Timeshares are a $10.5 billion industry that keeps growing:
Even Mexican cartels are scamming people for timeshare resales.
This is a huge industry that isn’t and full of unfair sales practices and hidden costs, all of which consumers don’t understand and keep falling prey to.
More than 10 million households have a timeshare and timeshare scams and misrepresentation are norms in the industry.
Rich and Bo of Timeshare Compliance, a timeshare consumer advocacy group, are sharing their knowledge as former leaders in timeshare sales for Wyndham, one of the largest timeshare developers in the world. Now they are working on the other side to help consumers avoid getting stuck with a bad purchase that will drain their bank account. Here is a recent interview:
I had a chance to interview them as well to learn more.
What are the downsides to a Timeshare?
Value proposition- At one time timeshares were a value proposition and actually penciled financially compared to escalating costs of vacation accommodations. Unfortunately today the same can’t be said. The average timeshare purchase is over $20,000 combined with annual assessments and rising maintenance fees, timeshare is more of a luxury item than a value proposition. Additionally, the majority of timeshare owners do not have exclusivity or reservation priority, so therefore are competing access to their timeshare resort with the public booking online.
Availability - Timeshare owners are typically forced to book out as far as 18 months in order to secure a reservation. If a family doesn’t have the ability to book out months in advance, it will be incredibly difficult to utilize.
Right to use - Often timeshare is presented as a real estate purchase or vacation ownership. The fact is, timeshare is not a real estate purchase, it is an unsecured right to use. Timeshare is presented with a mortgage, but the reality is, it is technically not a mortgage, it is simply an unsecured note, no different than a credit card or any other unsecured note.
Zero down or “Ghost” equity - Timeshare developers will present zero down or the ability for the consumer to roll over equity from their current timeshare into an upgrade purchase costing tens of thousands to as much as six figures in one sitting. Unsuspecting consumers on numerous occasions are not aware of time of sale credit cards issued, and are lead to believe they participated in zero down only to realize a credit card was issued in their name at the the time of sale. The harsh reality is, more than likely there is no equity in a timeshare to roll over into an upgrade, but instead additional debt with interest incurred.
Why do people fall prey to timeshare sales tactics?
Behemoth sales and marketing machines - Timeshare developers are Behemoth sales and marketing machines that prey on unsuspecting consumers. Timeshare presentations are often disguised as updates, but in reality are full blown sales presentations that, at times, go on for more than three hours. A lot of consumers fall victim to such sales presentations on vacation, with their guard down not prepared for the onslaught. Nothing is “free!” If someone approaches you offering something for nothing it can very likely be someone who is soliciting you to attend a so called update, which in reality is potentially a full blown sales presentation.
When might a timeshare be a good purchase?
If a family is OK with going to the same place at the same time every year, a timeshare might be a good purchase, but even in that instance, we would highly recommend purchasing on the secondary market for a fraction of the price. Additionally, we recommend requesting the assessment history and maintenance fee escalation over the previous ten years to ensure you have an idea what to reasonably expect in assessments and annual maintenance fees. Disney Hyatt and sometimes Marriott are major brand name developers we suggest.
What are some strategies developers use to get people to sign, and how can people be aware of them?
If something is too good to be true, it probably is and it should raise a red flag. Additionally…if it’s a good deal today, it will be an even better deal tomorrow once you have had an opportunity to do due diligence out from under the high pressure of a timeshare sales presentation. Often times timeshare developers present as “today only” implying that the benefits will not be available the next day or at any time in the future. Once again, the reality is, if the benefits are not available other than at the time of the sales presentation, that should tell you everything you need to know about the organization you are dealing with. Commonly in the contract it will state that anything said by the salesperson throughout the presentation is null and void and that the written agreement supersedes all verbal statements made by the salesperson. So…if it’s not in writing, it is not binding. Do not fall victim to believing what the salesperson is saying if it is not backed up in writing in the sales agreement.
If someone is stuck with a timeshare, what options do they have?
In most cases, depending on the developer, the majority of timeshares are not of much value, so therefore selling it is unfortunately not typically a viable option. However, a lot of consumers assume their timeshare is of value and set unrealistic expectations. First and foremost we recommend contacting your developer to inquire if they have a legitimate option for you. Unfortunately, too often the developer is not a good option and can lure consumers in to an upgrade option encouraging more debt with interest.
Our company specializes in advocacy for those who have fallen victim to high pressure or unethical timeshare sales presentations. Regardless of whether we can help someone directly or not, we are here to recommend encourage and suggest to anyone seeking assistance who find themselves stuck in a timeshare.
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