Today, nj.com released one of their latest timeshare news articles titled “Timeshares and broken promises.” Although we really liked the direction that they were taking this piece we couldn’t help but notice they were sugar-coating the issue being discussed. We, at Safe Hands Transfers however like to take the hard to hear, honest-truth route. We are certain the New Jersey community will take to our method a little better.
With how many resources and statistics that have been released on the resale market of timeshares, it is surprising that there are still so many people fooled by the “timeshare illusion.” One of the main “illusions” is that timeshare have, resale potential.
The article released by Nj.com quotes a certified financial planner advising owners to contact their resorts to see if they will let them walk away from their contracts. If you have spent any time researching the resale market of the timeshare industry one of the first red flags you will come across is the fact that timeshare developers don’t take back any unwanted memberships.
The state of Wisconsin government has done some in-depth research on the industry and not only found that only 3.3% of owners were able to “resell” their timeshares within the last 20 years, but ALSO, that developers DO NOT take back timeshares. The reason is quite simple. The developers don’t need the one week/one unit membership. However, they do need and prefer to receive the annual maintenance fee that owners have committed to paying for the duration of each contract, and with the average length of contracts being perpetual, owners have literally committed to supporting a developer forever, no matter what the cost.
The reality is the money that was spent for the initial purchase price was never intended to pay off the actual value of the property. It was simply a very large fee they charge to be able to cover all or most of their marketing costs plus the commission for the salesperson who sold it to them. Think about it, if timeshare actually held any sort of value, wouldn’t the developers be ecstatic to take them back for free and resell it to someone else? They don’t for a reason, and it’s because when they sell a timeshare and get signatures on the dotted line, the hard part is over. They literally have residual income, forever.
Statistics have shown that an average timeshare owner over the course of a 40 year period will spend $70,000 on JUST the maintenance fees. So it really can’t be that surprising that the developers don’t take them back. Even if a timeshare owner was able to figure out how to give it away, they would still run in to closing costs, which can end up being a couple thousand dollars once resort transfer fees are paid. In most cases, timeshares are deeded properties so they have to go through the same closing process as other real estate. Timeshare salespeople use the fact that they are deeded properties as a way of representing timeshares as an investment.
As a result, timeshares have received a reputation that because there is a title and deed involved it is true real estate and of course real estate is generally considered to be a safe investment. And although timeshares can technically be categorized as real estate, when it comes down to value, one week really can’t amount to much of anything. Timeshares actually cannot be appraised because the appraisal of time is impossible. The only number that can really be analyzed is what the developers are selling them for, which of course doesn’t mean anything if there is no resale market.
Ultimately, buying a timeshare is a lifetime commitment that involves thousands upon thousands of dollars with no return on investment. With all other supporting evidence aside, timeshares being available for rent with no membership required makes it really difficult to sell.
Also, when the people who convinced us to buy the timeshare won’t even consider taking it back for free, it’s a pretty clear indication of what the value of timeshares are today.