Some resort timeshare developer sales practices imply easy resale marketability. This creates
a false presumption for the buyer that inflates the timeshare new sale value. When
the time comes for owners to sell they are shocked when they learn about resale
values.
We also noted that understanding individual owners’ timeshare resale rights are clouded by
confusing language in the condominium closing documents. Some have Right of First
Refusal (ROFR) and Exclusive Rights to Resell imbedded deep in the new sale documents--not
fully explained to the buyer.
Sometimes there are changes to the timeshare product after purchase by a consumer.
The product seems to morph into what is more profitable for the resort timeshare developer and this
further confuses the owners as to what they really own and how they can use it.
Many times property showings to resale buyers are blocked or restricted by the resort.
Sometimes they are actually 100% occupied. Most of the time resort timeshare personnel are
not accommodating prospects for owners wanting to resell, and whenever an owner
or broker requests a showing to such a prospect. This will disappoint potential
buyers and scare off some permanently from that resort. If the concept of reselling
in the future is on your mind and it is hard to buy because of such practices, would
you purchase at a timeshare resort with such restrictions?
Resort timeshares that charge excessive transfer fees to sellers unnecessarily burden the
resale process. It has been noted that some resorts use this as a tool to further
frustrate resales. This is based on our experience in closing thousands of timeshare
resale transactions with willing buyers and sellers.
Point Systems and market values where usage value and rights are controlled by the
resort timeshare or the exchange company are also falling suspect by not being in the timeshare
owner’s best interest. The ability to trade for like accommodations is uncertain
in the future for those owners. More controls are needed to help support owners’
equity.
The resort timeshare developer new sale industry average of near to 50% marketing costs
distorts owners’ perceived value and eventual resale expectations. For the most
part developers spend upfront thousands of dollars per unit for sales centers, mailings,
gifts, mini vacations, promotion, other marketing, commissions, overrides and draws
to sell timeshare vacations. The developer invested upfront thousands of dollars to attract buyers to its marketing regime to sell new timeshares.
Most would argue that without an onsite ongoing organized efficient sales force
experienced in selling timeshares, fully funded marketing programs in place, access
to showing the units and with market financing, timeshare units cannot be sold for
the same price or higher on the resale market.
What would one have to charge to rebuild the scenario to help owners resell as efficiently
as the resort timeshare developers’ new sale? Would the marketer need to charge a 50% marketing cost
when they put the resale on the market for the owner? More than likely the owner
has a mortgage and an expectation of some equity.
Who primarily has a vested interest to see that timeshare vacation properties resell? Only
the reselling owners and the brokers have such a vested interest in seeing that
a viable resale market exists.
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Timeshare Resale Study - Table of Contents