What are the risks involved with buying a time share?

Answer 1

Don't buy a timeshare. Let me repeat-- Don't buy a timeshare.

People routinely get seduced into thinking their little time in heaven should translate into doing it again and again.

Don't be fooled. A timeshare is an expensive hotel room without services. You can buy five-star-hotel services anywhere on the planet for much less and with much greater flexibility.

Let me repeat-- Don't buy a timeshare!

Pros and cons

One of the major benefits of the product is the fact that vacation timeshare is real property. Resort developers purchase land in a location and develop a timeshare resort. They are actually selling consumers deeded weeks of real property at a specific location, meaning customers can do what they wish with the weeks they own. This flexibility includes the opportunity to rent out weeks that are not used or lend them to friends or family. A timeshare unit is real property, it does require constant maintenance. With each unit owned by many people, a competent management team is necessary for it to operate in an efficient and economically beneficial manner.

The problems discussed below notwithstanding, timeshare has the potential to provide a range of vacation experience in a variety of locations, for substantially less than an equivalent resort if rented on the open market. This is particularly the case with overseas travel where a convenient and economical location is sought, rather than a 'holiday' at a given resort. An often overlooked advantage is that timeshare units are usually 'self-catering' with a full or partial kitchen and have readily available laundry facilities. This frees the occupant from the necessity of eating at retail establishments and allows purchase of local products from markets, thus providing a more flexible and economical approach to the daily requirements of life.

To gain the most from a timeshare experience it pays to research any purchase thoroughly. Understand the precise nature of the particular timeshare contemplated, the management scheme and competence, the time of year or other conditions and the details associated with the available exchange mechanisms. The key is to be knowledgeable and flexible. Understand what the benefits and potential problems are, and how to use it to maximum advantage.

The timeshare industry has been widely criticized and even likened to a travel scam.[2] Unlike the customary renting arrangement, where the customer decides every year on the quality and price of accommodations, timeshare requires a major payment up front. Doubts exist as to whether timeshare buyers ever recover the money spent.

Many people complain that they cannot trade their weeks easily, or that the weeks they bought are suddenly "unavailable". There are also complaints that owners have to return to the same resort every year, but several companies exist that enable timeshare owners to exchange their weeks into literally thousands of resorts around the world. However, using these companies increases the overall financial cost of owning a timeshare. There are a growing number of independent timeshare exchange organizations available to timeshare owners. One of the biggest issues for exchange is that it depends on another owner to deposit a desired week, which may not happen. Another issue is some exchange systems have hidden rules and the deposit unit may not be strong enough to allow the owners to get the vacation they want. Also, some owners can not make a decision on when to vacation or where to vacation until the last minute, which often results in a bad exchange or no exchange at all.

Other complaints involve issues surrounding the yearly maintenance fee. Some critics talk of ever escalating fees that owners cannot afford, and the resulting financial pressure prohibits them from keeping their weeks. In the worst cases, there are maintenance fees, homeowners' fees, rental fees, fees for trading weeks, property taxes (depending on location), and an assortment of hidden fees that buyers were not aware of when they first bought their timeshares. In addition, if a resort suffers as a a result of a natural disaster, it may need some special assessments to recover it.

As real estate, timeshare requires the owner to take an interest in their resort's operation and, unfortunately, most owners are not prepared to do so since they see the purchase as just a vacation unit.[citation needed] Also, when owners first purchase the timeshare, they have little knowledge of the local renting market and local season, and end up getting a time slot they can not use. When they then try to rent it out, they find that there is no chance to rent or the rent income is not able to cover their maintenance fee.[citation needed]

People interested in purchasing a timeshare are strongly advised to look online at the secondary market listings for the development they are interested in. Developers put a very large mark-up on new inventory and a new owner will find the resale value of their timeshare to be half or less of what they purchased it for. In the very worst of cases, timeshare resales are virtually impossible and users are stuck paying fees indefinitely. This is what is commonly known as the "timeshare trap,[citation needed]" Sometimes, when it happens, owners can talk to the resort and the resort may be willing to take it back if there is no loan attached to it and the maintenance fee has been paid. Sometimes, there are various charity groups that are willing to accept a timeshare if no loan is attached and the maintenance fee is current. With the development of the internet, there are a lot of sites that charge little or no fees to let owners put "for sale ads" that will reach a larger market over the internet. However, it is usually hard to evaluate the value of a timeshare, thus it may take a while to sell or to get a reasonable price.[citation needed] If the unit belongs to a big chain, there is a better chance that enough people know the product and desire to add more vacation time from that product, and will thus increase your chances to sell. There are also sites that let owners put their share up for auction, and within weeks it will be taken if the ad is successful[citation needed]. Some of the resorts have resale programs that will take a cut of the final price. If owners are not very comfortable about reselling by themselves, there are real estate companies that can do that for the owner, although some charge a hefty up-front costs. Usually, if there is no sale, an owner will have a difficult time trying to get the money back.

There are also a lot of timeshare user groups that form different forums. If one happens to have an interest in purchasing a timeshare, one may want to check various internet communities like Yahoo, AOL, Google. If the owned unit is part of a major point system, those groups also provide a place to rent out your points or rent more points from other owners.

Like any other product, timeshare exchange is subject to the law of supply. This should make the exchange mechanism a fair and meritocratic system. For example if a timeshare owner deposits a studio apartment in low season that owner is unlikely to be able to exchange into a villa during a country's high season. In practice the major exchange companies have proprietary exchange formulas that add complexity to the system. The study of and issues revolving around exchanging are beyond the scope of this article and should be researched before making any timeshare purchase.

One aspect that is little known outside of the travel industry is that timeshare companies generally have very generous compensation programs for those sales agents able to convince individuals to take a tour of their timeshare facilities (something that normally takes approximately 90 minutes).[citation needed] With this in mind, a crafty individual can bargain for incredible vacation deals with a sales agent if they are willing to spare a bit of time. At one time, timeshares were known for applying considerable pressure to these touring individuals to purchase (even prompting a South Park episode called Asspen parodying the process), though that is generally supposed to have been lessened after a backlash by customers. The movie Once Around provided a look at the "inside" of a timeshare company. Each timeshare has its own rules for who it is willing to allow to tour, and most only allow one tour per year, though this does not prevent multiple tours from different resorts. An entire industry has sprung up based around this concept, negating the need for the frugal individual to do his own bargaining.

Several people have discussed what should be the motives for purchasing a timeshare.[3] It is important to review them based on the facts and avoiding to be trapped with false expectations.

Buying a timeshare can sometimes end up in a scam. Other times, some agreements will not be realized.

Most buyers come with high hopes with the units they are buying. Some did not even saw the real place, they just saw it through presentations or pictures. And much of the disappointment comes when their expectations were not realized.