San Francisco Timeshare Examiner

If you live in San Francisco and own a timeshare, or are thinking of buying one, you might be interested in a new column on timeshares by Mark Silverman. In the very first entry, Mark invites readers to write in with their timeshare-related questions and grievances.

He also makes this highly astute point about timeshare resales:

One of the most frequent inquiries is how to sell your timeshare. A couple of ways to address that – first, let’s look at the reasons you made the purchase in the first place. If your expectations aren’t being met, it could be you were over promised at the sales presentation. Or perhaps you have an unreasonably high expectation for what the program can do for you. Many frustrated owners simply are not working the system to the best advantage.

If you are committed to selling, we will focus on the best methods to do that. And minimizing the expense and inconvenience involved. As a general rule, you will not be happy with what you get for your timeshare – remember, it’s not what you get out of the sale – it’s what you get out of.

We couldn't have put it better ourselves, and many individuals turn to Timeshare Relief for precisely that reason -- it's not what you get out of the sale but what you get out of.

Contradictions Abound: Wyndham Reports Slump

The timeshare industry has seemingly carved an all-but-unique bubble in the recent real estate downturn, floating unscathed to everyone's bewilderment. However, it was bound to slow at some point, and Wyndham Worldwide has just released what is likely the start of an industry wide trend.

We must bear in mind that Wyndham also franchises hotels, and their earnings are not itemized in the following reports. However, on the whole it is a safe assumption that US families are finding vacation time less and less crucial -- probably due to rising gas, food, and overall cost of living prices.

AP also reported that Starwood Hotels have seen a 28 percent decline in timeshare revenue during the second quarter of 2008. AP analysts "have expressed concern about timeshare sales, particularly after Starwood's second-quarter declines."

STOCK PERFORMANCE: Wyndham shares lost about 13 percent in the quarter, closing at $17.91 on June 30. During the past 52 weeks, the stock has fallen from a high of $36 last August to a low of $14.62 in mid-July.

http://money.cnn.com/news/newsfeeds/articles/apwire/8ff43b93985ca009455d544312a85fe7.htm

Timeshare Sales...UP?

Apparently they are, but there's an explanation: timeshare resales are booming.

The blogosphere has been buzzing with this news lately, but Timeshares Daily has the scoop:

In a study released last week by the American Resort Development Association (ARDA), research prepared by Ernst & Young, LLP, shows that sales of new timeshares increased by 6 percent in 2007 over the previous year, totaling $10.6 billion in the US alone. Although gains were less than in previous years, the sale of new timeshare from 2003 to 2007 has increased by an amazing 66 percent.

But why?

Howard Nusbaum, ARDA president and CEO, says, "The continued growth of the timeshare industry in today's economy is a direct indication of strong consumer satisfaction and demand. Vacation ownership, with its flexibility and spacious accommodations, continues to be a preferred travel choice for American families."

The problem with this explanation, however, is that is doesn't make sense. Preferred choice or not, every area of the economy is feeling the pressure from recent issues, and travel seems a likely target for cut-backs -- especially considering the price of gas. But, Jason Trembley of Sell My Timeshare has another explanation:

"As good as the numbers sound for the sale of new timeshares, the report doesn't mention the huge segment of the timeshare industry that deals with timeshare resales, and that side of the business is really booming."

Of course. It would make sense that resale numbers are up, since owners are probably dropping extraneous expenses. Those that still can afford timeshare, then, are cleaning up in the aftermarket.

Information on the numbers of people buying resale timeshare is limited because the secondary market includes individual timeshare owner transactions as well as sales consummated by traditional industry specialists. In 2005, 7.2 percent of buyers bought timeshare from an existing owner, according to an ARDA profile of vacation owners. While this indicates a resale industry in the hundreds of millions of dollars, these figures are very conservative, as the survey did not include alternative sales methods such as the Internet.

We doubt the timeshare industry will be entirely immune to recent economic difficulties, but for now it seems to be carving out a pattern all its own -- which, for the industry, is very common.

CNN: Are Timeshares Worthwhile?

It's very rare to see frank discussion of timesharing in the media, especially here in the US. And yet, it seems like in the last few months many national periodicals have published feature stories on the timeshare industry, and how it has inexplicably managed to survive the recent downswing of the housing market. Perhaps most surprisingly, many of the articles in question have admitted outright that timeshares are not great purchases for the majority of consumers.

