Are Timeshares Really Worth it?
We constantly hear about timeshares — and it’s usually not in a positive light. Despite this, these vacation properties sell in large numbers every year and make up a $9.2 billion industry. In this article, you will learn why so many people continue to buy them, what owning a timeshare really involves and whether it’s worth its many costs.
What Are Timeshares?
A timeshare is a deal in which you own a part of a vacation property. By paying a certain amount up front and a yearly maintenance fee, you receive access to the property for an allotted number of days, which tend to be during the same period every year. When you are not using the property, someone else is vacationing there.
Timeshares have existed in the United States ever since 1969. They first became popular in Florida, where some real estate developers, who were struggling to sell condos during an economic slump, had the idea to pursue this new sales model. Because of their successful efforts, they forever changed the world of vacationing. In 2016 in the United States alone, there were 1,558 resorts, each having an average of 132 units.
There are four common types of timeshares.
- Fixed-week:In this type of timeshare, the owner typically has access to his or her property during the same time slot every year. This arrangement has little flexibility and can become boring.
- Floating:in this arrangement, the owner can reserve a specific time slot during the year. Although this option gives people more flexibility, it is often difficult to reserve the time you want. That is especially true during holidays, when other shareholders will likely want to make reservations as well.
- Right-to-use:With this type of timeshare, the buyer can lease the property for a set amount of time per year for a certain number of years. In this case, however, the developer still owns the property.
- Points club:This option is like the floating timeshare, but allows buyers to use multiple properties, depending on how many points they’ve collected from buying into a certain property or purchasing club points.
Why Do People Buy Timeshares?
A few factors cause so many people to buy these vacation properties.
- People are more likely to spend when they travel. When people are on vacation, they tend to eat and spend more than normal. This phenomenon is due to the “travel high” they experience— and timeshare salespeople like to take advantage of this euphoria. Tourists often purchase timeshares without giving much thought to maintenance fees, perpetuity clauses and other conditions. Often, they don’t realize what they’ve gotten themselves into until they return home and read their long agreement more thoroughly or after many years of trying to use the timeshare.
- Presentations can be misleading. Many timeshare owners purchased these properties after having attended a timeshare presentation. Most people know very little about timeshares, so these presentations are often the first exposure they have to this type of vacation property. Timeshare salespeople know this, and perform high-pressure sales pitches that focus on the benefits and downplay the costs and risks. Many people become sold on this selective information and sign without properly researching what owning a timeshare entails.
Is It Worth It to Buy a Timeshare?
From the hidden fees to the scams involved, there are many drawbacks associated with investing in timeshares. Here are some of them.
- They involve many costs. Although many consumers are lead to believe they are saving money with this purchase, this is a mistaken belief. Besides the annual maintenance fees — which you must pay, whether you end up using the property or not — there are many other costs involved, including taxes, special assessments and, in most cases, a mortgage.
- Agreements are binding, usually for life and beyond. A good number of timeshares have a lifetime agreement, meaning timeshare owners will pass them on to their children and grandchildren. But who knows if they’ll like it or even be able to afford it?
- Revisiting the same place can be boring. Even if you enjoyed yourself during your first visit, you will likely enjoy the second trip less, and the third visit even less. You will no longer experience the excitement of visiting a new location. Also, your tastes in travel might change over the years: If your family purchases a timeshare at the Magic Kingdom, for instance, it might be fun for 15 years or so, but once your children are older, they may lose interest in going. If you want to trade your unit for a different location, there are even more fees for the use of exchange programs.
- You may not be able to afford the property in the future. Even though you can afford the payments now, who knows about next year? Many people lose jobs they thought were stable, while others encounter expenses they didn’t expect. You never know what your financial situation will be in the future. If financial times get rough, you shouldn’t have to pay for something frivolous like a vacation home.
- You may not always be able to visit during your allotted time. You may believe you can always vacation during a particular time of year, but just like with finances, you never know what could happen in the future. Your job might change, you might suffer health issues, or resort usage rules change. You should vacation when it’s most convenient for your schedule, and don’t assume you’ll be available on a certain week many years from now. Many resorts require vacation scheduling many months in advance or never seem to have availability
- Timeshare resale scams are common. Timeshares are difficult to resell, and for this reason, an industry of scammers has emerged. Known as timeshare resale brokers, these scam artists contact people trying to sell their timeshare and tell them a buyer is interested in their property. They say they can broker a sale, but demand payment before the transaction can occur. The fees they charge are high and, if paid, will quickly disappear and your timeshare will remain unsold.
- Losses are not tax-deductible. When you lose money reselling your timeshare — which is almost always the case — you cannot deduct the loss when tax season comes.
- If you can’t make your payments, you may face foreclosure. If you took out a loan to buy your timeshare, and you default on your payments, you can say goodbye to your property. Even if you can’t pay other fees, such as taxes and maintenance charges, you will also get foreclosed. Foreclosures have other unpleasant consequences: They will likely lower your credit score and make it more difficult for you to apply for loans in the future.
