Before You Buy A Timeshare: What You Need To Know Before You Go Down The Rabbit Hole!
Timeshares have a less than savory reputation, not because the choice to purchase one is entirely a bad one, but because most individuals move into ownership without as much information as they need to make it a successful endeavor.
The multi-billion dollar timeshare industry affects over nine million American households. They employ hundreds of thousands of employees, and is a lucrative source of tax revenue for the American government. If you are interested in taking part in this wave of shared vacation time, you need to do so with your head on straight.
This article will outline the primary things you need to know before purchasing a timeshare:
- The timeshare presentations are persuasive and are designed to get you to buy using highly compelling tactics.
- You can get a refund on a shotgun purchase within the first seven days in most cases.
- Research the history of the resort where your timeshare will be and speak to other owners to find out what their experience has been like.
- Your timeshare is not a financial investment and will likely have little to no resale value.
- There are often hidden high maintenance and membership fees
- You can transfer your timeshare to a family member for very little cost if you need to get out of your timeshare.
According to the Federal Trade Commission (FTA), they advise the following:
“In calculating the total cost of a timeshare or vacation plan, include mortgage payments and expenses, like travel costs, annual maintenance fees and taxes, closing costs, broker commissions, and finance charges. Maintenance fees can rise at rates that equal or exceed inflation, so ask whether your plan has a fee cap. You must pay fees and taxes, regardless of whether you use the unit.
To help evaluate the purchase, compare these costs with the cost of renting similar accommodations with similar amenities in the same location for the same time period.” (1)
The Timeshare Presentation
As you soak up the sun on a beach that feels like paradise or fly down the slopes of your favorite ski mountain, you may be in vacation intoxication and never want the feeling to end. This state of being makes you ideal prey for the timeshare presenter who can and probably will take advantage of your lubricated emotions.
In order to get you to attend a timeshare presentation you will likely be offered a free gift of some enticing variety. Once at the presentation, your own people pleasing tendencies or manners may prohibit you from easily exiting the presentation, and before you know it, you may have already been wrapped up into timeshare ownership.
The first step is to not attend the presentation. If you are seriously looking at purchasing a timeshare do so methodically and with plenty of research as you balance out the cost of simply renting a similar accommodation for your yearly vacation versus timeshare ownership.
If you are lured into a timeshare presentation please read about how to get out in a socially acceptable way: insert link.
Shotgun Timeshare Purchase and How To Get Out: A Seven Day Grace Period
If you do get roped into purchasing a timeshare while you are on vacation and once you get home are experiencing buyers remorse, most resorts offer a seven day grace period where you can receive a full refund on the property. Be aware to act quickly because once the initial seven day period is over you may be tied up with your timeshare for life.
Research The Resort or Company Where Your Timeshare Will be Located and Speak to Current Owners
Not all resorts are created equal, and it is worth looking into the history of any vacation location you may be interested in. Just as you would before purchasing any other piece of real estate, you will want to be thorough in your research.
Take your time finding out about the institution you will be buying into and its surrounding area. Take some time to chat with potential future neighbors, do they happen with their timeshare? Do the owners have any words of wisdom to share with you?
By far, the most substantial issue facing timeshare owners is that the purchase was made quickly and under the sway of a persuasive seller. The most important component is to take as much time as you need to look into the resort where you may be spending many years of vacation time before making the purchase.
Your Timeshare Property Is Not a Financial Investment
Home ownership, across the board is generally considered to be a safe and sound investment. Over time the property with some variants will ultimately appreciate in value. This, however, is not the case with a timeshare. A timeshare may be a great vacation investment if you are happy to enjoy your holidays in the same place every year.
Rarely do timeshares have any real resale value, in fact many owners end up giving their timeshare away at a deficit. It is important to remember that a timeshare is not a real estate investment, even though it is deeded ownership, and will not appreciate in value over time.
The reality: A timeshare is a pre-purchased vacation destination with ongoing fees and a possible mortgage in one single location.
Maintenance Costs, Mortgage, Property Tax, and Membership Fees
Be aware of the annual cost of timeshare ownership before you make your purchase. Take your time to find out what the maintenance fees are at your resort of interest, do property taxes apply (this varies from location to location), and what, if any are the applicable HOA fees?
If you have a mortgage on your timeshare, you will need to tally this into the annual and or monthly cost of timeshare ownership. A major pitfall for ill-informed owners is the high and sometimes compound interest fees on late payments for maintenance or other associated fees.
In addition to the original purchase how much is your timeshare really going to cost you? Look at the realistic cost and balance this out against the cost of just going on vacation and renting a hotel, for example.
To Buy A Timeshare Or Not Is A Question Of Pre-Purchase Knowledge
Before considering purchasing a timeshare please be sure to do your due diligence in research ahead of time. Balance the cost of ownership versus just going on a vacation to the desired location. There are many layers of consideration before buying a timeshare and remember it is not always easy to get out!
Sources Cited:
- https://www.consumer.ftc.gov/articles/0073-timeshares-and-vacation-plans
