What to Look for in a Timeshare
Look! You are going to steal any timeshare you buy on the resale market anyway. The resale market is just starting to come into its own. Prices fall in a market vacuum and there has been a market vacuum in resales since the timeshare industry started twenty-five years ago. Now, people such as us are starting to make a serious business of resales. This means that the least expensive weeks are going to get sold first. Like harvesting apples, you shake the tree and pick up the apples. The next time you have to shake the tree harder. The long-term prognosis is that resale timeshares will increase in price. I believe that anyone buying a resale in today's market just isn't going to get hurt unless they are entirely unknowledgeable about the current market value or they are not looking for a good product. At these prices, buy the best! It's affordable.
So how do you find out what you should pay for a given property? This publication is certainly a good start, but not everyone advertising has a realistic idea of what their property is worth. The Internet also lists weeks for sale, but it is still young, therefore imperfect. The resort itself should yield some information and is always worth a call. Although it sounds self-serving, the best bet is to call a Real Estate Broker if one is involved with that property. Normally, people in general real estate are simply not yet knowledgeable about timeshares. Seek out a broker specializing in what you want. They are going to want to make a deal and will tell you what you will actually be able to purchase at the lowest price. They will also give you accurate detailed information about the resort itself. Further, a good broker will counsel you about your needs and try to direct you to the product, which will actually end up best serving you. They are not emotionally tied to any specific week or project. They know that if they do a good job for you, you will refer others to them and return for more yourself.
The most important criteria are to buy into the project you like the best. If you are buying just to exchange, this is still important. If you think you can buy a cheap February week in Hog's Breath, Idaho, and exchange it for the Whaler at Maui over Christmas, think again. It might happen once every 50 or 60 years, but generally, you are not going to get great exchanges using an unexciting week to trade. It seems almost redundant to say, "Buy Quality!" but it needs to be said here... particularly at these prices. You can buy quality resort timeshares today for 20% to 30% of replacement value! Why would you not go for the best? Another thing just coming into the business is resale financing. We offer 80% four-year loans to our customers so immediate cash requirements should not be a big problem. All we require is good credit and a good resort with the timeshare being purchased at a realistic resale price.
After you have selected your week and have obtained a good price, there are still a few things you should do for your own protection:
Get a policy of title insurance unless you know the history of the timeshare week. Sometimes people get a "great deal" only to find that there is a tax lien of several times the entire value attached to the week. In others, the original loan was never satisfied. The Seller might have paid it, but they never received a reconveyance. The great Savings and Loan debacle was famous for this. By the time the loan was paid, the S&L was no longer around and there was no one to sign the reconveyance. Some resale brokers do not bother with this. Our advice is that if they do not, don't bother with them. In some cases, the title policy is so expensive relative to the price, it just doesn't make sense to buy it. If that is the case, you should still research the title to make sure there are no visible defects.
Go through an escrow. Unless you are buying from someone you know, (and not often even then) you will be better off having the neutral third party holding the funds and deed until it is time to make the swap. In the east, attorneys perform this function.
The Seller is required by law to disclose anything wrong with the property, but how many know that? Further, what guarantee do you have that the Seller even knows that something might be wrong? Your best bet to protect yourself is still the Broker. Get references. Check with the usual agencies including the Real Estate Department to make sure that the Broker has a license. The resort itself might be able to refer someone who has had no problems. Title companies are also a good reference.
Have you picked up a trend here? Notice that as the industry matures, resales will start to look more like resales in the regular housing market. A fledgling resale marketing system will mature, develop good standards and the boomers will leave. As that continues, the price of resales will start to stabilize at higher levels.
The timeshare product is incredible. It really enhances people's lives and saves them a fortune on truly splendid vacations. As more understand this, more will purchase. The truly smart ones will purchase a resale through a licensed Broker just as you would a house. They will have many years of enjoyment and eventually probably get their investment (or at least most of it) back.