Risks of Buying a Timeshare
Many timeshare owners have said they were pressured into a purchase by salespeople and are now trapped in an expensive ongoing obligation. Here are some of the risks of purchasing and owning a timeshare, according to those who have made that mistake.
1. You Were Talked Into Something You Can’t Afford
Like walking into a car dealership, timeshare sales agents are going to show you their best (and typically highest price) offer first, and then push hard for a sale. If you decide to proceed, ask for the fine print first and cross-check that with what you would typically spend on an annual vacation—not what the salesperson claims vacationers spend.
For example, a sales agent will often cite calculations that show how much you can save on a lifetime of vacations by purchasing a timeshare, assuming you don’t finance the purchase, and that without owning that timeshare, you would pay full price for the same level of accommodations every year.
In reality, many people do finance the purchase, and the market offers opportunities to pay less than the full price for a resort vacation. You can also quickly look up vacation package costs on any of the main travel booking sites to get an idea of what you would pay for a desired location without purchasing a timeshare as a comparison.
2. Timeshare Financing Is Often Pricey
You can’t finance a timeshare with a traditional mortgage because you’re not buying ownership of a piece of property, which is what mortgage lenders require as collateral if the loan goes sour. If you finance a timeshare, your options may include financing through the timeshare company, getting a personal loanwith no usage restrictions, using a credit card or the proceeds of a home equity loan. Further, unlike mortgage financing for a home, you’ll almost never be eligible for any real estate or investment tax deductions for owning a timeshare.
3. A Timeshare’s Value Won’t Appreciate
Timeshares do not retain their value, let alone increase in value. If you want to sell your timeshare on the secondary market, you will be competing with people who are practically giving their timeshares away. According to the Association of Vacation Owners, an independent advocacy group for timeshare owners, there are millions of timeshares available on the secondary market. What about renting out your timeshare? You should not expect to be able to rent out your timeshare for a profit. You’ll be competing with thousands of other listings that Timeshare Users Group describes as often being priced at less than you’d pay for the cheapest hotel, especially if you’re trying to rent out your week on short notice. If your contract allows it, you may be able to rent out your timeshare to recoup some of your expenses, but it can be a lot of work.
4. Timeshare Points May Lose Value Over Time
Not all timeshares are points-based. There are also fixed-week and floating-week timeshares. But point systems are popular these days and have an important drawback. “Points offer more flexibility but can oftentimes suffer from inflation,” Schreier says. “Meaning, what requires 100 points today may very well require 150 points next year.” Further, the easy ability for people to buy timeshares on the secondary market for much less than what the developer sells them for can depress the value.
Another possibility is that the points required to use your timeshare during your preferred dates could change from year to year. For example, the developer may reevaluate point requirements annually to shift demand away from high-vacation periods and increase incentives for low-demand periods.
5. The Fees May Become Unaffordable
To understand how annual dues might increase over time, it’s helpful to look at the timeshare’s historical dues.
For Disney Vacation Club (DVC), for example, annual dues per vacation point ranged from $4 to $7 in 2010. That range jumped to $7-$10 for the same resorts in 2020, according to DVC member Tim Krasniewski’s website, DVC News.
Similar to owning a condo, timeshare ownership can require you to pay a special assessment if the property needs upgrades or repairs that can’t be covered by the reserve funds from timeshare owners’ annual dues. Higher assessments can lead to a downward spiral of owners not being able to afford their dues, and then the resort quality declining.
6. Timeshares Can Be Hard to Get Rid of
Purchasing a timeshare is a long-term commitment, often lasting decades. They’re a commitment that’s so hard to get out of that some people will give their timeshares away. You can’t simply walk away from a timeshare by refusing to pay your annual dues in the same way you can walk away from a mortgage by refusing to make your monthly payments. Sometimes, you can give your timeshare back to the resort—a process that leading developers explain through their Coalition for Responsible Exit.
However, the process can be difficult and time-consuming. Timeshare owners have had varying results when trying to return their timeshare to one of these developers.
Bishop & Waters is a consumer advocacy company specializing in timeshare cancellation. If you are feeling anxious about which timeshare exit company to use, consider using a smaller, more personal and caring company. We’re there when you need us.
We pride ourselves on being forthright and working with you throughout the entire journey. Our goal is not only to succeed in canceling your contract and lifting this burden from your shoulders, but also to let you know we care, and to make you a part of our family.
We service clients from all across the United States and we just opened another location in Las Vegas, Nevada. Give us a call for a free consultation at: (858) 280-1039. Contact us today for a free consultation.