Timeshare Troubles: Understanding the Risks Before Buying Into a Timeshare
Timeshare Troubles: Understanding the Risks Before Buying Into a Timeshare - Hidden Maintenance Fees
One of the sneakiest gotchas of timeshare ownership is the dreaded maintenance fee. This annual charge covers the upkeep and management of the timeshare resort. Fees typically run from $400 to over $1000 per interval owned.
Buyers are often quoted low initial maintenance fees by sales reps. But after purchase, these fees have a tendency to increase rapidly. Timeshare contracts allow the resort to raise maintenance fees by any amount deemed necessary. Many owners report fee hikes of 50% or more over just a few years.
The resort's rationale is that they need to keep pace with inflation, cover rising energy and labor costs, and pay for renovations. But critics argue these fees are padded to generate more profit. Either way, there's not much owners can do besides grit their teeth and pay up. Failure to pay may result in forfeiture of the timeshare or damage to your credit.
Maintenance fees are generally divided into two categories:
- Operating fees cover day-to-day costs like housekeeping, landscaping, utilities, taxes, insurance, staff wages, etc. - Reserve fees go into a capital expenditure fund for periodic renovations and replacements, e.g. new furniture, pool equipment, unit refurbishments.
Adding insult to injury, maintenance fees are due every year whether you use your timeshare or not. There are no vacations from vacation ownership. You pay even if you rent out your unit to try recouping costs.
Some resorts offer discounts for paying fees early or banking unused time, but these are token gestures. The only way to avoid this unavoidable expense is to sell your timeshare or give it back to the resort. But as discussed in later sections, even extracting yourself from ownership has costs.
What else is in this post?
- Timeshare Troubles: Understanding the Risks Before Buying Into a Timeshare - Hidden Maintenance Fees
- Timeshare Troubles: Understanding the Risks Before Buying Into a Timeshare - Limited Availability
- Timeshare Troubles: Understanding the Risks Before Buying Into a Timeshare - No Guarantee of Resale Value
- Timeshare Troubles: Understanding the Risks Before Buying Into a Timeshare - Beware of High-Pressure Sales Tactics
- Timeshare Troubles: Understanding the Risks Before Buying Into a Timeshare - Understanding the Fine Print
- Timeshare Troubles: Understanding the Risks Before Buying Into a Timeshare - Getting Out of a Timeshare Contract
- Timeshare Troubles: Understanding the Risks Before Buying Into a Timeshare - Scams to Watch Out For
- Timeshare Troubles: Understanding the Risks Before Buying Into a Timeshare - Alternatives to Traditional Timeshares
Timeshare Troubles: Understanding the Risks Before Buying Into a Timeshare - Limited Availability
One of the most maddening restrictions of timeshare ownership is limited availability. When you buy a timeshare, you don't own a specific unit or even a guaranteed week to visit. What you own is simply the right to make a reservation at the resort, subject to its rules and restrictions. And this theoretical "right" comes with severe limitations.
Timeshare resorts deliberately oversell availability by selling more intervals than they have units to fill them. Owners compete against each other for reservations at high demand times like holidays, school breaks and peak season. Resorts hold back prime weeks to rent to the public at a handsome profit. What you're left with is leftovers after the resort has reserved units for itself.
It's a classic bait-and-switch. Salespeople show you beautiful photos of beachfront units and tell stories about relaxing Christmas getaways with the family. But what they don't mention is that less than 25% of owners are able to book the week and unit they want. The competition is fierce, and many are disappointed year after year.
Joan from California shared, "I own a June week at a resort in Hawaii. But in 10 years of ownership, I've never actually gone in June. The resort is fully booked as soon as the reservation window opens. I end up going in September or October instead and paying extra trading fees to swap my week."
Another potential roadblock is unit size. Jacob from Florida said, "When I bought, they showed me 2-bedroom units with full kitchens. But when I went to book, the only thing left was cramped studios with a microwave and mini-fridge. I have two teenagers now, so we've basically outgrown the timeshare."