CNN recently ran an article like this, entitled "Are Timeshares Worthwhile?". This article takes a question/answer format like many others, posing the inquiry "Are timeshares a good investment" and then offering a response.

A few notable points with TSR Commentary:


- "Timeshares can bring their owners substantial savings in time and money when planning vacations, but experts warn that they should never be viewed as a financial or real estate investment."

True - a timeshare is a prepaid vacation, not an investment.

- "They do have their drawbacks -- an owner hoping to sell a timeshare might end up taking a loss. And while there are laws protecting buyers who purchase a timeshare from a developer, they don't help someone buying from an owner."

Also true. In many cases a title transfer is the only option available to a timeshare owner.

- "Basically, if you take at least a week of vacation each year and don't like sleeping on grandma's couch, then this is a great deal," says Howard Nusbaum, president of the American Resort Development Association. "But if you're not a vacationer, then I wouldn't recommend this, just as I wouldn't recommend you buy a car if you don't drive."

- Prospective buyers might think that purchasing from a timeshare owner could seem like a steal, but Nusbaum warns, buyer beware. While there are consumer protections and regulatory oversight of the industry, that would not apply to a sale in the secondary market. Most important, the buyer should be sure that all of the rights to the property or access to the facilities would transfer with the deed. While a contract with the developer is government-backed, that protection may not extend to the person the timeshare is resold to.

Again, very true, and it is refreshing to see even the resale market fall under such careful scrutiny. While it is true that timeshares purchased on resale will save dollars, it is the opinion of many that a FREE timeshare is not much of a deal. The industry has issues from top to bottom.

Read the full article.

It's a Commitment

Another great timeshare-related news article comes our way this week from Europe. Originally posted on moneysmarts, user "Bianca" deconstructs the payoff that timeshares offer the ordinary consumer in simple terms:

"But believe you me, a timeshare costs an arm and a leg. It ranges from P250,000 to gazillions... It gives birth to other expenses – yearly maintenance fees (which went up from P2,500 to P4,000 in the blink of an eye), RCI fees, booking fees that could range from P2,500 (Asia) to almost P10,000 (outside of Asia). It does not include airfare, or the cost of food....

But it is not all bad, as we have found out in our two years of owning one.

With it, we only spend approximately P3,000 per night, and if the trip is stretched a week, the discount could be really substantial. Moreover, the accommodations are almost always one bedroom suites, and they say that if we are really kulit (translation: a charming *****) with the RCI agent at the other end of the line, or during low season (August to October), we could even be given a two-bedroom suite (good for 6 people). Match the hotel savings with really low airfare (through Clark, the other gateway to Hongkong, Malaysia, Singapore, Korea), it could satiate the wanderlust in anyone."

Satiating the wanderlust is a good way of describing the allure of most timeshares -- salesmen often claim that you can exchange your week for time at resorts all over the world. Who wouldn't want to be part of this exclusive club? Well, people who don't necessarily have the money to invest in the "savings" Bianca mentions above. She describes the unfortunate circumstances surrounding her parents' timeshare ownership, an event they deeply regret:

"They paid approximately P700,000 for both and they got seven days at a one bedroom suite at the back of the Flamingo in Las Vegas, Nevada (the sign on the wall says $1,000 per night and that was a source of a little comfort) and seven days at a one-bedroom suite at a manor near Legoland in California. Sounds plush, but however I do the math, it is not P700,000. They tried to save up their weeks and were planning to go to Europe but travel was put off year after year after year because the kids got married, houses had to be built, the farm needed to be farmed and so forth. The timeshares expired and they never got to go."

The timeshares "expired"? So they basically lost money and vacation time? This situations rings very true to us, we hear such stories all the time.

Bianca says it best here:

"A timeshare is a commitment. It is for people who love traveling with a passion, love to do research (for cheap airfare, great places, good food), and, at the onset, the temerity to haggle with the timeshare salesperson until that person buckles down and gives the lowest-value-for-money-price imaginable.

There will be hits and misses, we know. But we are passionately excited to see the rest of the world as a family, to hear the lyrical overtures of another language, introduce our daughter to life’s many wonders, and immerse ourselves in the magic of cultures so fascinatingly different from our own."

