to advertise the timeshare until sold, effectively capping the cost to the seller. The less time a specific timeshare must be advertised, the lower the actual cost to the resale company – a model that rewards success and encourages timeshare resellers to advertise in a cost-effective manner.
Defining The Controversy
Until the recession, timeshare development experienced years of steady growth, peaking in 2007 with $10 billion in sales. The emergence of the timeshare resale market poses two distinct threats to timeshare developers:
- Since timeshare sales result from artificial demand created in a controlled environment, it is conceivable that no one would buy timeshare in the absence of these conditions. Should that prove to be the case, timeshare developers will have sold tens of billions of dollars worth of albatrosses – leaving millions of Americans with endless maintenance fees, and exposing themselves to both civil and criminal liability. The surest way for developers to protect themselves against this possibility is to discredit timeshare resales, and lobby sympathetic politicians like McCollum for legislation to thwart the timeshare resale market.
- If the timeshare resale market continues to grow, eventually most consumers will have at least a peripheral awareness that timeshares can be purchased from existing owners that want to sell, usually at a substantial discount. Timeshare developers have watched their sales decline around 40% over the past two years, with many now on the verge of bankruptcy (or in some widely publicized cases bankrupt.) Right now, for the developers every sale counts. The fear among developers is that widespread awareness of a credible secondary market would keep people from buying timeshare in the heat of the moment (on a timeshare tour.)
The Motivation Behind Timeshare Legislation
To borrow a line from Vanilla Sky, “What’s the answer to 99 out of 100 questions? …Money.” Not only is Florida home to more timeshare resorts than any other state, it’s home to more major developers than any other state. Among them: Wyndham Vacation Resorts, Bluegreen Corporation, Hilton Grand Vacations, Westgate Resorts, Marriott Vacation Club, Celebrity Resorts, Berkeley Resort Group, etc…
The ongoing assault on timeshare resale by McCollum may actually be a democratic one: While I could not find exact statistics (not surprisingly,) it’s possible there are actually more employees of developers in Florida, than there are timeshare owners in Florida.
The Strategy
Despite recent claims from the AG’s office, Florida has been after timeshare resale companies for a long time – the first legislation designed to crush the resale market passed in July 1989. Since, as mentioned above, advertising is the most integral component in timeshare resales, lawmakers have long sought to prevent timeshare owners from paying to advertise. Initially, a law was passed to force Florida’s timeshare owners to sell through a licensed real estate broker. Since commissioned brokers cannot charge advance fees in Florida, they lack funds for wide-scale advertising; making the sale of timeshares effectively impossible. A 1990 New York Times article specifically addresses the legislation’s unfair consequences for timeshare owners.
It’s worth noting that even after two decades of Florida lawmakers’ attempts to eliminate timeshare resale companies, consumer demand for resale services has remained strong.
Since 1989, Florida has passed numerous laws designed to discourage companies from entering the timeshare resale market. The culmination of these efforts is Sec 721.20; an over-broad piece of legislation, enforcing retroactive record keeping requirements, attempting to regulate the actual prices of resale timeshares, and effectively eliminating the timeshare resale industry in Florida.
The Legacy of Florida’s Timeshare Witch Hunt
Having grown up in the “Good-Old-Boy-Network” of the Sunshine State, politicians like McCollum shouldn’t surprise me. Largely due to his crusade against my career, I moved away from my native home with more than a little sense of betrayal. Though I’m now an ex-Florida resident, for the sake of argument, I’ve attempted to theorize what exactly would constitute a legal timeshare resale company according to McCollum, and the Florida statutes, in the scenario below:
- To begin with, a newly formed resale company would need to employ a Florida licensed real estate broker, and a staff of licensed real estate sales people. This presents a challenge, as licensed real estate sales people who want to sell timeshare usually work for developers, where both commissions and prices are much larger than the resale market. Since this is hypothetical, lets assume we can find these folks, and that they will agree to work for lower wages, and possibly for free, until the marketing kicks in and starts producing buyers.
- Unless the hypothetical timeshare resale company only wanted to sell Florida timeshares, more real estate licensees would be needed on the payroll; from each state where listings would be taken, and commissions would be paid.
- As potential timeshare buyers or sellers would likely contact the company on the phone, a Florida telemarketing license would be needed ($1,500) along with a bond ($50,000.) Also, as a condition of the license, all directors of this resale company of the future would need to disclose their personal financials to the State of Florida, and consent to periodic, unannounced audits and inspections of their financial records and bank accounts.
- Since no upfront advertising fees could be paid by the timeshare owner, a resale company could need at least a years’ worth of expenses for a website and advertising. On a shoestring budget, I’d estimate this at around $1.5 million.
- The last requirement would be exceeding thick skin, as the company would be forced to confront the literal maelstrom of negativity timeshare resale companies face every day.
So, to open and operate a timeshare resale company in Florida, one would need to be a thick-skinned, multi-millionaire that doesn’t value privacy, and has access to numerous licensed timeshare sales people willing to take a pay cut. Hmm….
If one were to be in that rarefied position, why wouldn’t he/she just become a timeshare developer, and make a lot more money? Hmm…
So, to own and operate a timeshare resale company legally in Florida, one would need to be a philanthropist, thick-skinned, multi-millionaire that doesn’t value privacy, and has access to numerous licensed timeshare sales people willing to take a pay cut. Hmm…
So really, all Floridians need to solve their timeshare woes is to find a philanthropist mutli-millionaire dedicated to the cause of helping middle-class suburban Americans sell their timeshares? Really? Really?
Looking Forward
Timeshare developers are hard at work, lobbying for Florida-style timeshare resale legislation across the nation. If they are successful, over 4 million Americans will watch as their assets become albatrosses. The very same vilified timeshare resale companies are the only thing standing in the way of the developer’s goals – and there aren’t many of us left. If you own timeshare, it’s time to speak up or end up like the many Floridian timeshare owners who have no options left.
Mr. McCollum, in the words of Abraham Lincoln, “You can fool all the people some of the time, and some of the people all the time, but you cannot fool all the people all the time.”
September 1st, 2010
