It’s time to end the timeshare hard-sell tactics

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When you think of timeshares, do “high-pressure sales tactics,” “sky-high maintenance fees,” “unavailability for actual use,” and “inability to resell without incurring a high, non-tax-deductible loss” come to mind?

Maybe they should.

A recent editorial notes that sales of timeshares, or “plans in which persons share ownership or rental costs of a vacation home, especially a condominium, entitling each participant to use the residence for a specified time each year,” are on the rise again.

And along with the rise in sales volume are the notoriously intense hard-sell tactics that cause many would-be owners to throw up their hands (and drive a great deal of visitors to this site).

Fortunately, there are ways to avoid these come-ons, including knowing exactly what you’re buying (in actual and legal terms), knowing what your rights are, and reading all the fine print before you sign anything connected with a timeshare.

One of the biggest issues with timeshares, notes timeshare website RedWeek, is that timeshare purchasers have little legal recourse against timeshare developers when their salespeople make promises during sales presentations that are not kept by the developers — often the exact promises that drive buyers to agree to purchase the timeshares.

Under the laws of many states, the legally controlling document that spells out the obligations of owners, developers and HOAs (homeowner associations) involved in real estate transactions, such as timeshares, is the Public Offering Statement (POS). Timeshare associations must first file their POSs with the state or country in which they are situated and, on approval, share them with owners when signing contracts.

But if an approved POS is silent on any issue, including any promise made by a timeshare salesperson or developer to a potential owner, the owner is basically out of luck if the developer doesn’t keep the promise. In many states, the developer can’t be sued for misleading or inaccurate statements made by its salespeople unless the statements were deliberately misleading and deceptive — which can be hard (and expensive) to prove in court.

And according to Michael Finn, an attorney in Largo, Fla., who specializes in legal situations involving timeshares, “every timeshare contract includes wording that is designed to legally protect salespeople (and their sponsor/developer) who overstate the attractions, amenities and future development of a resort.”

Another issue with timeshare ownership is the nature of what owners actually purchase. In the past, owners received actual deeds to the properties they purchased. But the industry has moved to “point systems,” where the buyers receive “points” they can use for time and amenities, rather than deeds. They are still legally responsible for maintenance fees and taxes on the properties.

Two lawsuits are pending against Diamond Resorts International, a timeshare company that is noted for particularly aggressive sales tactics. The plaintiffs are purchasers who were pressured into buying “upgrades” in exchange for lower maintenance fees. The upgrades consisted of “points” at other Diamond timeshare properties, which turned out to be unusable. And the maintenance fees actually went up.

There’s also the issue of unloading timeshares that owners don’t want to keep. Timeshares can be hard to sell, especially in areas with glutted markets or other problems, like earthquakes, flooding or political issues. Timeshares in foreign countries are subject to laws and restrictions that are not always friendly to owners (and U.S. laws offer no protection). For example, timeshares in Mexico are not “ownerships” but “right-to-use” contracts.

And many timeshare companies, including Diamond, won’t repurchase timeshare holdings from owners who are looking to sell them — even those who can no longer afford them. Not only that, the contracts often indicate that “buyers generally do not have the right to terminate their memberships.” So they can be stuck paying HOA fees forever on properties they don’t want to own.

Does all this mean that timeshares aren’t good buys?

As with all purchases, it does mean caveat emptor. Timeshare purchases have been going up because “many timeshare buyers say they like being assured time at a resort they enjoy without the hassle of owning a second home.”

“They can guarantee you vacation time since they often come with fixed annual dates for right-of-use,” notes financial website MarketWatch. “On top of that, timeshare resorts typically offer more in-room amenities, such as kitchens and washing machines, than a hotel room.”

So, know what you’re buying or selling when it comes to timeshares. Check industry offerings against timeshares available on websites such as RedWeek and Timeshare Users Group, where you might find better deals. Go over those contracts with fine-toothed combs, check out applicable laws (if necessary, with professional help from a knowledgeable attorney), and read all the fine print before you sign.

Also, don’t purchase a timeshare as a “real estate investment,” advises Howard Nussbaum, president of the American Resort Development Association (ARDA). “The only investment timeshare owners are making is good vacation memories,” states MarketWatch.

