Time to Exit your Timeshare?
I’ve had the “timeshare debate” with my mom several times. She has friends — including money-savvy ones — with properties, and I know at least one is trying to unload at the moment, too.
About $8 billion worth of timeshares are sold in the U.S. each year. And it’s easy to understand how folks fall for the allure of basically buying a hotel room.
Let’s say it’s the dead of winter… ice, snow, sub-freezing temperatures. And you spot an ad for a free vacation at an upscale, beachfront resort in Florida. The only requirement: You have to attend a timeshare meeting that should last about 90 minutes according to the fine print.
No big deal you think. So you go.
The day after you arrive, you gather in a dining room for the 90-minute presentation.
While the wilted spinach salad and wine is being served, you watch a video showing tanned vacationers basking on a beach, sipping tall drinks with little umbrellas sticking out of them, and laughing it up. Then you’re taken on a one-hour tour of the resort.
After you return you dine on salmon or prime rib. With dishes cleared and chocolate cake and coffee in front you, you’re nice and relaxed.
A smiling sales representative sits at your table.
You can’t resist the picture she paints of vacationing here one week every year for the rest of your life. The unit she’s showing has two bedrooms, a kitchen, and a washer and dryer. And the maintenance fee is just $300 per year.
Plus she tells you that you could exchange your unit for one at other resorts around the world, such as Aspen or Paris.
Then she adds that it’s real estate… a great investment since real estate always goes up in value.
With that assurance, you sign on the dotted line and make a deposit with your credit card. Bells ring, people cheer, and wine glasses are raised to celebrate your timeshare purchase.
Looking back… it was exciting.
Fast Forward 10 Years…
You’re about to retire and relocate to a Sunbelt state. The timeshare is paid off. But it no longer fits into your lifestyle. The maintenance fee has shot up to $1,800 — the smiling sales rep failed to mention annual increases.
On top of that, you received a notice of a $2,000 assessment that may be needed to pay for recent hurricane damage.
So you decide to sell it for a tidy profit.
You paid $15,000 for your unit. New ones in an adjacent building are going for $20,000.
You soon find though, that buying the timeshare was easy and fun. Selling it is nearly impossible and frustrating. And you might have to settle for pennies on the dollar or even pay someone to take it off your hands.
What’s more, you might not be able to give it back to the timeshare company. Or if you’re lucky, they’ll do you a favor by offering to take it back without you paying a contract cancelation fee of perhaps $1,000.
The annual maintenance fees go on forever, and the unit is yours for the rest of your life. So often times, death is the only way to get out of the contract.
Those frustrations have fueled the…
Timeshare Exit Industry
Timeshare exit companies promise to help owners get out of their timeshares.
Many, however, are scams…
They’ll contact you by phone, mail, or online with alleged offers to rescue you from your timeshare. The offer might claim that it’s a sellers’ market and eager buyers are lined up.
All you have to do is pay an upfront fee — anywhere from a few hundred to a few thousand dollars — and they’ll sell your timeshare for profit or at least the amount you paid. They might promise a money-back guarantee if they can’t sell your timeshare quickly, often within 60-90 days.
The scam comes in when they don’t deliver on the promises, keep your money, and disappear.
Then you may be contacted by a timeshare fraud recovery company offering to provide assistance in recovering the money you lost in the resale scam… all for a modest fee.
But that could be a scam too, according to the FBI. The feds have identified some instances where people involved with the recovery company had a connection to the resale company, thus setting victims up to be scammed twice by the same fraudsters.
Timeshare Users Group is packed full of information on timeshares. And once you pay a $15 annual membership fee, you can list your unit on their marketplace page, for free.
Or seek out a real estate agent familiar with the area and doesn’t charge an upfront fee.
The Resort Owners’ Coalition, a group that represents timeshare owners, has listings of licensed real estate brokers who specialize in timeshares.
You might also consider contacting an attorney who specializes in timeshare law. They possibly have more leverage in convincing a developer to take your unit back.
As a last resort, you can simply stop paying the maintenance fees. However, the timeshare company could threaten to ruin your credit rating and eventually foreclose.
So I suggest if you are about to buy or refinance a home or car, do that before reneging on the maintenance fees.
To a richer life,
— Nilus Mattive
Editor, The Rich Life Roadmap