Timeshare Cure | Do You Have One?

There are two types of timeshare owners, those that love their timeshare and those that for one reason or another want to get out of their timeshare. The people that need to get out of their timeshare are already looking for a timeshare cure. However, many owners who love everything about their timeshare are not lifting so much as finger to try and find a cure for their timeshare. And while they have little to no reason for finding a timeshare cure right now, there is no telling what will happen in the future to cause them to need a way out.

So whether or not you are looking to get rid of your timeshare right now it is important to have a timeshare cure in mind and ready to go. Because timeshare contracts are usually very long term if not perpetual it is important to have a plan. If something happens to cause your timeshare to become a serious financial burden you do not want to be clueless about how to get out.

Let’s face it, unexpected changes in life should be expected. And these changes can occur without any input from you at all. If your resort happens to increase your maintenance fees, or something were to happen to your timeshare unit that causes a large special assessment to be charged at your expense, you will not have a plan to get out. That is why you should prepare for when your timeshare ownership turns into a financial disease. Knowing what type of timeshare cure you will use is necessary.

Even the most satisfied timeshare owner has the potential to catch a timeshare disease. There are simply too many aspects of your timeshare ownership that are under complete control of the resort. Because it is so difficult right now to actually sell a used timeshare you should consider different options for getting out of your contract in case of an emergency.

Timeshares: When an Investment is Not an Investment

We know that some timeshare owners enjoy their timeshares immensely — especially those with disposable income and want to know where they are going to vacation every year.  But, if you are not an owner and are considering to “invest” in a timeshare, you really need to consider the costs involved.

Many timeshare owners finance their timeshare purchase.  The interest payments and the total cost of repaying the loan can make the timeshare enormously unprofitable.  Timeshare loans are not like “normal” real estate mortgage loans on a primary residence or vacation home.  The interest rates are typically much higher and can go above 15%.

Even if you pay in full at the time of purchase, you lose the opportunity to invest that money into other financial interest-bearing instruments like CD, bonds, and money market accounts.  Imagine if you took $20,000 (the average amount of a timeshare in 2008) and put it into a modest CD that could net a small interest gain.  Over time, that could be hundreds or thousands of dollars that could be given to your children, instead of passing along a timeshare that continuously requires more fees.

The American Bar Association Family Legal Guide reminds potential owners that the investment is less of an investment when you consider that “your time-share contract will make you responsible to pay any increases in taxes, maintenance, or repairs. If you think any of these amounts are going to decrease, you’re in for a big surprise.”

A true investment in real estate means you can one day sell it and see a return on that investment.  With upwards of millions of timeshares up for resale, that will not be the case.

Timeshare Exchanges – Benefit or Just Another Timeshare Fee?

Timeshare Relief arrowsOne of the perceived best features of timeshares is the ability for timeshare owners to “exchange” their timeshare for another timeshare in another part of the world.  An owner will “bank” their week at their home timeshare resort and depending on the value of their timeshare, they will be granted access to a timeshare with similar value in a different location.  Some programs allow multiple banking opportunities so that timeshare owners can upgrade to more luxurious accommodations with their exchange.

When purchased, a timeshare exchange program sounds like you’re getting access to potentially thousands of timeshares for a price of one…or is it the price of one PLUS exchange fees.  Like maintenance fees, popular exchange programs require annual membership fees for the administration of the exchanges.  Although not exorbitant, these fees are required whether your timeshare is exchanged or not.  Then, there are fees when you execute an exchange.  There are also a la carte fees for other options and features in these exchange programs.

The results for many timeshare owners is similar to timeshare maintenance fees.  The exchange fees get paid because owners justify the cost of potentially using an exchange in the future.  It’s a mental trap that keeps people paying these fees year after year without much benefit.

Our advice is the same as fora  timeshare: USE IT OR LOSE IT.  If you don’t use your timeshare exchanges, then drop the program.  Luckily, exchange programs in general do not lock you into a long-term contract, so you can cancel.  Keep in mind that if you’ve banked time in the past, canceling your membership will most likely discard your accrued time.

And of course if you’re not using your timeshare, contact Timeshare Relief and let’s see what we can do to get rid of that timeshare.

Do Timeshare Maintenance Fees Ever Decrease?