While we might disagree with some of the above we certainly agree that timesharing is a commitment -- and a large one at that. Individuals without any real estate experience should think twice before binding themselves to a contract where they'll be paying to vacation -- whether they do it or not.

Original article here.

More International Trouble

Timeshares are not only problematic here in the United States -- many Europeans also struggle with the same issues. Like here, the word "timeshare" is not always present in the sales pitch or the property being offered, but the business model is basically identical. "Holiday Clubs" across Western and Eastern Europe are quite popular, and scams are so rampant that last year the European Union organized a legislative crackdown that has yet to take effect.

We found this story from Malta's "Independent" on one of our many searches. Does the language sound at all familiar?

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A man who had a lucky escape from a timeshare con has warned others not to fall for the same trick.

The man, from Cowcliffe in the UK, who did not want to be named, was contacted by a Spain-based company that claimed someone wanted to buy his timeshare in Malta. He said: “They asked me if I was interested in selling and said they had a customer willing to pay a very good price for it. Then they said they needed a bond from me, and asked for my credit card details. That’s when I thought there was something wrong.”

The man contacted the consumer advice organisation Timeshare Consumers Association, which told him it was a fraud.

He said: “Somebody is going to fall for this at some point. People should be made aware of what’s happening.”

A spokesman for the Timeshare Consumers Association said: “This is a complete fraud. There are a lot of people who have a timeshare who want to get out but don’t realise it will be worth a fraction of what they paid for it.

“These companies, almost always from Spain, ring them up, having got their names and numbers from a stolen list, and claim they have someone wanting to buy. They then ask for credit card details for so-called security reasons.

“You should never send any money to any company on the promise of selling your timeshare – whatever reason they might give you.”

The original article.

Tips and Gyps

Searching for timeshare-related information online can be a tricky activity. One of the merits and drawbacks of the world wide web is that anyone, anywhere can upload virtually any content they want. So, the articles you read could be the fruits of years of experience, or some meaningless text generated using google searches for a corporate agenda. Furthermore, the latter category could appear cleaner and more appealing than the former, making distinction exceptionally difficult.

One of the most interesting formats for online information is the top five or top ten. These are nearly ubiquitous, and with good reason -- they are easy to write, and easy to read. They distill information into convenient enumerations of knowledge that seem, somehow, definitive. And yet, one could put the numbers 1 through 5 beside ANYTHING and make it seem definitive and complete. This is the impression the numbers themselves offer, not the information itself. And when speaking of timeshares, it's important to consider the subtleties that could potentially get neglected from any top 5 or 10.

One of the better top 5's we've read here is this one, "Tips on How to Sell Your Timeshare Successfully".

The author offers a number of worthy suggestions to essay when reselling a timeshare. For instance, attempting to get the original company to buy the property back (although this very often does not work). And consumers should certainly be wary of any upfront fees that a resale agent might demand, as the reseller's industry is fraught with utter scam. Selling online is an equally dubious prospect, and very often ends in theft or frustration.

And yet, there are a few details left out. For instance, it is mentioned that many timeshares are resold at 30-50% of the original price. It is not, however, mentioned that this is because timeshare companies inflate the prices of timeshares with overhead costs from presentations and "free weekend getaways". In fact, almost ANY timeshare can be bought for a fraction of the resort's price on the resale market. And the author additionally fails to take into consideration the fact that very few timeshares are ever sold at a profit. The article ends with this statement: "However, if done correctly, selling timeshares can be a rewarding and profitable undertaking." The profitable selling of a timeshare is truthfully less a case of accuracy and more of the luck of the draw and the status of the current market.

In any case, this is a good example of fair advice that misses a few crucial steps. To a prospective timeshare owner, it could appear as though a profitable exit strategy is the norm in the industry -- when in fact the exact opposite of that statement is true. Compare this article with many others online for a better portrait of what the timeshare resale industry really looks like.

Where There's A Will...

One of the most unfortunate situations we encounter here at Timeshare Relief are timeshare scam inheritances. It's more common than you might imagine. An elderly relative purchases a timeshare while on his or her last vacation, not realizing that the property is a moneypit and impossible to use. The relative returns home with thoughts of using the timeshare and happily pays the maintenance fees. Then, one day, the relative passes on. The timeshare company hears of the news (probably due to a truant fee payment) and contacts the next of kin. He or she has never heard of the company before and never been to the city where the timeshare is located -- in fact, it's never been considered as a holiday location. And yet, this family member has just become embroiled in what is perhaps the most menacing of timeshare contract stipulations, an agreement known as perpetuity.