If the scales seem tipped too far in favor of the timeshare industry, the outcry of customers is raising hope that the Consumer Financial Protection Bureau might rewrite the industry rules to address these practices, which in turn is driving down the companies’ stock prices. Diamond’s shares are down 37 percent since their high of March 2015.

So a timeshare might be a good way to enjoy a vacation each year — if you know what you are buying, and from whom.

Are timeshares worth owning for vacation purposes?

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Jennifer Finger

Jennifer is the founder of KeenReader, an Internet-based freelance editing operation, as well as a certified public accountant. She is a longtime editor and moderator of this site.

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  • sirwired

    I went to a timeshare presentation ONCE. (It happened to be Fairfield, (now Wyndham))

    Let’s just say that when the sales people outright REFUSED to let me take the paperwork home to examine it, I can think of no clearer signal that what they were offering was a horrible deal and/or not at all what they told me it was.

    As in, I would have walked, even without the non-stop barrage of “You’ve gotta be kidding me!” prototypical used-car-salesman tactics. The “closing” part of the presentation would be an example of how NOT to sell things to somebody with an IQ higher than a kumquat. (And even making that comparison is something of an insult to bitter tropical fruits.)

    I think timeshares have the potential to be a GREAT deal! That is, if you buy them on the secondary market for a fraction of the original selling price.

  • Joe_D_Messina

    Here’s my best example of how bad a deal they really are. I visited the grand opening of a beautiful complex in Colorado ski country 10-15 years ago. Sales prices ran from $100,000 if you wanted the week of Christmas down to around $30,000 for mud season (yucky weather before the start of ski season) which is when most of the town was closed. Then the inevitable maintenance fees added around $300 monthly, meaning the fees alone amounted to paying $500 per night for your week-long annual stay–easily twice what a similar place would run per night as a straight rental.

    And the kicker is that a couple years later, this same place came up on a rental search with prices starting around $100 per night. (They had taken to renting out units that weren’t being used by owners and/or were still unsold.) So, you could stay with zero long-term commitment paying 1/5 what the poor “owners” were forever on the hook for.

  • sirwired

    $3,600/yr, and that’s BEFORE actually paying for the timeshare itself? Wow; that IS a spectacularly horrible deal.

    And, of course, $3,600 x 52 = $187k/yr in “maintenance fees” per actual physical unit. Unless these places come with a complimentary full-time Butler AND maid, for every single unit, there’s some epic cash being raked in there.

  • Joe_D_Messina

    It was worse than some others I’ve seen over the years but the BEST deal I ever saw was still more in maintenance fees than what a regular rental would cost for a week. The only way a timeshare could ever make any sense financially would be for the maintenance fees to be somewhat less than a standard rental because then over the years the savings would essentially be paying off the original sales price. It might take forever, but at least theoretically someday you’d be able to say your timeshare was a better deal than standard renting. But that simply never happens with original sales from what I have seen.

    I know some people who have bought resale timeshares and they’ve been fairly happy because their only obligation is the maintenance fees since they paid little (if anything) to the original owners who were desperate to get rid of the thing. I think that is the only scenario in which a timeshare makes any sense at all.

  • sirwired

    I’ve often wondered about the whole “points system” many timeshares have shifted to. In it, (as best I understand it), you “buy” a certain number of “points” per year to spend however you wish on whatever resort in their network you wish. But your maintenance fees are tied to your “home” resort.

    Under such a system, why would one not just look for the resort with the cheapest maintenance fees (i.e. some basic thing that looks like an apartment complex in flyover country vs. a gleaming high-rise right on an Atlantic hurricane-prone beach), buy all your points there, and then use said points to vacation at the place you actually want to go?

  • Joe_D_Messina

    People do that to some degree, as I understand it. But points are tied to the desirability of the properties involved so to have a good amount of points you’re going to need a nicer property which likely isn’t going to be cheap in terms of either the original sales price or the maintenance fees.

    The one thing points do allow is for people to take shorter vacations or split time between multiple locations which was impossible under the traditional timeshare “here’s your week, use it or lose it” approach. But just like everything else the elephant in the room is that the original sales price is a sunk cost on something with zero resale value and the maintenance fees by themselves are probably still more than what you are getting is truly worth. Points make things a bit more flexible but a terrible deal made more flexible is still a terrible deal.

