Timeshares are an expensive form of shared ownership of vacation properties. They can be an attractive option for those looking for a second home. However, there are numerous reasons why you should never buy a timeshare. This paper will discuss the costs of timeshares, the associated risks, and the alternatives to buying one.
A timeshare is a resort vacation property purchased under partial ownership. That means many different people have a stake in the same timeshare units. The more common deals give owners a designated week each year to stay at the property, though more flexible options are available, too.
When you purchase a one-week timeshare, the general impression is you're saving money by prepaying for an annual vacation. Theoretically, this is a good idea. However, timeshare ownership seldom plays out the way people expect. Obstacles often prevent people from fully utilizing their property.
Timeshare vacations often last for one week, although some are longer. For example, you may have a timeshare that lasts two weeks or even a month. With this fractional ownership model, each owner and their family receive reserved vacation time on a scheduled basis. Just as the time spent at the resort is divided among the owners, so are the expenses.
There are two types of timeshares - fixed and floating week timeshares.
Fixed week timeshares mean you own the right to vacation during a specific week every year. So, if you own a timeshare, you can vacation at that same resort during that same week every year.
Floating week timeshares mean you can choose to vacation during any week of the year, giving you more flexibility in planning your yearly vacations. This means you can take your vacations when it is most convenient for you, rather than being restricted to specific months or seasons.
The cost of a timeshare depends on location, the size of the unit, the amenities offered, and the ownership period. The true cost of a timeshare involves maintenance fees, annual upkeep expenses, and whatever additional annual or monthly fees the company decides to charge.
According to the American Resort Development Association (ARDA) and National Timeshare Owners Association, the average price for a one-week timeshare in the U.S. is $22,140 as of 2022. Buyers can pay that in full or over time through a loan with the resort company, which likely has unfavorable interest rates. With a monthly mortgage payment, paying off a timeshare is similar to that of a primary residence.
A timeshare owner is also responsible for annual maintenance fees. According to ARDA, the average maintenance fee for a timeshare unit is $1,000 per year. Since many timeshare agreements do not have expiration dates, these fees continue to rise over time without end.
One thing on the minds of potential timeshare buyers is whether or not such a purchase is a wise investment. Ultimately, the answer varies for each consumer. Yet, timeshares have notoriously been deemed bad investments by the consensus. While some owners may enjoy the experience, there is often an overabundance of disservice that outweighs the good.
Folks looking to buy real estate as an investment are better suited to ignoring timeshare offerings. The value of these properties vanishes when the dotted line is signed, so seldom do they become anything but illiquid assets. However, it could be a good fit if you want a yearly vacation prebooked and have the financial means for support. Remember, buying a timeshare can lead to dream vacations, but there's also the risk of falling into a money pit.
Timeshares are only sometimes considered a good financial investment. Timeshares are not likely to appreciate and may be difficult to resell or transfer. Additionally, buyers should be aware of the potential for high annual maintenance fees, resort assessments, and other additional fees.
When considering a timeshare purchase, buyers should be aware of the potential risks. These risks include the fact that timeshares are not a liquid asset and can be difficult to sell or transfer, as well as the potential for high annual maintenance fees and future assessments. Additionally, buyers should be aware that timeshares are not viable investments and are not likely to appreciate.
The primary benefit of a timeshare is the ability to access a high-end vacation property for a fraction of the cost of buying it outright. Additionally, timeshares often come with amenities such as access to pools, spas, and other recreational facilities.
In addition to the timeshare cost, buyers should be aware of the potential for additional hidden costs. These can include high annual maintenance fees, resort assessment fees, special assessments, transfer fees, and closing costs. Additionally, buyers should be aware of the potential for aggressive sales tactics and the possibility of additional fees being added to the final purchase agreement.
Owners of timeshares may find themselves facing several potential disadvantages. These can include difficulties in reselling or transferring the timeshare, high annual maintenance fees, and the potential for future assessments. Additionally, owners may find themselves bound to the timeshare agreement for decades and subject to the rules and regulations of the timeshare resort.
Don't take our word for it. Here are a list of review sites that share unbiased timeshare resort reviews. The entire industry seems to average 1-2 stars.
Reviews from Timeshare Company #1
Reviews from Timeshare Company #2
Reviews from Timeshare Company #3
Aside from the mountain of negative reviews for these timeshare resorts, the sections below mention several reasons to avoid buying a timeshare:
Timeshare buyers sometimes have no idea what they're getting into when signing the dotted line. Many of them never intend to buy anything in the first place. So what changes their minds? The deceptive timeshare salespeople.
