We hate to be the bearer of bad news but selling a timeshare is extremely difficult and in some cases nearly impossible. This article may not be what you want to read, you won’t discover that there are buyers “lined up” to buy your weeks or points, or that this is the “best time ever to sell”, because those statements are simply not true. The main reason, put quite simply, supply and demand. The supply of timeshare resales greatly exceeds the demand. This has always been the case in the timeshare industry due to the fact that so few people even realise you can buy a timeshare resale, but those who do know the value, more on that later.
The vast majority of owners only discover (or even think about) selling a timeshare on the resale market when they either can’t get out of their ownership or try to recoup loss! It’s common knowledge that you can buy a used car, but for some reason people fail to discover that you can do the exact same thing with timeshares! Well that’s the theory, the reality is somewhat different.
After a period of ownership, many owners find out that what they thought was an asset is in fact a liability including, but not exclusively, ever increasing maintenance fees, sellers outnumber buyers by a huge margin. This has driven the prices of resales down to levels never before seen in the timeshare industry. Some timeshares have depreciated over 99% and it’s becoming more common for individuals to actually list their timeshares for free or in the case of American timeshare a single dollar in hopes that someone will take them off their hands! Even then there are no takers.
Is timeshare bought or sold?
In virtually 100% of cases timeshare is sold, if you are an owner, ask yourself, did you plan to buy a timeshare when you were cajoled into attending a presentation? We’re pretty certain that buying a timeshare whilst you were on holiday was the last thing on your mind but somehow you still bought one.
So if timeshare is sold and rarely purchased what chance is there of privately selling it? We mentioned buying cars earlier. As those who have had the pleasure of buying a brand new car will know, there is a loss of around 25 to 30% just after driving off the forecourt. With timeshare the loss may be nearer to 100% why should that be?
With a car, despite the initial loss, there is a real product that has a resale value. With timeshare there is no actual product, all you have purchased is the use of time, whether this be fixed weeks, floating weeks or points, you actually own nothing tangible.
Although fractional ownership is rapidly replacing traditional timeshare, unfortunately they fare no better in the resale market and are prone to much greater problems when wishing to sell. Our recent article on fractional ownership may be viewed here.
Perceived value
The absolute number one reason the majority of timeshares go unsold in the resale market is the owners are completely oblivious to the realistic value, couple this with the fact there are far more people looking to dump a timeshare than there are looking to buy one then it becomes understandable why the second hand market is stagnant. Some basic points you need to understand are as follows:
- No one cares that you paid tens of thousands of pounds (or more!) for your timeshare when you bought it!
- No one cares that you still owe thousands of pounds on your loan!
- No one cares what you think your timeshare is worth!
- When the product is the same buyers are simply going to buy the one priced the lowest.
Whilst these statements may sound harsh, they are totally true and realistic. The timeshare resale market is flooded with weeks and points that people want to offload. This market has always had more sellers than buyers by a significant factor. You don’t need an economics degree to remember the basic concept of supply and demand! When you have such a massive disparity between sellers and buyers, the market responds by driving the price down.
Why are resale values so low?
New timeshare owners quickly realise that they have massively overpaid for a product that has as much real value as thin air. Couple this with prohibitive and rising maintenance fees and a saturated resale market it then becomes easy to see why second hand values are so low. Another important point is the complete misunderstanding of what the timeshare owner actually purchased in the first place. Owners often believe that they own a much better product than they actually do.
When you buy a timeshare, you aren’t given instructions on how to use it. You’re not told that you can rent it out versus leaving it unused; you are given no explanation of the exchanging process in any detail. To draw an analogy, it’s like being handed the controls of an airplane and being told to work out how to fly it yourself! Factor in the untruths about what the reality of ownership means versus what was told at the sales presentation and you can start to see problems.
As we mentioned earlier no one buys a timeshare, they are always sold, but hold on a moment, despite the second hand market being awash with unsold timeshare, buyers in this market do their homework. These buyers know that all owners massively overpaid for the privilege of ownership, they also know the pitfalls of the system. Couple this with the fact that they have researched the maintenance fee problems and you can see that the value they are prepared to pay is nowhere the perceived value the owner believes.
Below we take a look at some American and European resales as listed on EBay. The interesting point that stands out is only on one single occasion, being Club Wyndham has any bids, if that bid succeeds at $560, we shudder to think how much the owner will lose:
Finally
Owners have many varied reasons for attempting to sell but as this article points out setting a low expected return then lowering it further is about the only way there may be a chance of a result. If selling is a last ditch attempt to get rid of what has become a nightmare then this route is really not a good idea. Remember whilst trying to sell, which in itself could take a long time, maintenance fees still need to be paid.
If you find yourself wanting out then exiting ownership is far more preferable than going down the sales avenue. We appreciate that many developers play hard ball when trying to simply cancel your contract but with specialist advice and assistance this hurdle may be overcome.
A final stark warning is that selling a timeshare will not extinguish any finance contract taken to facilitate the purchase.
We know this article can be depressing for those trying to sell their timeshares, but hopefully by knowing the truth about the situation; you will be able to act accordingly.
We hope you appreciate our transparent views on timeshare resales in order for you to know where you stand and what you can do. We think we have demonstrated that selling your timeshare is very unlikely and at best, if you do manage to sell, will never yield the sort of returns you may be expecting.
Just to finish on a slightly more positive note, certain developers with a first class reputation for value and exclusivity such as Disney Vacation Club do have buy back schemes so if you own with one of these developers you may strike lucky.
For more information regarding this article or assistance in any other timeshare related issues please contact the TCA on 01908 881058 or email: info@TimeshareConsumerAssociation.org.uk