Timeshare Relief deep thoughtsDuring timeshare presentations, the audience is often shown a chart or some organized way of portraying timeshare costs as being less than comparable luxury hotel accommodations over time.  At least in the past, these comparisons included escalation in hotel costs due to inflation.  But was the consistent rise in maintenance fees ever discussed?  Probably not.  But many timeshare owners have experienced increases in their maintenance fees.

Regardless of the presentation style or exact numbers, the case is made for a timeshare to save money over a period of time if a timeshare owner can consistently go on vacation annually to their timeshare.  This way the new timeshare owner can justify spending the money now in order to save later.

However, one assumption is made in the cost analysis — the price of hotel rooms does not go DOWN.  But during this recession, we know that hotels have lowered costs, sometimes drastically in order to bring in guests. This begs the question, “Do timeshare maintenance fees ever decrease?”  I cannot recall a timeshare owner ever getting a smaller annual maintenance fee bill year-to-future-year.  This would certainly change the cost comparisons between hotels and timeshares.

Just a couple questions to ask your timeshare sales person the next time you find yourself in a timeshare presentation.

Don’t Find Ways to Justify a Timeshare Purchase

Once you step onto a timeshare resort that you like, you’re mind is going to think about buying a timeshare there.  Whether you love the location, the architecture, the amenities, activities or service, it’s amazing how quickly that little voice in your head starts to justify a purchase.  Our advice: Silence the voice; Fight the urge.

There are a few justifications that we’ve heard over the years that do not make any sense over time:

“It will FORCE us to go on vacation”
If you have to feel forced on vacation, that force will feel like a heavier and heavier weight as maintenance fees rise and special assessments come in.  You’ll want to be forced out soon.

“We’ll use this timeshare forever!”
Just like gym memberships, diets, money-making opportunities, feelings go away over time and the stark reality of paying for something whether you use it or not will be left.

“It will save us money over time”
If you are a dedicated user of timeshares, this may be true, but you could save that money that you use to buy the timeshare and invest it elsewhere.  Then, take vacations as you choose.

“We can give it to our children when we don’t want it”
Believe us when we say that your children will not want an old, out-of-style timeshare by the time they’ll be ready to inherit it…and they certainly will not want additional bills!

So, when you feel the urge to buy a timeshare, let it pass.  For many of you, you’ll be much happier over time.

The Impact of the Economy on the Timeshare Industry – Panel Discussion

A few days ago, timeshare executives discussed the impact of the economy on their industry during a panel discussion at the 31st Annual New York University International Hospitality Industry Investment Conference at the Waldorf-Astoria hotel.  Beth Kormanik, the managing editor of Buyer Interactive and editor of Hotel Interactive writes about the discussion here.

Here is a summary of some of the more interesting points:

– With retirements being wiped out, more people are opting to keep discretionary income rather than spend it, especially on a timeshare.  So, timeshares are looking for a new pool of buyers.

– They want to emphasize rigorous maintenance of their properties, “even if it means raising fees.”

– They wish to cut down on the colossal marketing costs of timeshares

– Mortgages will require higher downpayments

– Timeshare owners for the most part kept paying their fees in spite of the economic downturn
“Will the consumer not pay the $800 and give up the $24,000 they have already spent?” he [
Stephen Cloobeck, chairman and CEO of Diamond Resorts International] asked. “That’s the issue in a nutshell.”
TR360 comment: Interesting statement…think about what that implies.  Timeshare owners feel compelled to pay the maintenance fees regardless whether they use the timeshare or not.

– Lower cost options are on the way with fewer ammentities and upgrades.

– We may see conversions into condo-hotels.

Last statement from Johann Murray, senior vice president of financial services for Hilton Grand Vacations: “We’ll be out of this downturn in five to six months. We’re already seeing signs of bottoming,” he said. “There’s just too much money to be made in this industry.”

Read that last sentence a few times.  He’s talking about timeshares making the money, not owners.

Harry Gross: Why Very Few Are Happy Owning a Time-Share

Harry Gross, Personal Finance Columnist of the Daily News (at philly.com), responds to a reader who has been trying to sell his timeshare for FIVE years!  The costs have gone up tremendously since the owner purchased in 1987.  Now, the owner is thinking about simply walking away.

Mr. Gross provides a spot-on reply, stating that he has only ever heard of 2 people he knows that are “happy” with their timeshares.  He continues by pointing out something that Timeshare Relief has known since the beginning of the company: Timeshares are notoriously difficult to sell.  Also, walking away from the problem is not  solution because of the damage to your credit score as well as potential legal action against you.

Click here to read the Q&A