Timeshares often get sold through aggressive and misleading sales tactics, which can pressure people into buying a timeshare they may not want or need. Salespeople sometimes lure in prospective buyers by promising extravagant gifts. These high-pressure sales presentations can last for hours. A timeshare purchase can happen simply by attempting to remove yourself from a sales environment. Signing on the dotted line sometimes feels like the only way out.
If you were misled into timeshare ownership by a deceptive sales pitch, you might be able to cancel your agreement. Click here to learn more.
A prominent selling point for timeshares is their wide variety of vacation club locations all across the world. Salespeople will list off names of exotic places and show dozens of resort pictures to encourage people to buy a timeshare. Yet, the truth is that many timeshare agreements are on a fixed week system restricted to the same location each year.
A timeshare may be ideal if you are only interested in revisiting the same place every year. However, owning a timeshare can be restrictive if you desire to explore a new area with each vacation. It's a lifetime agreement that can cause you to miss out on other opportunities.
Prepaying for future vacations should make the entire scheduling process simpler. Unfortunately, that's not always the case. Sales representatives regularly brag about how easy it is to use their programs, but that's rarely true.
Scheduling issues have become so common that several states passed laws against misleading scheduling statements during the sale. What's the point of prepaying for a vacation if it is impossible to schedule?
No matter what you hear in the sales presentation about how much you save with a timeshare, these things are not cheap. According to the National Timeshare Owners Association, the average purchase price of a timeshare in the U.S. is $22,990. That's a substantial upfront cost for a vacation home you can only use once a year.
According to the National Timeshare Owners Association, the average price of a timeshare in the U.S. is $22,990. Being so expensive, most buyers have to take out a loan to afford it. Due to the timeshare developer's typical terrible interest rates, ownership could cost a buyer twice as much as expected. On top of that, other hidden fees quickly creep in after the purchase.
Salespeople like to compare the cost of timeshares with the average price of hotel rooms. They're right that, over time, timeshares appear more cost-efficient. However, in this appeal, they conveniently disregard the annual maintenance fees.
Timeshares often have high maintenance fees that increase yearly, which are not tax-deductible. According to the National Timeshare Owners Association, the average maintenance fee for a single timeshare unit is $822 and rising annually. Furthermore, whether or not you use it each year, you can always expect to be billed for these yearly fees.
There are several points to keep in mind when selling a timeshare. Getting pulled into a timeshare scam can happen quickly. But getting yourself out of a timeshare is excruciating. Due to the unhappy nature of many timeshare owners, the resale market seems to get flooded with resellers constantly. With the supply of secondary timeshares exceeding the demand, reselling can often feel like an impossible task. Often, properties will list for as little as $1.
Several factors play a role in a timeshare's resale value. From the week's season and resort's location to the remaining mortgage costs and maintenance fees, the difficulty of reselling is often out of the owner's control. Selling timeshares continually proves to be a long-drawn-out process with little financial upside. Timeshares are not viewed as investments because they do not appreciate in value and can be challenging to sell.
Reselling a timeshare can be difficult as timeshares are not considered liquid assets. To resell a timeshare, buyers must typically advertise the property and find a buyer willing to purchase the timeshare. Additionally, buyers may be subject to transfer fees, closing costs, and special assessments when attempting to resell the timeshare.
Before making a timeshare purchase, buyers should know the potential risks. These risks include the fact that timeshares are not a liquid asset, high annual maintenance fees, and the potential for future assessments. Additionally, buyers should be aware of the potential for aggressive sales tactics and hidden fees being added to the final purchase agreement.
Potential buyers should research companies thoroughly and read customer reviews before purchasing. Additionally, individuals should look for timeshare providers that have been in business for a long time and have a good reputation.
Potential buyers should be aware of scams and fraudulent activity. Research any timeshare offer thoroughly, including the company offering the timeshare, the terms of the contract, and any taxes or fees associated with the timeshare. Additionally, individuals should only sign a contract after carefully reading and understanding the agreement.
Vacation ownership typically involves a long-term commitment to the property and an agreement to pay annual maintenance and dues fees. In contrast, traditional vacation rentals offer more flexibility and often shorter-term commitment but may require a higher upfront cost.
While a timeshare can serve a particular purpose when reasonably priced, it is not a good investment. Timeshare owners typically pay more than they expect to use their units. When they finally decide to sell it, they often lose thousands of dollars. There is rarely a positive return on profit from this investment.
If you are a timeshare owner who has further concerns or questions, contact a representative at Wesley Financial Group, LLC, today. Our team of experienced professionals can help you navigate the often confusing and complicated process of timeshare cancellation services. We have helped thousands of people, and we may be able to help you too. Give us a call today for a free consultation.