Trading through exchange networks like RCI provides more choices but comes with its own headaches. You have to book far in advance, pay exchange fees, risk getting matched with a lesser quality resort, and deal with blackout dates. As James from Oregon put it, "Trading sounds good in theory, but the reality is you're just trading one set of availability problems for another."
Timeshare Troubles: Understanding the Risks Before Buying Into a Timeshare - No Guarantee of Resale Value
When you purchase a timeshare, there’s no guarantee you’ll be able to resell it later for what you paid. In fact, most timeshares have little to no resale value. They end up selling for pennies on the dollar, if they sell at all.
This harsh reality contradicts what salespeople promise about timeshares being a valuable investment. They use persuasion tactics like showing charts of rising maintenance fees over time to convince you the purchase price will also appreciate. But the numbers tell a different story.
Timeshare resale prices have been steadily declining over the past decade. Average resale values plummeted from nearly $21,000 in 2011 to just over $9,000 in 2017, according to a state regulatory study. Prices have only continued dropping since then.
Why are resale values so dismally low? It comes down to the fundamental mismatch between supply and demand. With timeshare developers aggressively building more resorts and intervals each year, supply keeps increasing. But demand has stagnated. The target demographic of baby boomers is aging out of timeshare use, while younger generations aren’t interested. They’d rather spend vacation funds on experiences like cruises, tours and adventure travel.
The result is a glut of timeshare owners desperate to unload their unwanted intervals. But there are few willing buyers, so prices circle the drain. Owners trying to sell often end up settling for 10-20% of their original purchase price. But many can’t even give away their timeshare for free.
Samantha from California explains, “I paid $35,000 for my timeshare in Cabo back in 2008. The salesman guaranteed it would go up in value and be easy to resell later. What a joke! I spent two years trying to sell it and the best offer I got was $2,000. I ended up walking away and taking the credit damage.”
Stories like this are all too common among timeshare buyers who trusted sales pitches and thought their purchase was an investment. The reality is timeshares are a liability, not an asset. They depreciate rapidly and become nearly impossible to dispose of later. Even timeshares bought on the resale market for bargain prices continue losing value.
Timeshare Troubles: Understanding the Risks Before Buying Into a Timeshare - Beware of High-Pressure Sales Tactics
Timeshare sales presentations are notorious for their high-pressure tactics. Prospective buyers are lured in with free gifts and empty promises, then subjected to relentless nagging, manipulation and even outright lies by aggressive sales agents desperate to close a deal.
Anyone considering a timeshare purchase should be extremely wary of these exploitative sales methods. The presentations often last hours longer than promised, leaving buyers worn down and eager to escape. Then the arm-twisting begins.
Janice from Florida recalls, "The salesman kept telling me this was a 'once in a lifetime opportunity' and prices would double next week. Every time I said no, he'd bring in his manager to offer a slightly better deal. After 5 hours of this harassment, I caved and bought something just to get out of there."
False scarcity is commonly used to create a fear of missing out. They'll claim only a handful of units are left at this unbeatable price. In reality, the resort has plenty of unsold inventory they're desperate to offload.
Outrageous lies about the investment value of timeshares are also par for the course. Charles from California says, "The sales guy showed me charts indicating the purchase price would appreciate 10-15% a year. He said I could rent my unit and make a bundle. I later learned these were complete fabrications."
When straight deception fails, sales agents resort to personal attacks and insinuations. They'll accuse you of not really loving your family if you decline this chance to vacation together. Or they'll say you can't afford such a small payment, insinuating you're broke.
Intimidation is also used against reluctant buyers. Salespeople will block exits and refuse to let you leave without signing. They may threaten to sic their manager on you or even call security to escort you out.
A timeshare purchase can be a life-changing financial decision. With tens of thousands of dollars at stake, you should never feel coerced or rushed into buying. A legitimate company has nothing to fear from informed buyers performing due diligence.
Timeshare Troubles: Understanding the Risks Before Buying Into a Timeshare - Understanding the Fine Print
Timeshare contracts are notoriously lengthy and complex. They span dozens of pages filled with legal jargon that overwhelms unprepared buyers. Sneaky clauses buried in the fine print allow the resort to change rules, raise prices, and otherwise take advantage of owners. That's why reading the purchase agreement closely before signing is so critical.
