Realty Check
Tough talk on all things housing -- booms, busts, bargains and more -- from "Nightline" correspondent Vicki Mabrey
Vicki Mabrey is a correspondent for "Nightline" based in New York. She covers real estate as well as a range of national stories.
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The Truth About Timeshares
June 13, 2008 4:19 PM
Wow -- the things you learn when you start digging for info. Because of my aunt’s dissatisfaction with her timeshare, I wanted to know more. That led me to TUG -- Timeshare Users Group. Got off the phone at almost midnight Wednesday night, after an incredibly informative hour and a half talking with Brian Rogers, who runs the site. His father William started it about 15 years ago, wanting to connect with other people to share their experiences, good and bad, about timeshares. Brian took over from his dad two and a half years ago.
His dad originally bought a “new” timeshare in Hilton Head and while he's perfectly happy with what he bought, he realizes he could have gotten the same thing and saved a bundle. Brian learned from his dad and buys “used.”
Brian tells me TUG has about 30,000 registered users, with about 200,000 browsing the site. A respectable number, but only a fraction of the four million timeshare owners. But it’s quite an eye-opener to browse the site and talk with Brian.
“Everyone who comes to the site is looking for help, probably half are looking to sell,” Brian says. Why is that? They find out they can’t use it the way they’d like; it costs more than they expected (“Those maintenance fees never go down, they always go up,” he tells me); they get home from paradise, reality hits and they’re freaked (“Oh my God, what have I just done?!”). They start searching the Internet and find that what they just spent $10,000, $20,000, $50,000 for is listed on TUG or Ebay for $5,000, $1,000, even $500!
Talk about being dashed with cold water. As I wrote in yesterday’s post, there is virtually no after-market for timeshares, yet the market is saturated with people wanting to sell. But why, I ask Brian? If you can get the exact same thing for THOUSANDS of dollars less, why don’t people buy in the aftermarket?
“When you buy a new car,” he says, “you know it loses 15-20 percent of its value the minute you drive it off the lot. We all accept that.” Timeshares, he says, lose 40 percent of value immediately, and usually more. If you check the classified ads on TUG, they’re being sold for pennies on the dollar. Yet people are leery of buying a “used” timeshare -- even more afraid than they are of buying a used car.
“People know they could buy the same car used and save money,” Brian tells me, “but they’d rather buy new because they figure they’ll get better quality. But a room doesn’t fall apart,” he says. “And with resale, you usually get the exact same benefit as someone who bought new.” But still, people are afraid. Or unaware.
I asked if people think the ads on TUG are a scam. “Some see the price disparity and just don’t believe it can be true,” Brian says. “They think, ‘How on earth can it be that good if it’s 60 percent, 70 percent less than the developer’s asking price?’”
Developers and sales agent are getting savvy in the way they handle resales, Brian tells me. In some cases, they make sure those who’ve bought for less don’t get the same “VIP” benefits and perks that come from paying full price -- they don’t get bonus weeks or “Gold Cards” or the use of the pool and sauna, things like that. If that’s important to you, retail is the way to go. But I particularly enjoyed the response of TUG member “Tombo,” to poster “Jasenj1”, who was thinking of rescinding his $10,000 timeshare purchase after seeing the exact same thing offered at resale on the Internet for $500: “IF YOU BUY A $500 WEEK ON E-BAY, YOUR FAMILY CAN ENJOY THE EXACT SAME VACATIONS AT THE EXACT SAME RESORT WHILE KEEPING $9500 IN THE BANK.” (emphasis Tombo’s)
So (wth apologies to “Bud28dy” who’s not happy that I used my family as an anecdotal story) I asked Brian about my Aunt Liz. What happens if she or someone in a similar situation just walks away from their timeshare? Calls the company, says they want out, they’re through, take it back, they’re not paying anymore?
“In most states, a timeshare is real property,” Brian says. “Unlike a house, they can’t come and take the property away if you stop paying, but it’s like if you stop paying on a credit card. They probably will send credit agencies after you.” Though Brian says TUG doesn't condone walking away from your timeshare (you did, after all, enter into a legal agreement), he says he's heard of some older people who are willing to risk it. He’s heard of some brave (or foolish?) 80-somethings saying, "Sue me! What do I need credit for?"
I think Aunt Liz is planning to be around long enough that her credit score matters. We certainly hope so!
Next week: Lots more timeshare information –- TUG is a fountain of wisdom! We'll also welcome some guest bloggers -- let’s call it Real Estate and the City. Nightline’s young staffers say they’ve got the job to die for, but will they ever be able to get on New York’s property ladder?
June 13, 2008 | Permalink | User Comments (11)
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I've sat through a few sales pitches and always wondered who finds returning to the same place once (or more) times a year appealing. It's a big world... explore!!!!
Posted by: Lesley | Jun 13, 2008 5:35:42 PM
I purchased a timeshare about 7 years ago with a former spouse. We had great results in the few years that I used it. The maintenance fees are high, but our facility had a rental pool where we could rent some of our time....and it paid for the maintenance.
I guess in my situation, I looked at the cost of lodging for trips we would take for the WHOLE year. Since the monthly cost of the time share was less...it was worth it to us. We took probably 10 trips in two years for less than $1200. It costs more than 120 for hotel TAX these days...
Posted by: Richey | Jun 13, 2008 5:54:08 PM
We bought a Timeshare in 2000 for $8000. We bought 'points' not weeks. But depending on which season you were willing to go, it added up to about a week.
