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So you want to buy a timeshare?

If you' are new to timeshares, you most assuredly have a lot of questions. Read our advice on:

Why to Buy (or not buy!)

Before you buy a timeshare, it is important to determine why you are buying it! When you are on vacation and you see the free gift offers and sit through sales presentations, it's easy to fall into the mindset that owning vacation timeshares is for you! Before you commit to any timeshare purchase, ask yourself these questions:

Am I really going to use this time every year? Or is it just going to go unused like that boat or camper you have sitting in storage?

Can I afford to go on vacation every year? Just because accommodations are paid for, you still have maintenance fees, exchange membership fees, travel fees (airfare), car rental, etc. Also, can you afford the time off of work? Will you be able to rent the timeshare easily or have a friend use it when you aren't going to?

How much would equivalent accommodations cost me if I didn't buy or stay at this resort?

And consider these advantages:

After the timeshare is paid for, your yearly maintenance fees, taxes, and optional exchange membership fees replace your yearly hotel bill! The yearly fees are typically 1/3 to 1/5 or less than the hotel bill!

You get more than a hotel room. Depending on the units and locations, you get a spacious condo, fully equipped with almost everything you could ever need! Plus there are often many more amenities and activities to enjoy as well!

You can give your vacation time away to friends or business clients! Vacations make great gifts!

You can receive income from your unit if you rent it out!

Because condos include full kitchenettes, you save money by being able to cook meals rather than eating every meal at restaurants!

Resort owners can get bonus use and first chance at last-minute bargains! If you live nearby, some resorts allow use of facilities even when it's not your week!

When you shouldn't buy:

If you aren't going to use the time (either yourself, or giving it away), timeshare ownership will never be worthwhile! Renting can help, but it can be difficult to find renters. After yearly maintenance fees, and after paying an agent to help you rent your unit (if necessary), net proceeds can be small!

If you don't plan on owning your unit for several years. Timeshare ownership pays off every time you use it. Depending on how much you pay for the timeshare and how much you can get out of it, it can take years to generate a positive return! On average, it takes nine years to recoup the initial investment. When you buy through the resale market, you can cut this time much shorter!

If you intend to make a profit, you should NOT purchase a timeshare. Timeshare values rarely, if ever, go up in value. The resale market is so full of inventory, the demand just doesn't exist to push prices up! With new resorts going up constantly, the situation isn't likely to change anytime soon. Even if you purchase a unit far below resale market value, it can still take months to re-sell the unit.

Prospective buyers should not purchase a timeshare week with the intention of making a profit. Due to initial marketing costs, resale prices rarely appreciate to the point where a profit can be made. Vacation ownership is best suited for those people who want to invest in the idea of providing luxurious vacations for themselves and their families. Over time, this works out to be a cost-saving way to enjoy this style of vacationing. On the average, it takes approximately nine years to recover the investment spent on purchasing a timeshare week. The save timeshare buyer can literally save thousands of dollars and break even with his investment much sooner.

Who to Buy From

Most resorts do not have a resale program for owners who decide to sell their timeshares. It is simply too much overhead and the resorts have very little incentive to do this, although most have a bulletin board in their main office where owners can post flyers and notices. If a resort does offer timeshares for sale, they are typically brand new units sold at developer's prices.

When purchasing your time, there are a number of sources to choose from. Resort developers are some of the most aggressive timeshare sellers out there. They target tourists and lure them to sales presentations by offering free gifts, accommodations, dinners, tickets, etc. just for sitting through a sales presentation. Statistically, developers sell timeshares to 8-10% of the qualified people who sit through these presentations. The cost of the extensive promotion effort is added on to the timeshare price and typically accounts for 40-50% of the price! This makes developer's units way too expensive compared to the resale market.

In the resale market, the opportunities are endless. There are timeshares for sale pretty much everywhere you look, once you start looking for them. Check the ads in your local paper, or even talk to your realtor. Most realty companies, such as ERA, Century 21, and Coldwell Banker have divisions that deal with timeshares. The Internet has also made the buying and selling of resale timeshares much easier than it used to be. There are many sites, just like this one with thousands of ads to search through. Visit our links page for other websites to look for timeshare properties.

Online auctions, and special real life timeshare auctions are also great places to pick up timeshare properties. Give Yahoo auctions and Ebay a try also. But be careful, make sure you know what you are bidding on. Email the seller questions if you have any BEFORE bidding. Auctions are a great place to get bargains on timeshare properties!