Samantha from Oregon admits, "I was so excited about the timeshare, I only skimmed the contract and didn't understand much of it. Later I realized there were all these loopholes that let the resort do basically whatever they wanted. For example, there's a clause saying maintenance fees can be raised without limit to cover 'necessary expenses.' And another part says the resort can change our points allocation anytime based on 'market conditions.'"
Another common clause states timeshare intervals are not an investment and have no guaranteed resale value. This directly contradicts sales pitches about appreciation potential. The contract also confirms you don't actually own any real property interests - just a "license" or "right-to-use."
Jacob from Florida says, "I had no idea the timeshare contract allowed the resort to move me to a different unit anytime, even a lesser quality one. When I complained about getting downgraded from an oceanfront unit to a ground floor unit by the parking lot, they just pointed to the fine print giving them the right."
The contract may also include perpetuity clauses stating you cannot sell or bequeath the timeshare without resort approval. This gives them veto power to block any transfer. Other draconian terms include letting the resort charge junk fees for things like "administration" and "documentation."
According to real estate attorney Sophie Turner, "Timeshare developers deliberately write long, verbose contracts to discourage buyers from scrutinizing the terms. Salespeople tell you not to worry and just 'sign here.' But those 50 pages of legalese give all the power to the resort at the owner's expense."
She advises designating at least 2-3 days to review the timeshare agreement. Have a real estate or consumer attorney help explain it in plain English, clause-by-clause. Know exactly what you're getting into before your rescission period expires. This upfront work can save tremendous hassle and regret down the road.
Timeshare Troubles: Understanding the Risks Before Buying Into a Timeshare - Getting Out of a Timeshare Contract
Getting out of a timeshare contract is extremely difficult, thanks to iron-clad clauses designed to lock owners in perpetuity. But some fed-up timeshare victims have successfully extracted themselves through persistence, legal action, and even financial distress. Their hard-won experiences illuminate some options for escaping the timeshare trap.
The most straightforward exit strategy is exercising your rescission rights if still within the revocation period. By law, buyers have 3-10 days after signing to cancel for any reason. But meeting the narrow deadline can be tricky if you signed while traveling or vacating. And unscrupulous salespeople are known to obstruct buyers seeking to cancel. Jeanette from Florida says, “As soon as I got home and read the contract, I knew I’d made a mistake. I immediately sent my rescission letter by certified mail. But the sales office claimed they never received it. I spent months fighting them before finally getting the contract voided.”
If too late to rescind, check your contract for any buyback or surrender provisions. A few developers offer programs to take back unwanted timeshares, but usually with onerous terms and fees. Others may cancel your contract if you can demonstrate extreme financial hardship from death, disability or insolvency. But documentation requirements are stringent and you’ll take a credit hit.
For owners with otherwise good credit, deliberate default is always an option. You’ll damage your score for a few years, but you'll be free of the timeshare forever. Owners who go this route recommend consulting a consumer protection attorney to ensure the developer can’t still come after you for payments or maintenance fees under state property laws.
Avoid shady upfront fee companies promising to get you out of a timeshare. This fast-growing industry is rife with scammers peddling false hope. They pocket enormous fees and do little or nothing to actually relieve your obligation.
Class action lawsuits are one avenue owners are exploring to combat deceptive business practices. A recent suit against Welk Resorts resulted in a $94 million judgement, allowing thousands of plaintiffs to exit their contracts. But outcomes vary, and these cases take years to resolve as developers fight back with teams of corporate lawyers.
For the lucky few whose resort still has decent resale value, selling on the secondary market is the best case scenario. But you have to price aggressively under comps and promote the listing heavily. This option has become increasingly infeasible as timeshare values deteriorate industrywide.
As a last resort, some owners literally walk away from their timeshare — ceasing payment, ignoring maintenance fee bills and foreclosure threats, and waiting for the resort to initiate cancellation. This leaves a terrible credit scar, but desperate owners see no other way to break free.
