When the consumers have made up their minds they want to buy a timeshare, it is time to also look at the timeshare resale market.
Timeshare has frequently been the subject of unfavourable comment, seldom directed towards standards or facilities, or indeed the concept, but rather to the somewhat unsavoury methods often employed in persuading people to purchase.
Buying or Selling timeshare between private individuals either through a resale company or privately.
Many owners want to sell their weeks roughly 10% of total ownership, the majority not because they don’t like it, but suffer a change in circumstances. Someone died, the husband left, they lost the job, or they are getting older and find it difficult to go un-escorted. Only a minority dislike it. Some bought on an impulse and cannot afford it, then it becomes a nightmare. Many thought they could make money by selling it and refuse to accept this is not the case.
Buyers who understand timeshare are aware of the lower prices offered by private individuals who need to sell and look to buy a resale rather than purchasing direct from the resort at a much higher price.
Consumers have two options –
Buy or sell timeshare privately
There are many difficulties involving a sale direct between two persons. The necessary checks on the property and the monetary side of the transaction.
Buy or sell through a timeshare resale company
Timeshare resale has grown over the last few years but it has not been healthy growth as it has come from price dumping and the emergence of many fringe operators. This affects all owners who wish to sell through resale companies, as to compete in the market place, these are obliged to persuade the sellers to lower prices to unacceptable levels. This is also a source of contention between developers and timeshare resale companies as it devalues developers stock.
A timeshare resale company cannot show the product, can only paint a beautiful picture of it and provide a good made up brochure as in many cases the resort does not have any or there are not available. It is essential that resorts are inspected so the resale companies have an idea of what is being offered and are satisfied that the standards are good. Some resorts suit one person, but not another. The timeshare resale broker should be able to advise the buyer what is best for them. There is a need to take photographs of the resort and general location to build up the resale company promotional material. It is a hard job and costly, but essential, particularly if trying to sell to first time buyers. In today’s world with the internet these major tasks have been eased with the emergence of resort website’s and exchange companies providing valuable information.
There is no excitement in the purchase. No pressure, it is all done by telephone, if the buyer visits the offices it is all very business like, no emotion. There are no margins to offer incentives of free holidays or colour TV’s. Resale buyers are educated in timeshare and are always shopping around. On site the buyers tend “not to know any better”. The disadvantage of buying a resale is that you may have less choice of apartments or location.
The result is that people expect a lower price just as in the “high street sales ” because the choice is limited and they are buying second hand. But that is not strictly true. The resorts maintain their standards with regular refurbishments and resale buyers have the advantage of buying into an established resort, in exactly the same unit as someone who bought the day before from the resort. There will come a time where developers stock is sold out and buyers will come to the resale market to get what they want.
There are no legal requirements for timeshare resale companies over monetary controls. During the last five years over 50 resale companies have gone out of business or disappeared, many with clients monies. Each of these has resulted in media coverage detrimental to Timeshare.
All resale companies should work with an Escrow account. This is the only way for buyers and sellers to be protected even if the reseller goes into bankruptcy. An Escrow account in this respect is where buyers monies are deposited in a clients account administered by a solicitor, bank, or trustee and are only released upon submission of the ownership document transferred into the name of the new owner(s). In an Escrow account, buyers pay direct to the solicitor, bank or trustee, so there is no temptation for resale companies to use clients monies as cash flow. Once in Escrow the monies cannot be withdrawn until completion of sale, when the vendor is paid and commission to the reseller released – or if the transfer is not concluded by the purchaser.
Most of the resale companies do not handle a full conveyance. The vendor assigns his certificate, passes it onto the reseller or their solicitor and the certificate goes to the buyer as it is received. The buyer will then transfer it himself or is provided with the details of someone who will do the transfer for them. At a price of course.
What is the risk here?
Maintenance fees, finance, banked weeks. The buyer finds himself in many cases with large arrears to pay or in some cases the timeshare has been repossessed. If the resort repossesses, they do not get the owners certificate back, so he can sell it on easily. Many vendors genuinely don’t know that the timeshare is no longer theirs.
Transfers of ownership have become extremely costly and complicated. Always insist on full conveyancing so you are safe.
In conclusion, when buying or selling timeshare using a resale company you should bear in mind a few points:
- Only deal with TATOC, RDO, ARDA or ATHOC members and CARE for rentals.
- Do they have an Escrow account administered by an independent solicitor, bank or trustee? Not a company clients account.
- Do they have offices or showrooms? Genuine, not accommodation addresses.
- Do they specialise purely in buying or selling Timeshare? Ensure resales are not a sideline of their business.
- Do they do their own legal work and not farm out to a third party?
- Do they regularly visit the timeshares on sale? It is very difficult to sell something of which you have virtually no knowledge, even with the added bonus of the internet.
So how do timeshare resales differ from direct selling? Quite simply, when you are coerced into a timeshare presentation (an experience many of us would like to forget) you are immediately under intense pressure to hand over your money and purchase on the spot. With a timeshare resale you have no financial obligation right up to exchange of contracts.
The advantages of timeshare resale are:
- The business is conducted by telephone, mail and email with no pressure whatsoever on the purchaser. You make up your mind in the privacy of your own home. Resellers act as estate agents for timeshare between existing owners who wish to sell and people who want to buy.
- A reputable re-seller will only sell resorts of good standing and recognised structure.
- Resorts offered are usually affiliated to RCI and Interval International or Dial an Exchange, giving the purchaser the same flexibility of exchanging holidays throughout the world.
- Buying – you can save 000’s! Resale prices are often less than 50% of developers price and purchasers get all the same benefits as buying on site.
- Unbiased advice. Re-sellers acting as an estate agent and not linked to any one resort or country, are able to offer a much wider and better choice of timeshare to suit the requirements with only the buyers interests in mind.
Although this is a very good way of buying timeshare, consumers must take precautions.
- You must be sure of the reputation and stability of the re-seller
- Re-seller should preferably be a member of TATOC or RDO. If anything goes wrong, the consumer has somewhere to go to with the problem and TATOC or RDO members have to follow a strict code of conduct, closely monitored by TATOC or RDO, certainly in regard to Resale Companies. TATOC and RDO keep a close eye on their performance and business practice.
- Ensure re-seller offers at least 10 days cooling off period.
- Monies are placed in an independent clients account in escrow, preferably in solicitors hands.
- Re-seller has a bonified conveyancing department or uses the service of a recognised Timeshare conveyancing firm.
Some major groups such as Marriotts have a right of first refusal if they feel the timeshare is being re-sold at an unreasonably low price. They will then refuse to transfer the ownership to the new owner.
This does not happen with other resorts where second hand buyers benefit from the low selling prices on the resale market, where supply and demand is much in the buyers favour.
Some price examples of bargain resales:
- Marriotts – 2 bedroom, Occupancy 6, High Season – £8,000 – £10,000
- Hilton – 1 bedroom, Occupancy 4, High Season – £3,000 – £4,000
- Clowance – 2 Bedroom, Occupancy 6, Mid Season – £2,500 – £3,500
- Harbour Club, Tenerife – 1 Bedroom, Occupancy 4, May – £900 – £1,500
- Royal Savoy, Madeira – Studio, Occupancy 2/4, High Season – £4,000 – £5,000
- Palm Beach Club – Studio, October – £500