  • Rebecca

    The amount of “points” you get is directly related to the desirability of your home resort.

    The one thing I don’t think people understand about these points systems when they buy in is that the inventory is going to be limited to what’s available that’s not even comparable, but less than, what you already have. The salesman promises Hawaii over Christmas break. What idiot that owns a couple weeks in Hawaii over Christmas break is going to trade that in for points to begin with? It’s just like the cash market, as desirability goes up, so does the price. And availability goes down.

  • Rebecca

    How fittingly ironic that the document governing a timeshare is actually called a POS. Best fact of the day I have learned in quite a long time!

  • DCMarketeer

    My husband and I own two weeks of timeshare time that we inherited from my father and stepmother, so our only financial outlay has been the annual maintenance fees, not the initial costs. If we’d actually paid the initial cost, we might feel differently. We have had no issues with being able to exchange our weeks through RCI for other destinations and have been to some very nice resorts. It’s really important to buy in a place that people really want to go (Orlando, for example) in order to be able to exchange well.

    One of the resorts at which we own is now owned by Diamond Resorts; however, and the maintenance fees have skyrocketed since they took over. The other issue is that they will not stop calling to try to upgrade us. They call once a week despite our asking to be put on their do-not-call list. I’m beginning to think they don’t have one.

  • PolishKnightUSA

    I went through a hellish timeshare presentation BUT I did actually learn a lot (which they didn’t intend.) I was considering buying in the secondary market because, as Jennifer points out, the secondary market is a fraction of the price from buying at the presentation.

    After being jerked around in the primary presentation and sent to a “survey” for a secondary limited-trial membership pitch, I told the secondary presenter that I liked renting units. She argued that capacity at the resort I preferred was high and I had no chance of staying there again. She did this to basically flip me off but… unintentionally revealed that it was a good choice to not buy. She also reacted badly when I mentioned the word “ponzi” scheme.

    This got me to thinking… this all could collapse at any moment. At the resort we toured, in a desirable area, there’s no guarantee with points one can stay there unless they pay more for the VIP package. In that case, I rented from an owner at about the cost of their maintenance fees. So without any obligation, I didn’t get stuck.

    Want out of the presentation fast? Say you’re buying on the secondary market and bring in ebay pages to show you’ve checked. If they say that resales damage the value of the unit, say that therefore this makes it worthless as an investment. Use the word “ponzi” to ask if there are guarantees that there will be availability. Ask about an exit clause to walk away. Get a business card from an attorney and ask to have the contract sent to him.

    Heck, I wish I had said I agreed and as they popped the champagne, say that this is contingent upon my attorney reviewing the docs and give the email of the attorney. They’ll rush you out of there in disgust.

  • PolishKnightUSA

    My father’s trick with pesky telemarkers was to speak in Polish to them. They eventually got annoyed and hung up. A few times, and they would “get the messsage”.

    My mother’s favorite trick was to act interested and go “uh huh” while doing her crossword puzzles. After about a half hour, she’d say she had to check something on the stove and then… leave the phone there hanging.

  • John Galbraith

    Hi Sirwired. Have you got confused with the math or is it me? The maintenance fees are $300 monthly so as you said that is $3,600/yr. You then seem to have multiplied this yearly figure by 52 weeks to get $187k/yr.

  • sirwired

    Traditionally, timeshares are sold by “weeks”. As in, you buy a specific class of unit during a particular week that is yours to use every single year. (i.e. “Deluxe Suite, Week 23”)

    Since there are 52 weeks in a year, that $300/mo gets paid 52 times for every single actual physical unit. (You pay that $300/mo all year ’round, even though you only actually stay one week a year.)

  • pauletteb

    You made my day!

  • sirwired

    A note to your State Atty. General can shut up DNC violations in a hurry. In my experience, they send an actual intimidating physical letter, and one that has always earned me a personal reply from the business involved.

  • pauletteb

    I made the mistake of entering a contest sponsored by Diamond . . . and the telemarketing calls came fast and furious. After numerous requests, the calls finally stopped more than a month later.

  • John Galbraith

    Ah thanks Sirwired that makes sense. I know you usual spot on so i did wonder if it was me and it was!

