The timeshare industry is a multi-billion one. Fancy dinners in fancy hotels serve as the stage where agents sell annual vacations to couples financially independent singles. The promise of owning a piece of land one can call their “own spot in paradise” sounds enticing on paper but is very impractical in real life.
This “everyone is doing it so it’s time to jump on the bandwagon” thinking is a great way to push the demand of timeshares. Unscrupulous salespeople bloat the cost of buying and exaggerate the benefits of owning a timeshare – they even go as far as telling prospective buyers that a timeshare is a risk-free investment. Unfortunately, that’s not the case.
Instead of earning from owning or selling properties, timeshares owners lose money—not just initially, but throughout their retirement. Sharing ownership of a premier vacation property with others sounds cost effective. However, the reality is buying a timeshare contract does not give owners’ equity. Timeshare is pre-paying for a vacation spot a consumer may or may not use in the succeeding years — something not considered by consumers who get persuaded to buy in.
The average annual cost of maintaining a timeshare is $660. The responsibility of paying for maintenance fees rests on the shoulders of the timeshare contract owners whether they intend to use the property each year. Plus, the maintenance fees continue forever, even after the owner’s death — further risking retirement options for their heirs. Failure to comply and pay said fees justifies foreclosure and ruins credit ratings.
The fiscal health of every family, like any business, goes up and down. It takes financial commitment and responsibility to pay contract maintenance fees during the lean months — even more so after financial devastation hits. A common reason timeshare owners choose get out of their contract is hardship—both personally and financially. When hardship arises, it’s important to protect their retirement.
The usual advice given to get out of a timeshare contract is to resell. There is a belief that re-selling timeshare is easy. The truth is, it takes a fairly long time to sell timeshares as the number of properties in the market increases yearly. A snapshot of the market consists of developers selling newly built properties, owners trying to resell theirs, in addition to agents or brokers joining in the market. The competition is high and the demand may dwindle after some time especially when prospective buyers discover how the value of timeshares depreciate over time — contrary to what they’re told. To believe timeshare value appreciates over time is an erroneous belief. It is actually more like a car’s value – it depreciates the moment the contract is signed.
Five Considerations for Getting out of a Timeshare Contract
Given these disadvantages of owning a timeshare, here are five considerations for ending a timeshare contract:
- Understand timeshare options. Factors such as the type of timeshare, location, desirability, and age impact the selling price. This is very important to know especially if there is a plan to resell.
- Sell timeshares online or sell them back to the developers. In very rare instances, developers buy back the properties they sold under a timeshare contract. Try to negotiate with developers to see if they can buy back or help in re-selling a previously owned timeshare. Note: if developers agree to help with resale, contract terms determine if the annual maintenance fees continue for a year or two, or until another buyer comes along.
- In other cases, joining timeshare owners’ groups online is another option one can take to resell ownership rights. Heed caution when dealing with those who resell a timeshare and complete due diligence on the broker or company.
- Pass timeshare to family members. Talk with relatives and family members who may be interested in having future vacations. Transfer the ownership of these properties to them, making sure to follow state rules and regulations. When in doubt about the contracts or process, get legal counsel to help with the paperwork.
- Consider timeshare re-mediators. These organizations exist to help deceived timeshare owners and those having a hard time existing their contract.
As with any high-ticket purchase, proper planning before signing up to buy is essential. Even more important is the ability to end a contract and protect retirement income from ongoing, excessive timeshare fees.