Understanding timeshares

Factual Questions
1

A friend has asked me to sell her timeshare for her, if it’s possible. Or rent it or in some other way squeeze some money out of it.

She has to deliver to me the original documents to clarify exactly what her ownership inolves, but this much I know for sure, after going into her account online:

It’s with Wyndham
She has a Plus VIP membership (she paid $26k)
It involves a deed to something tangible in Puerto Rico
She has 105,000 points on one contract, 210,000 points on another. One of them involves bonus points.
There’s some kind of exchange with another company called RCI.

I have been digging around the website and Google for the past hour and my head is spinning. Who came up with this crazy? What does a membership actually represent? What do you own? What is the deed for? (I saw on her membership page that it is an “Undivided interest”…in what, I’m not yet sure)

Some kind of simple overview would be very welcome. In checking Ebay sales of timeshares, I couldn’t make out why some sold for a decen price and others for nothing ($8,000 vs. $429).

Thanks for whatever help you can provide. I shall continue to see what I can find out…

2

I cannot help you except to say you should contact Wyndham and start asking questions. Presumably they deal with such things regularly so I would expect them to be able to provide some answers.

3

I know that timeshares can be sold and then transferred, but the value you get from selling one, versus what you may have paid for it, may be quite different. Expect to have to discount it heavily to get someone else to buy it from you. I’ve seen ads where all you have to do it take over the monthly maintenance fees and you “own” it.

Presumably she wants to sell it because she is finding she can’t really use it and she is forced to pay monthly maintenance fees for it.

When you buy a typical timeshare you are purchasing the right to occupy a particular unit, for a specific amount of time each year, and usually during particular weeks of the year. Often times you can trade with other locations so you don’t have to go to the same place every year.

There are websites and brokers who deal with the buying and selling of preexisting timeshares.

4

First thing I will say is that you should head over to Timeshare Users Group. www.tugbbs.com. The people there are very experienced with offering advice to those who are new at this.

By and large, a timeshare will have very little value compared to the original price. Some timeshares have some residual value if they happen to be in locations with few timeshares or are tied to a desirable week.

Wyndham is different in that they use points that you can cash in to stay at various resorts. The main factor in determining whether they have any value are really maintenance fees. With some exceptions, points are points in terms of usage no matter what resort they are tied to. But the maintenance fees can differ significantly depending on the home resort. And a resort with very high fees is rough to unload for anything. And the VIP and bonus points have zero resale vale because they are not transferable.

You might be able to use the points to reserve a desirable week, then rent to others. You may be able to wnt them for enough to cover fees plus a small profit. TUG folks can offer some advice there. Some of them are very experience renters.

5

One thing to note too–timeshares tied to major hotel/entertainment chains will often have something known as a ROFR in the contract–Right of First Refusal. Essentially, if you have one, this means that if you sell to someone, Wyndham would look at the proposed sale, and if the price is too low, they’ll take it from you at that price. As the seller, this might not matter quite so much–you still get yours–but the buyer would be left out, which might make it harder to find a buyer.

6

Some jurisdictions may still allow the developer to regain title after a certain period of time. The contract and/or state law should be read. This was the policy in SC until about 20 years ago, when the state made such reverter clauses null and void. The price (for a one-week timeshare) varies according to the location, amenities, and luxuries of the unit.

RCI is a separate company. A timeshare owner can join RCI (for an annual fee) and then be able to trade his or her unit for any other unit that’s on the list. Owners who will not be using their units for the year, can put it up on RCI. You can then obtain the unit for the year, but you have to give up your unit for the year. These are cumulative and you don’t have to substitute another place for the year you give up your unit that year. You’ll have to check with RCI for all the details.

7

As other people have mentioned, timeshares come with maintenance fees. A timeshare is a partial deed on a property. Essentially, she owns 1/52nd of the property. She is responsible for 1/52nd of the fees associated with that property such as repainting, utilities, lawn maintenance, parking lot repaving, etc. Think about if you owned a house. You have to pay for all the upkeep and maintenance. All those costs are passed on to the timeshare owners at the fractional amount. If a hurricane hits the property, she would be on the line to pay for the repairs (although just 1/52 of the cost).

