Posts filed under 'Timeshare Owners'
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
Las Vegas based Diamond Resorts International® has been quietly expanding its timeshare holdings; continuing a trend of buying assets of bankrupt developers. Having established itself as a leader in the timeshare industry, with several successful Las Vegas timeshares including the popular Polo Towers, Diamond Resorts made headlines in 2007 with their purchase of the Sunterra Corporation, a developer with a long history of financial woes. By most accounts, the Sunterra acquisition was a successful one – providing stability for Sunterra’s 326,000 timeshare owners. In recent months, Diamond Resorts has set its sights on two more troubled developers: ILX Resorts and Tempus Resorts.
Los Abrigados Resort & Spa - Sedona, AZ
ILX Resorts is the Arizona based developer of ten resorts, including the Premiere Vacation Club at Los Abrigados Resort & Spa in Sedona. Tempus Resorts, headquartered in Orlando, Florida, is the developer of the Mystic Dunes Resort & Golf Club, located just 3 miles from the Walt Disney World® complex. Diamond Resorts’ plans have owners at both resorts wondering what to expect from the new management. If the Sunterra acquisition is to serve as an example, then Tempus and ILX owners should find themselves in good hands, but there will be changes…
Mystic Dunes Resort & Golf Club - Celebration, FL
Ownerships sold by both Tempus and ILX are “deeded” weeks, while Diamond Resorts’ vacation ownership product is a Club/Trust arrangement. Deeded owners will, or course, be able to retain their deeded weeks – but there will be enticements for Tempus/ILX owners to upgrade to the Club/Trust, and over time many likely will. This scenario highlights one of the paradigm shifts occurring throughout the timeshare industry: the move from deeded owner-managed resorts to Club/Trust developer-managed resorts. We’ve seen this trend with Blugreen, Festiva, Welk Resorts, and others, but what are the implications for the individual owner?
Real Estate Investment vs. Use Product
We’ve touched on this issue in previous posts: how should timeshare be perceived, as an investment or a use product. In the case of a deeded timeshare, owners are wise to acknowledge they have made a real estate investment. Once developer sales have ceased, the owners (through the HOA/POA) will be largely responsible for decisions regarding upkeep and amenities at their resort. This can be a double-edged sword, as resorts with an active owner base have been able to keep maintenance fees low and timeshare resale values stable, but resorts with unengaged owners often suffer from soaring costs and abysmal resale values. Ultimately, owning a deeded timeshare is a responsibility – one that few developers explain fully at the time of sale.
The Timeshare Club/Trust Concept
With a Club/Trust timeshare product, owners receive a true “use product.” While specifics vary from brand to brand, in a Club/Trust arrangement the timeshare is deeded to either the developer, or more often to a non-profit Trust created by the developer. Decisions about upkeep and maintenance at the resort are made by the developer or trustee. Since individual ownerships are not directly tied to real property, maintenance fees are calculated as a fraction of the aggregate upkeep costs of all resorts in the Club/Trust. In theory, this arrangement puts the entity with the most knowledge of resort operations (the developer) in complete control, and as long as the developer continues selling Club/Trust timeshares they have an incentive to manage costs carefully in order to attract new buyers. In practice, the results have been mixed; with some owners happy to have less responsibility, and others complaining of excessive maintenance fees.
Choosing The Right Form of Ownership for You
Owning timeshare, in any of its variants, is a smart choice for regular travelers – a means to save money, and a hedge against inflation (During the height of the recession timeshares remained over 80% occupied.) Both deeded and Club/Trust ownerships have advantages and drawbacks, and each family is different. If you’re considering buying timeshare, consider the level of involvement you want to have with your resort. A Club/Trust ownership represents a sharp departure from the ideal of timeshare – owning a fraction of the vacation home that would otherwise be unaffordable – but delivers on the promise of timeshare as a use product. For those ready to make the departure from deeded property, Diamond Resorts timeshare stands out as the clear choice!
January 5th, 2011
An interesting article appeared in my RSS feed recently; making the claim that, according to “legal experts,” timeshares are still not an investment. Having spoken to thousands of owners about their timeshares, I have to take issue with this perspective. Timeshare itself can be hard for even experts to quantify, and the view that it is simply “not” an investment is not only an oversimplification; it can pose a danger to timeshare owners’ interests. At the core of this issue there are actually two separate arguments:
- In the past, timeshare developers have come under fire for allowing/ignoring sales reps who “pitch” investment potential to consumers. The idea being that buying timeshare is akin to buying whole ownership real estate, and that the owner should expect the timeshare’s value to rise dramatically over the years. These sort of “pitches” are clearly unethical, possible illegal, and damaging to the timeshare industry as a whole. Fortunately today, this practice has been largely eliminated (at least in the U.S), and developers now openly deny timeshares’ investment potential.
- The secondary argument is more subtle: Timeshare itself is not an investment, should not be considered real estate, and costs of ownership will soar unchecked in perpetuity. Sadly, this argument seems to be gaining ground with myriad disenchanted owners, who find selling at a fair price can be difficult in the current market. There exists a real danger that, if enough owners believe timeshare is not an investment and act accordingly, this idea could become a self-fulfilling prophecy; leaving timeshare in the “ash heap of history.” (Along with over $100 Billion of Americans’ hard-earned dollars.)
Just what constitutes an investment anyway? According to the Merriam-Webster Dictionary, an investment is
“the outlay of money usually for income or profit: capital outlay; also: the sum invested or the property purchased.”
Even the developers agree that timeshare should not be bought “for profit,” but timeshare does involve a “capital outlay” and is a “property purchased.” Thus, I think it safe to conclude objectively that timeshare is, by definition, an investment. As such, it carries with it both rights and responsibilities: You have a right to use your timeshare during the designated time period, and you have a responsibility to pay for the maintenance of your timeshare property. Beyond these basic concepts, you have a right to expect to recoup a “fair value” for your timeshare when you decide to sell, and you have the responsibility to ensure your resort is properly managed – including closely monitoring increases in your maintenance fees.
Ironically, the thing timeshare owners must do to protect their investment, is the very thing denying timeshare is an investment discourages: Take Ownership of Your Timeshare.
Like it or not, if you own timeshare, you have invested in real property. It will not go away; you will pay property taxes, you will pay maintenance fees, you will pay to insure your property, and you should attend HOA/POA meetings, you should take an active interest in the operations at your resort. Protect your timeshare investment as you would any other – and be leery of headlines that begin with “Legal Experts…”
November 30th, 2010
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