Timeshare Troubles: Understanding the Risks Before Buying Into a Timeshare - Scams to Watch Out For
Timeshare owners trying to exit their contracts often fall prey to rackets promising relief for an upfront fee. But behind the slick websites and official-sounding names, many of these outfits are scammers pocketing thousands in fees yet doing nothing. Their high-pressure tactics and money-back guarantees are just part of the ruse to seem legitimate. Jilted buyers end up still stuck in timeshare hell but now out hundreds or thousands more dollars.
The most common scam is the “listing” scheme. Here’s how it works: you pay a hefty fee for the company to “take over” your timeshare and list it for rent or resale. They make lofty revenue projections from renting your unused weeks and claim they’ll split proceeds with you. Of course, no serious offers ever materialize, but when you complain, they say a sale is just around the corner. Desperate owners get strung along for months or years, paying more fees, before realizing it was all a fraud.
Then there’s the “transfer” trick. Scammers of this variety promise to transfer your timeshare liability to an anonymous buyer. You pay an upfront processing fee, sign some documents transferring ownership, and the company assures you the new buyer will be responsible for future payments. But in reality, there is no new buyer - they simply collect your fee then disappear. The resort continues hounding you because no legal ownership change occurred.
Some timeshare exit scams even use the court system to appear legit. They may claim their “cancellation” method involves filing a class-action lawsuit or that they have special legal knowledge for invalidating a timeshare. But buried in the fine print of their contract will be a disclaimer admitting they aren’t attorneys and don’t actually know how to get you out of a timeshare.
What all these scams have in common are demands for large upfront payments before rendering any meaningful services. They ask you to wire funds, send checks overnight, or pay in gift cards to build trust. Timeshare owners so desperately wanting to believe these companies often ignore blatant warning signs of fraud until it’s too late.
Timeshare Troubles: Understanding the Risks Before Buying Into a Timeshare - Alternatives to Traditional Timeshares
Fractional ownership has emerged as a middle path between traditional timeshares and outright vacation home purchases. You buy 1/4 to 1/12 shares in a property and receive corresponding usage weeks each year. Maintenance fees still apply but are shared by fewer owners, so they tend to stay lower. The buy-in costs are higher than a timeshare but give you actual real property rights. You can rent your unused days, bequeath your share to heirs, or sell at market rates since fractional properties hold value well. Major players like Marriott, Hilton and Hyatt all operate fractional clubs blending luxury accommodations with exchange flexibility. Just beware of overbuilt vacation spots glutted with units chasing limited peak demand.
Destination clubs take the shared concept further by pooling properties at marquee destinations worldwide. You purchase a deed to the club’s portfolio with annual dues and booking privileges rather than buying into one specific location. Clubs acquire new high-end residences continuously, so the variety stays fresh. They also offer 5-star concierge services and flexibility to split or borrow nights. Though travel is limited to club regions, those seeking stress-free globetrotting sans ownership hassles are drawn to this model. But destination club dues often resemble timeshare fees, so run the numbers carefully.
Vacation rentals by owner (VRBOs) offer similar space flexibility without the commitment of shared ownership. You rent someone’s condo or vacation home directly through platforms like Airbnb, VRBO and TurnKey. Lengths range from a single weekend to a month or longer. You deal with an individual host rather than a corporation, but sites do enforce standards. Plus owners are incentivized to earn repeat business with positive stays. The value flexibility is unmatched, and you can try new locales every trip. Just vet owners thoroughly, read reviews, clarify cancellation policies and inspect properties upon arrival.
For ultimate freedom, DIY vacation planning may still win. Armed with savvy websites for surfing deals and insider hacks to maximize loyalty programs, dedicated travelers can save substantially on airfare and hotels. Avoiding packaged tours, cruises and amenities like airport transfers and rental cars trims costs more. Travel hacking takes effort and discipline, but the savings reward your time. Slow travel movements like “#vanlife” take this mentality further, promoting extended trips in mobile tiny homes optimized for budgeting. Tourism dollars go directly into local communities, skirting commercialization. But scheduling everything yourself does demand time and travel expertise.