Wednesday, May 29, 2019

An Open Letter to the Timeshare Industry

Dear bigwigs and not so bigwigs, I hope that at least one of you answers this letter, even anonymously. 

Here’s the question:  Why do timeshares in the secondary market have such low value compared with the original purchase price?

Let us assume that Joe and Mary purchase one of your timeshares for $20,000. They use it annually and pay all the maintenance fees, even when you increase them. 10 years go by and they don’t want it any longer. They are disheartened to find out that similar timeshares have only managed to sell for $1,500.  

Joe and Mary will now do one of three things; a) they’ll fall prey to a scammer who will promise that they can sell it for $20,000 because its real estate, for a $6,000 upfront fee, b) stop paying the annual fees and be faced with a foreclosure and everything that goes along with it when you start legal proceedings or c) end up selling the timeshare for only $1,500. All three of these options will have the effect of negating the positive experiences Joe and Mary have had vacationing and you can bet that they will not be recommending timeshare to anyone. 

You, on the other hand could have offered to buy back Joe and Mary’s timeshare for $15,000 (actually you could buy it back for $20,000, but I’m feeling generous today) and turn around and sell it the following day for $30,000 as that is what you’re charging now. There has been no depreciation on the timeshare because Joe and Mary faithfully paid what you billed them every year and you maintained the unit and the did, didn’t you?

Joe and Mary will not fall prey to any scammers now, because there’s no need for them to even exist. Joe and Mary feel good about their purchase and their years of vacationing at timeshare resorts and are likely to recommend this way if vacationing to their friends and family. 

Why don’t you do this???

Thursday, May 16, 2019

The Truth About Timeshare Exit Companies

As you probably know, there’s been a lot of talk lately about so-called timeshare exit companies. Major timeshare developers are filing lawsuits left and right against these companies as well as licensed law firms. Heck, I’ve even been interviewed by the CBS affiliate in Charlotte about these companies.

Timeshare developers, ARDA and ARDA-ROC have been putting out press releases about how their goal is to protect consumers from the ‘evils’ of any person, company, organization or firm that claims to assist beleaguered owners. I’ll leave the discussion about what their actual goal is for another post.  

At a recent legislative workshop in Florida at least two individuals from the industry, Ken McKelvey of ARDA-ROC and Jason Gamel (who was with Wyndham at the time) of ARDA made impassioned speeches about how timeshare developers have programs to take back timeshares from owners who want out. 

But that really isn’t the case, is it?  If you’re a timeshare owner who wants out for whatever reason, your first course of action is not going to Google ‘timeshare exit’, is it?  No. It goes something like this:

Step 1-Contact the resort where you purchased your timeshare. Chances are pretty darn good that you’ll be shuffled from department to department because there’s not really any dedicated staff at the resort to deal with these situations. You’ll either be told that you signed a contract that can’t be broken, given a number to someone at corporate or worse, invited to an “information session” where you can learn new ways to use your timeshare. 

Step 2-Contact the developer where you’ll play yet another round of telephone transfer to no avail. 

Step 3-Try to sell your timeshare. This is where you’ll find out one of two things. First, if it’s paid in full it’s only worth a tiny fraction of what you originally paid and the secondary market is awash with listings, many of them for under $100. More often than not, it’s not paid in full and then you discover that you can’t sell it because no one is going to buy it when there’s a balance owed. 

At this point, weeks or months have gone by and you are in the same situation; you want out and out quickly before another maintenance bill hits. 

Only after exhausting these options to no avail will you go online in hopes of finding an exit company. 

Now, I’d be remiss if I didn’t mention that some developers have instituted some programs where they will take back their own timeshare. For a fee. If it’s paid in full. At their own discretion. If they decide to. 

It’s pretty easy to see why there’s been such an increase in the number of organizations that promise to get an owner “out” of their obligation.

Are people within the industry truly that blind to what is going on?  They don’t really believe their own spin, do they?  The ONLY reason for the increasing number of organizations that are advertising their methods to get someone out of a timeshare is because the industry won’t let owners out. 

Monday, May 6, 2019

This Is What You Need To Know About Timeshare Charges

When you purchase a timeshare, either on the primary or the secondary market, there are a number of charges that you will encounter aside from the purchase price.  
Read this to understand the basic, not so basic and red flag charges you may encounter. 

Standard Timeshare Fees

Maintenance Fees
Regular maintenance fees cover normal wear and tear on the timeshare units and common areas, such as the pool, the clubhouse and the grounds.  Most resorts have a timetable for replacing items such as televisions, bedding, kitchen appliances, etc. This timetable and more information on annual fees can usually be found in the Public Offering Statement (POS).

Real Estate Taxes
If a timeshare is in fact real estate-based, there are taxes to be paid, similar to a home or condo.  Some resorts combine the annual maintenance fee and the real estate taxes into one payment, but it is a good idea to get the breakdown, as the real estate tax you pay on your timeshare may be tax deductible.

Special Assessments
While maintenance fees are regularly occurring, special assessments are by their nature “special” or assessed on a non-regular basis.  Special assessments are levied to cover costs over and above normal wear and tear and replacement of items.  A typical example of when a special assessment is needed and what it covers is hurricane damage.

Exchange Company Membership/Subscriber Fees
The primary exchange companies, RCI and Interval International, charge an annual membership fee, which you need to pay in order to take advantage of any trades/exchanges.  Some of the other exchange companies do not charge any annual fee.  

Exchange/Trade/Usage Fees
In addition to the exchange company membership fee, there are exchange or usage fees charged in order to use your timeshare.  Exchange/usage fees vary depending on if the exchange is domestic or international; made on the phone or online, or if the exchange is internal or external

Charges You May be Asked to Pay
With the exception of the “Administration Fee” which I do not like at all, these fees must be factored into the overall cost of purchasing/owing. Nearly all of them are negotiable.  It pays to ask.

Title Transfer Fee
Guest Certificate from Exchange Company
Administrative Charges
Pool Towel
$300 Marriott New Member Education Fee (covers usage and benefits)

Questions to Ask Before Purchase
Who is in charge of collection of the fees and when will they be assessed?
Who is the resort’s management company?
Who serves on the resort’s HOA board?
How much have the fees increased over the past five years?
Is there a cap to how much these fees can be raised annually?

If you don’t get full answers to these questions and are shown the answers in writing, not merely on a piece of paper, do not proceed with the purchase. This isn’t the only timeshare fir sale. You deserve better.