The easiest way for me to describe perpetuity is to ask my readers to imagine a timeshare with the stamina of the Energizer bunny. Indeed, the life of the timeshare contract -- and all agreements therein, including payment of fees -- keeps going and going and going and.... You get the idea. Perpetuity ensures that timeshare contract outlives its owner -- maybe even a few generations beyond its owner, if it isn't taken care of properly, as through a sale or title transfer.

Timeshare inheritance is far too common, the reason for it is simple -- con men prey upon the elderly. Several arrests have been made recently as part of an SEC crack-down on vacation scams targeting aging American adults -- a worthy, if somewhat minor, reaction to what has become a very serious problem. Often times these con artists operate below the border or in the Caribbean, where there are delays in seeking legal reprisal. And the result is very often the same: middle-aged families, while grieving the death of a loved one, are struck with the double-whammy of a timeshare scam inheritance they didn't ask for, and cannot afford.

We've found a few resources online to underscore this unfortunate trend. Here's a good if short forum discussion outlining timeshare inheritance:

http://timeshareadventures.com/vacation/general-timesharing-information/1289.htm

And a brief advice column offering clarification on a real-life situation:

http://www.thinkglink.com/Figuring_Out_The_Inheritance_Of_A_Timeshare.htm

If you think a relative of yours may be at risk for timeshare scams and unknowingly leave a burden on your family, get the right information and try to plan ahead.

Resell Hell

All too often, timeshare owners have been told they can sell their timeshare at some point in the future, and because it’s such a good investment, they’ll make a nice profit on the sale after enjoying years of happy vacationing. Sadly, there are increasing numbers of distressed timeshare owners, who find that they cannot use the timeshare they have, or trade it successfully for another. Following this disappointment, they turn around to face the prospect of selling with an eager mind to that profit they were originally promised. Worse news follows the bad when they step into the world of timeshare resales. Time and again, these owners pay exorbitant up-front fees (usually $500 and up) to timeshare resale agents. The owners are hoping to turn a profit and get out of a timeshare contract that never delivered on its promises, except for the ones where they promise to sic collection agencies for delinquent or missed payments, and the promise to pass the timeshare along to the purchaser’s heirs forever. The actuality usually turns out to be that the resale agents are the only ones turning a huge profit as they rake in the up-front fees, meanwhile investing little or no time in ever advertising or promoting the timeshares they promised the clients to actively sell.

There are companies and individuals being investigated and prosecuted for activities such as this (Stroman realty for one), and it’s a good idea to spend significant time researching any and every company that you cross paths with that promises to help you get out from under your timeshare burden for the low low bargain price of $500 or so. With journalists, investigative reporters, financial advisors, authors and bloggers and even former timeshare owners cautioning people to avoid the seductive spiel of the timeshare resale agents, there can be no doubt that it’s a troublesome industry at best that has certainly earned its share of negative criticism.

In an industry where there are thousands upon thousands more timeshares available than are in demand, naturally the likelihood of selling at all, let alone at a profit is next to impossible. Jane Bryant Quinn referred to this over-supply in her article in Newsweek as a glut of timeshares. A quick search on the sales site, EBay produces on average about 1200 timeshares being listed for resale, and while a small percentage may appear to have bids and close, those transactions don’t necessarily go through all the time, because bidders indubitably find out the ridiculous costs associated with maintenance fees, special assessments, and taxes, and let’s not forget title transfer fees and closing costs as well. So that listing for $1 turns out to be a $1000 or more transaction. Also, State Attorney General’s are issuing cautionary advice about purchasing and reselling timeshares. Apparently the glut of unhappy chained-for-life-timeshare owners have complained en masse enough to move the government into warning people to be leery of timeshares.

It seems these warnings are going largely unheeded, at least on the front end of the purchase because timeshare sales are still increasing. It’s not until people realize the enormous burden of what they’ve signed up for that they start looking for sound financial advice, legal help, and a solid way out. The scams take place on either side of the transaction, and consumers would be wise to heed the advice of those who’ve gone before them, and simply just stay away.