Every year she may have to pay maintenance fees of several hundred dollars. This is why timeshares are not a good deal. Why buy a week for $26k and then spend $600/year just so that you can stay there 1 week a year? Why not keep that money in your bank and use it to spend a week wherever you like?

That’s why you see timeshares being sold for almost nothing. The owners just want to be rid of them.

8

Timeshares can be a good deal. I bought one this winter on eBay for $1. The yearly maintenance fee is much less than what I’d pay for 7 days at the associated resort, so it’s a win for us. Not so for everyone.

But, for the OP, that is a bad story. Timeshares on the resale market are worth almost nothing. Higher prices are usually for really great destinations - say, Myrtle Beach in the third week of July, or Aspen at the height of ski season. Prices are based on location and which week owned, but they almost never sell for more than half of the purchase price, no matter how great.

That message board above is great, but I would also recommend just calling the resort and see what they have to say. You could also look into the various timeshare resellers, but make sure you do your homework - never pay fees upfront, etc.

I would go with a legit reseller if I were you - a timeshare sale is just like a real estate sale, with closing and title and everything else. If you can do those things, fine, If not, it may turn out to be a gigantic headache for you.

RCI as noted is a separate thing, and I don’t believe it can be transferred to the new owner. They would have to pay a fee to register the property themselves after the sale.

9

Not an expert on timeshares but I listen to Clark Howard and people call him all the time about what to do with a time share they don’t want anymore. It’s a broken industry. The outlook is pretty bleak.

He once said to expect about 20 cents on the dollar if you are lucky enough to sell it in the first place. People are having trouble even giving them away!!

Scams are rampant so be extremely careful.

10

I don’t understand the “undivided interest.” A time share interest is a divided interest (1/52) of the unit. A time share owner does have an undivided interest in the divided interest of the common elements.

11

I second the idea of going to the TUG boards. She might be better off trying to rent it out rather than sell it. I have rented timeshares many times (would never buy one) and it works out great. I usually find them on craigslist and Redweek.

12

Wyndham is a slight different animal. Where many timeshares are 1/52 of a particular unit corresponding to a particular week, Wyndham sells you a share of an undivided interest in the entire resort. So if the resort ownership is say 500 million UDI units, and you own 154,000 of those units then your ownership what whatever that percentage is. That’s just what they call it even though it’s “divided”. Legally, it’s probably more like co-op interest than a condo interest. In the end, it’s still all timeshare.

That’s probably a very half-assed explanation but it’s the best I can muster right now.

13

My parents got a timeshare many years ago at a place in Angel Fire, New Mexico during the summer. It wound up being the family vacation destination several times when we weren’t going somewhere else. They are also members of RCI, so it often got traded for other areas including Carlsbad, CA; Estes Park, CO; and Avon, CO (these are all off the top of my head) and they still use or trade it now. I’m afraid I don’t know more than that because I’ve never really discussed it with them and when you’re a kid you just go where you’re told. Good for a family with kids, though; for example going to Carlsbad, CA gets you close to both San Diego and Disneyland. Estes Park puts you right outside Rocky Mountain National Park. I wouldn’t consider one right now, but I might in the future if I was in a situation similar to my parents 20+ years ago.

14

I see. Wyndham’s arrangement is a co-op, not a condo, and it sells shares just like a co-op, which it is.

15

Here’s something I don’t understand:

Using the OP’s number of $26k for a week’s share, and multiplying by 52, we end up with a total investment from all owners of that one unit over $1.3 million. And they are on the hook for maintenance costs.

How does anyone find that financially attractive? And yet it seems quite a few have been sold.

16

It’s not. But that’s why timeshare salespeople need to use extremely questionable sales tactics to sell the units. Out of intellectual curiosity, sit in on a presentation sometime and you’ll see what I mean.