What to Buy

In order to decide what timeshare to buy, it is important to decide how you want to use it. If you want to ensure the ability to use prime time at a prime location, it will be necessary to buy your timeshare at that resort. Be prepared to pay a little bit extra for this luxury.

If like most people, you don't wish to vacation at the same place every year and you want some variety, it is not as important where the timeshare is. Some people buy a timeshare and never stay at their home resort - they trade it every year! Keep in mind, simply buying a RED week is not enough! The quality of your trade will depend on the how easy it is for the exchange company to trade your week to someone else! The more time you give the exchange companies to exchange your weeks, coupled with the size, time, and location of your timeshare determines the tradability. The exchange companies have years of data to determine how tradable your unit is given those factors. They will not reveal this information, but you can talk to other resort owners and use reasoning to determine how tradable the unit might be. Size of unit, time, and location are the most important factors.

If deterministic time and location are not important, you may be able to save some money by purchasing less expensive weeks at less expensive resorts and trading for resorts all around the world. Your ability to trade for different resorts is directly proportional to the tradability of your resort as previously mentioned. If you can travel at the last minute or you travel to destinations during non-peak times, or if you're not too particular about where you vacation, you can probably trade your average resort for a prime resort!

Size Matters… Avoid studio units. Studio units are small and unattractive to most vacationers. With a small unit, you automatically eliminate a large portion of potential vacationers for renting and trading. 1 Bedrooms are not much better, but do offer more flexibility for sleeping arrangements.

Location Matters… When it comes time to sell or rent your timeshare, think how easy it will be. Would anyone at your office be interested in a timeshare on a Tennessee golf course? Or perhaps on a beach in Hawaii? Although you are not required to stay at the resort you purchase, it is best to pick one that you wouldn't mind staying at in the event that it cannot be rented or exchanged. Resorts that are close to where you live may offer extra benefits, such as last minute bargains and extra time, or let you use facilities even during weeks you don't own.

Beware of buying in built-up vacation locations such as Orlando. Orlando is the timeshare capital of the world. The abundance of timeshare properties in Orlando makes demand for Orlando timeshare low, and ease of trading into Orlando high! Because of the glut of timeshares in Orlando, it is not even possible to trade time at one Orlando timeshare for that in another! Your best bet is to buy a timeshare at a location other than Orlando and trade into Orlando as you please!

How much to Pay

First of all, never purchase a timeshare from a developer! You can save thousands of dollars by purchasing a unit in the resale market. Chances are there are already many resale units available for any particular resort!

In determining how much to pay, it is important to consider ALL of the costs involved. Besides the purchase price, there are also closing costs, annual taxes, and annual maintenance fees. Optionally, there are club fees and exchange service fees. Maintenance fees range from $200-500 or more, exchange company memberships are approximately $70 per year, and exchange processing fees range from about $100-150.

All resorts require owners to pay annual maintenance fees. If these fees are not paid, the resort can disallow usage of the unit (including trading and renting), place liens against the property, or turn your account over to a collections agency. This is especially important to consider if you buy a small unit in a low demand time period at a low demand resort. Even if you decide to disown the property, you may be liable for maintenance fees until you can get someone to take over responsibility.

Because of the large supply of timeshares in the resale market, a savvy shopper can usually find a great timeshare at a great price. Statistics show that more than 1 in 10 timeshare owners are desiring to sell their timeshares, which means there are hundreds of thousands of timeshares for sale! The biggest bargains can be found in distressed sales. Because of the difficulty of selling timeshares, distressed sellers will sell their weeks dirt cheap. Likewise, most non-distressed sellers will also take considerably less than their asking price, depending on how long they have been trying to sell their timeshare.

Like any real estate, before you buy, it is important to determine if there are any liens against the property or any back fees or taxes owed against it. Title insurance is a good idea as well. Make sure you know what you are getting in to!

OK, so how much should I spend???

We like to recommend that you spend no more than $6000 for a 2 bedroom Red week. Even if you can't get the resort you want for this price, you can easily buy one that will trade into it. It is likely you can find a $2000 red week that will trade just as easily. Be patient, keep your eyes peeled, and you can find these bargains! Of course, there are exceptions. There are some resorts and clubs that are worth more than $6000.

Avoid medium and low weeks. Never spend more than $1000 for these. The reason is simple - you can easily find a RED week for this price (or lower) that will trade as well if not better than the medium and low weeks.

What to Look For



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Last updated November 2, 2003

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