- Timeshares are not a good value. If you’re asking yourself, “Is it a good investment to buy a timeshare?” calculate how much your timeshare would go for in a private sale. You can find this out by checking out nearby real estate listings for similar properties Next, figure out how much your timeshare costs per year. If your property costs $20,000 for one week, for instance, multiply that by 52, and the amount will be $1,040,000. If a similar property is selling for significantly less than that, then you can be certain your timeshare is a poor value.
- They depreciate. Buying a timeshare is similar to purchasing a new car: They lose a lot of value right after you buy them. Used cars, however, are relatively easy to sell, while timeshares are notoriously difficult. That is because the timeshare market is flooded. The supply exceeds the demand. Nothing illustrates this point better than auction sites, where it’s possible to buy a timeshare for as low as $0.01 on sites like Ebay.
- It’s hard to make money by renting. Because you are a partial owner of a property, depending on your agreement, you may be allowed to rent it out. While this may seem like a good idea, you will likely encounter some difficulties. For one, it can be hard to find interested renters, and the rates you can ask for will probably not make up for the yearly costs you have to pay. With renters, you also have to deal with the possibility of damage to your property, in which case you will be responsible for the repairs.
- Buying timeshares in foreign countries can be complicated. Laws in other countries, or lack thereof, can present a challenge for timeshare buyers. In Mexico, for instance, foreigners are not permitted to have the direct title for property within 60 miles of international borders, or within 30 miles of the ocean. They are also only allowed to buy right-to-use timeshares. In some other countries, consumer protection laws are less strict and poorly enforced. If you get scammed abroad, taking legal action against the scammers is much more difficult.
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How Much Does It Cost to Buy a Timeshare?
The average initial cost of timeshares is near $16,000, but there are many other costs involved — many of which you may not become aware of until after the purchase. Here are some of the additional costs a timeshare owner will likely encounter.
- Maintenance fees: Although some may at first consider paying for maintenance and think it is a great way to keep their property clean without having to do anything, they soon realize the fee is expensive — and becomes more so every year. The American Resort Development Association reports maintenance fees have increased an average of 12 percent per year since 2005, which greatly exceeds the rate of inflation.
- Real-estate fees: When you purchase your share, timeshare resorts will charge real-estate fees such as recording fees and transfer fees. If you make improvements or repairs on your property, resorts may charge you to help cover the costs. Even a new paint job will cost the shareholders.
- Disaster-related fees: Keep in mind, avalanches can affect ski resorts, and hurricanes can hit beach resorts. If a natural disaster has affected your timeshare, they usually send you a bill to help cover the repairs.
- Travel expenses: One expense many timeshare owners don’t take into account is the cost of travel to and from the resort. Flying to the Caribbean or the Rockies could become very expensive. If you can’t afford the plane ticket, your timeshare will be of little use.
If in Doubt, Exit Your Timeshare
If you are experiencing any degree of buyer’s remorse, do not hesitate to go ahead and cancel your purchase within the rescission period. Don’t be deluded into thinking you got the “deal of a lifetime” — timeshares are abundant, and you can likely find the same deal the following week, month and perhaps even year.
Some other good reasons to cancel are:
- You felt you received misleading information during the sales pitch.
- You felt pressured when buying and didn’t have time to research it properly.
- Now that you are back home and have had time to think, you realize you don’t want to make the financial commitment.
- You found the same property on the resale market that cost 15 percent or more of what you originally paid.
- You feel the interest rate on your purchase was too high.
Contact Us for Help
Is owning a timeshare worth it? If you are one of the many people who have decided the answer to this question is “no,” it is imperative to receive help from a company with a solid reputation for integrity and good work. Sadly, finding a company to cancel your timeshare without adequately researching is as risky as trusting a timeshare sales pitch and some owners don’t qualify for assistance.
EZ Exit Now is one of the country’s leading timeshare exit companies. Our practices are ethical, our prices are reasonable and our practices are quick. We are passionate about our clients’ satisfaction and strive to provide a customized solution that will spare them financial and emotional stress.
Get Help Cancelling Your Timeshare
At EZ Exit Now, we believe three things set us apart from our competitors:
- Our devotion to our clients
- Our transparent business practices
- We are a faith-based organization
Hiring third-party exit companies like ours is essential to exiting timeshares because we ensure timeshare companies adhere to whatever exit promises they offer or work to create a tailored exit solution.
When you decide to use our services, we will meet with you individually in a venue of your choice. We will discuss your situation and take notes on all the details, then review your case and discuss appropriate courses of action if we are able to help.
Once we’ve decided how to proceed, we will provide you with documents you need to look over and sign. We will then pass along the paperwork to our cancellation team, attorney or possibly a title company to begin your exit from your timeshare.
After the resort settles on an agreement, the completed documents will make their way to the county clerk’s office and developer, where they’ll get recorded and filed. We will then confirm the resort’s records show that you are no longer an owner of the timeshare.
At the end, we will give you call to let you know you are released from the timeshare. You can celebrate, relax and enjoy your new life free of timeshare obligations.
Contact us today to exit your timeshare or learn more about our business.