17

I’ll second that. They hook you into going by giving you a perk like free Disney tickets and/or 3 nights at a resort for $100 IF you attend a “very short 90 minute presentation on a wonderful vacation opportunity.” You walk in and they have donuts and coffee and fruit and fountains and tropical scenery, and it’s in an area of the resort with a beautiful view overlooking the pool where people are relaxing and having a great vacation time. You tell the kids to hang out with the other kids and in just 90 minutes you will be on your way to Disney!

Then you watch a couple of videos which lead you to believe that the major hotels are scamming you. Charging you thousands of dollars when you should be paying pennies. They show you a life of luxurious vacations all over the world and show you breakdowns of the figures which are equivalent to a three card monty trick. Invariably, there is always one couple (who I am convinced are a plant, but maybe not) who declare that they are SOLD! and break out the checkbook immediately.

And don’t think that you are immune to such things. Human psychology being what it is, they know how to hit the sweet spot. Plus, this rate is good for today only and is a special price for their valued customers. They know that if you walk out, go home and think about it, that no person in the world will ever buy after crunching the numbers*. They must sell it to you before you leave.

And let’s say that your first name is “Jim”. They will call you Jim 20,000 times and ask you frankly if, Jim, do you want your family to have the vacations of a lifetime?

If you politely say no, they imply that you are positively insane. He will break out his wallet and show his beautiful wife and beautiful kids having a great time in the Cayman Islands and how through “tweaking” the system, it was absolutely free! If you still aren’t sold, finally they give up (not really) and just ask that you speak to the manager so that they can see what they can do to make the offer more attractive to knowledgeable consumers like yourself. If you say that you really need to be going, then the salesperson will lower his voice and tell you that, “Please, Jim, I get paid on customer feedback, so if you could just take a few minutes, I would appreciate it. I’ve treated you pretty well, haven’t I Jim? I’m not supposed to do this, but here’s a coupon for dinner at Chili’s (some restrictions apply). I really appreciate it, pal.”

You give in because, they are still holding your Disney tickets. The manager comes out and is an aggressive asshole. He is not taking a survey. He is dropping the hammer on you, dropping the price, throwing in more perks, but these are only valid if you sign right now. One douche even had the contract with our names filled in and all that was left for us to sign. He put the contract and the pen right in front of me and told me to just go ahead and sign. Treat myself and my family to something and quit being so uptight about spending money. “Jim, your family deserves it.”

Long story short, you won’t get out of the presentation until you raise your voice and tell them that you want your goddamn fucking Disney tickets right now. Any type of politeness on your part is seen as an opportunity to keep you there and finally sell you on the timeshare.

The last time I was there, I was leaving with my wife after thoughts of murder towards the timeshare company, the salesman, the manager, and the Disney Corporation. She turned to me and said, “It really is a good deal if we had more vacation time at work.”

Full disclaimer: I am against domestic violence in all forms, but no jury would have convicted me then.

*It’s basically a pre-paid vacation plan. The only possible way I could ever see it being a good deal is if you were retired and could travel at any given day of the year to any given destination that is on special and plan it many months in advance. But as others have said, you can get the same thing for a quarter of the price online.

18

Thanks, jtgain - a good explanation.

Having never been to one (due to a violent aversion to high-pressure sales pitches combined with a belief that - on this planet at least - free enticements like Disney tickets rarely are free) I had no exact idea what these things really are like. I would have thought the ability to multiply by 50 with any sort of accuracy would be enough to get anyone to say “No way!” - but obviously it is not.

19

You can’t just multiply the price of a week by 52 to get the total. Prices for different weeks vary tremendously. If that $26K is for a premium week, an unpopular week might be as little as $1or 2K

20

I think I remember someone on this board talking about his strategy for those high pressure timeshare pitches. He would say yes to everything, but say he needed to take the contract to his lawyer before he could sign them. That way the sales droids can’t try to counter any of his “no” arguments. He’s already saying yes to everything.