We had about 8 places to go to, scattered in Florida, California and Las Vegas. But we also had an agreement(included in membership)with Interval International to trade out anywhere in the world for about $125. Maintenance fees were around $300 a year.
We were lucky to have a larger development buy the existing timeshare out, because it had many Timeshares in the US and all over the world. (we paid an additional $2000 for points.)
My only beef is that the maintainence
fees just went up to $700 this year (up from $500 a year) when another company bought again.
Maybe paying $10000 was not that bad, now that I have read this article. Also points are better than weeks....you can use as much or little as you want(e.g.week-end only).
Posted by: Peach | Jun 15, 2008 8:10:59 PM
I would STRONGLY recommend NOT buying a timeshare. I made the mistake of buying two! The first one I bought was in Hawaii. It was a wonderful place right on the beach in Maui. It was HUGE, had gorgeous furnishings, etc. I thought I would be able to sell my week when I couldn't use it since my job exposed me to people with significant incomes.
However, I found out there were three categories of people. Those who had plenty of money and who, in many cases, had their own timeshares, those who had the money to go on a trip to Hawaii, but did not want to spend 9 hours on a plane, and those who didn't have the money, but would have gone in a heartbeat if the did. It left me with a timeshare that I rarely used and that nobody else seemed to want to or be able to use, take your pick. After two years I sold it. Luckily, it sold within 30 days after I put it on the secondary timeshare market.
My second experience was not quite as good. I bought a timeshare in Mexico after a trip to Cancun. This time I thought I would use it every year since I had a ton of frequent flyer miles, I was making a hefty salary, and I had a family who loved to travel which included a brother who worked for the airlines, and a newish beau who also loved to travel. I considered it my "car" since I had a company car and did not have car payments. What could go wrong? Plenty!
Soon after I bought the timeshare, my boyfriend and I broke up, most of the family members that had the time and/or money to travel, got sick one after another, and those that would have gone either did not have the money and/or could not get the time off work. Murphy's Law. Again, I put the timeshare on the market after a couple of years expecting it to sell in about 30 days. Well, 3 YEARS later, I had paid to have it on the market, paid the yearly maintenance fees, which only climbed every year and still no buyers. I one point I got so desperate to sell, I offered it to someone for $3000.00 (it was supposedly worth 15,000.00) or for FREE if they would take over the maintenance fees and let me use it every other year. I couldn't even GIVE it away! Eventually after loosing my job to downsizing, out of desperation, I actually PAID a company to take over the time share. I think it was about $2000.00 which they claimed I would be able to take as a deduction on my taxes as an investment that lost money. My accountant straightened me out on that, I got NO deduction and was told the IRS flags returns that have timeshares as an investments and does not allow them. To make things worse, there was a hurricane in Cancun at one point during my ownership so my maintenance fees DOUBLED to rebuild the structure that I "owned" 1/100th of one week out the the year.
Needless to say, I will NEVER buy another timeshare, even on the secondary market. Even if the cost is low on the secondary market, there is always the unending maintenance fee that doesn't ever go away or get smaller.
Feel free to pass this along to others so they don't make the same mistake I made. I thought I had a pretty sound reason to buy between loads of frequent flyer points, making good money on my job, and the lack of a car payment, maintenance, insurance, etc. I was wrong!
Posted by: Nancie | Jun 16, 2008 7:56:19 PM
I recently found a useful website for timeshare owners, giving independent reviews, news and advice plus a downloadable magazine - it's free to subscribe and gave me a much better idea of whether I should buy or rent timeshare. Website is http://www.ownersperspective.com
Maintenance fees are always a bit of an issue, but if you buy in the right place, the value is there over the years, just do your homework first.
Posted by: Jack | Jun 23, 2008 6:45:12 PM
I've made a huge mistake too. I bought my timeshare from Point To Point Destinations (PTP Destinations, West Coast Timeshare, Vancouver, BC). I regret it ever since.
Check out my experience and more facts here:
Posted by: TimeshareRevealed.com | Jul 20, 2008 1:09:57 PM
Timeshare is great if you have the time and money to use it. If not the annual fees do become a headache. If you have to sell, be realistic with your expectations and don't pay a service fee in advance as the company has no incentive to help you.
Posted by: VacationTrader | Feb 9, 2009 11:09:37 PM
Timeshare is great if you have the time and money to use it. If not the annual fees do become a headache. If you have to sell, be realistic with your expectations and don't pay a service fee in advance as the company has no incentive to help you.
Posted by: VacationTrader | Feb 9, 2009 11:09:39 PM
Timeshare is great if you have the time and money to use it. If not the annual fees do become a headache. If you have to sell, be realistic with your expectations and don't pay a service fee in advance as the company has no incentive to help you.
Posted by: VacationTrader | Feb 9, 2009 11:11:51 PM
I found this site to be useful for the resale market. I rent timeshares in all the best places for a fraction of the cost, and it saves the owners maintenance fee's usually. They now have a button you can click to book it now, which is pretty cool. I have been on Tug and find it very one sided, of course there side. There are many great companies to help in selling a timeshare or renting, upfront fee's or not. Tug only shares there side of the story.
Posted by: Stu | Apr 22, 2009 3:41:29 PM
Oppps forgot to place the site name. Anyway check them out. I think they have much more to offer than most, and lets face it, if you want to get rid of your timeshare, you want to get rid of it fast.
Posted by: Stu | Apr 22, 2009 3:45:52 PM
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