  • jim6555

    There seem to be people who are attracted to time share presentation by the free gifts or cash that they offer and then don’t have the will-power to say no. I know a husband and wife who are having a hard time financially. A factor in their money woes is having to pay the maintenance fees on the four timeshare contracts that they purchased over several years. Recently, the husband told me that they were going to a resort area for a weekend to meet some relatives who had flown in from overseas. He said that while there, he was going to attend a timeshare presentation because they were offering $300 in cash along with some other perks for attending. When I saw him a few days later and asked him how the trip went. He excitedly told me about the great deal that he got on purchasing a timeshare unit while there. They now own five weeks of timeshares but can’t afford some of the inexpensive pleasures of life.

  • jim6555

    My phone provider, Verizon FIOS, provides a free service where a list of up to 100 numbers can be blocked from putting through further calls. Once the number is entered on the list, the caller receives a recorded message saying that “the party you have called is no longer accepting calls from this number”. If they block their caller ID number, there is an Anonymous Call Rejection feature that won’t allow a call to be connected unless caller ID is activated. Perhaps your phone provider also provides these services.

  • Annie M

    Make sure you report every single call to the Do Not Call website. Eventually they do catch up with them and fine them if they get enough complaints.

  • Annie M

    There is a wonderful free service called nomorobo.com that blocks telemarketer calls. Unfortunately, it doesn’t work with a lot of phone service, but it does work with Fios. This has cut 99% of our telemarketing calls and if one gets throigh, we simply add the phone number to nomorobo’s data base and they get blocked as well.

  • Annie M

    We have an acquaintance who takes all his vacations going to time share presentations. He walks in, points to his watch and tells them he is walking out exactly 90 minutes later. He has never purchased but enjoys trying to get the best of these presentations. I guess if you have strong will power, where there is a will, there is a way.

  • Alan Gore

    How different is this, though, from that “Contract of Carriage” that they will rope and hogtie you if you ask to read it?

    I do know people who successfully use timeshare units for vacations. The key is to always buy resale, never new from the developer.

  • sirwired

    There was just an article in the NYT a couple of days ago about one developer, Diamond, that raises maint. fees SO high when they take over a property that people literally cannot give their units away. (As in, advertising it for $1 lands no sale, and the developer will not accept the property back when offered.) Buying a unit on the secondary market would save you money, I suppose, but would STILL be a horrible deal. I wonder if there is any defense against that? (As in, a secondary unit might be a great deal when maint. fees are cheap, but what about when they go up?)

    I don’t know what you are getting at with Contracts of Carriage…

  • bpepy

    We have nomorobo.com also, and it’s wonderful. The phone rings once only if it’s a robo call, so our dinner isn’t interrupted every night!

  • Alan Gore

    It goes without saying that a buyer should look at maintenance fees closely. After all, every condo arrangement involves a maintenance fee. It represents the rolled-up cost of all the maintenance that you now no longer have to do yourself; in timeshares, it also has to include a number of non-durable items within units, such as bedsheets, that are not included in condo arrangements.

    Another advantage of buying resale is that the market price factors in any weirdness in the maintenance fee setup. Those giveaway prices you cite are a red flag for a property you should stay away from.

  • 42NYC

    Yes, they’re a bad investment and yes its a hard sell. But i have little sympathy for someone who shells out $50k for something without doing any research. A quick 2 minutes on the internetz will tell you what a bad deal these are.

  • Fishplate

    Do Not Call doesn’t apply to businesses with which you have an ongoing relationship. As long as you are an owner, they can call you to upgrade, or whatever other message they want to send.

  • Fishplate

    My dinner is never interrupted, as I own my phone – not the other way around. :)

  • jim6555

    I also use nomorobo.com and highly recommend it. Unfortunately it only works to stop robo-calls and will not stop dialed voice or collection calls from getting through.

  • Lee Delong

    it is like giving to a charity of the otherwise unemployable. like a lot of people that sell cars and real estate, most of them can’t get real jobs.

  • Lee Delong

    the purchase is charitable gift.

  • Lee Delong

    I just found a hotel in Valdosta, GA with heated indoor swimming pool. Briarwood Motel ex#16 I-75 GA
    very reasonable pricing.

  • Lee Delong

    they are part of nature

  • KanExplore

    I said I never make this kind of investment without seeing my lawyer first. They said, “No problem, we have lawyers here you can talk to.” I ran for the exit.