Last week I wrote about our encounter with a timeshare sales pitch from Diamond Resorts International (DRI) in beautiful Lake Tahoe (see below). Here’s the bottom line: The offer price for the timeshare was, effectively, between $420 to $642 per night. I rented the unit for $85 per night from a broker. Fairness Doctrine Caveat: Clearly there are ways to cut this price. First, I suspect that if I had managed to avoid gasping audibly at the price and been able instead to say something like, “Gee, I’d love to buy, but I’m thinking about Marriott instead,” the price would have come down. I’m not that good an actor. Second, there are angles to be played with timeshares. If you book closer to your planned visit (thus with less certainty of getting your first choice), our salesman said that the point requirement is cut in half (Oooh! Only 2 ½ times what I actually paid!). And they were going to throw in a couple of weeks someplace-or-other for free. And probably a microwave oven or a set of grill tools.
I can imagine that some timeshares could make sense for some people. A lot depends on what you usually pay and where you like to visit. And owning a timeshare ensures that you’ll keep taking those vacations, if you are looking for an excuse.
But think hard before signing up. DRI probably calls their business “Diamond” Resorts because, like diamonds, timeshares are forever. A timeshare is a real estate transaction. In theory, you should be able to resell the timeshare just like you might resell a home or a condo. The problem is that nobody is buying.
Do an Internet search on “buy timeshare” and you’ll find countless sites like BuyaTimeshare.com or BuyAndSellTimeshares.com. Better, consult one of the timeshare user groups, e.g. tugbbs.com or timeshareforums.com. You’ll be surprised at just how many of these are for sale and, at the user group sites, will be able to get advice on specific developers and an informed perspective on the challenges (and, to be fair, opportunities).
Another place to look is Ebay. I checked the hundreds of timeshares on offer there. By selecting “completed listings,” I learned that most don’t sell. One of the few that did sell in the past month was a Diamond property in Sedona, Arizona, Los Abrigados Resort and Spa. The price? $1.
This purchase entitles the user to 6,500 Diamond points annually. Now while the devilish details are always complicated with timeshares, remember that Diamond Resorts just offered to sell me 5,500 points for $26,923. Hmm—Diamond points seem to be a depreciating asset! According to the current DRI Reservations Directory, this will buy you a week in a 1 bedroom at high season in Sedona or two weeks in a studio efficiency. If the claims made in this Ebay listing are correct, (annual maintenance fee is $767; Diamond club dues are $134; one-time $295 transfer fee), $1 is a reasonable price to pay. In effect, the seller is offloading the obligation to pay the maintenance fee and membership dues and was able to find someone who didn’t have to be paid to assume it.
Nothing emphasizes the negligible resale value of timeshares better than the “Optional Free Bonus!” offered with the sale just mentioned: “The lucky winner of this auction will have the opportunity to choose a second timeshare from a large inventory of great timeshares (including many great POINTS timeshares) absolutely FREE! That’s right…a FREE Timeshare…and we even pay the closing costs. No Gimmicks! No Kidding! AND NOW, we are giving away some 2011 maintenance fees.” Sounds like Ebay needs to be able to accept negative prices—i.e. “What do I have to pay you to take this off my hands?”
You can back out of a timeshare purchase, although the “rescission period” varies by state (from 15 days in Alaska to only 3 days in Massachusetts or Vermont). I would have had 7 days in Lake Tahoe, as the resort is in California. Move it a mile east and it would have been governed by Nevada law, which gives buyers only 5 days. Once you’re past this “cooling off” period, the only way out is to stop paying the annual maintenance fee/membership and force a foreclosure. That leaves a stain on your credit record (but better yours than that of your heirs!).
Why do so many people drink the timeshare Kool-Aid? The sales pitch is intense, for one thing. We were told upfront that there were a number of lucrative components of the deal that were only available if we signed up that day. The salesman was remarkably brash about this. “Why do we do things this way? Because it works. Disney tried to give people time to think before they signed up and sales dropped like a rock.” Odd sales pitch—“If I give you time to think this over, I’ll never see you again.”
The pitch plays on our vanity (not to mention weak math skills). The video we were compelled to watch (to earn our ski passes) was reminiscent of that ad campaign for L’Oreal beauty products—“because you’re worth it.” A timeshare offers “the simplicity, choice, and comfort that each and every one of you deserves” and “You haven’t bought a timeshare; you’ve bought a lifestyle.” While many of the resort images showed buff and tanned 30 somethings with impossibly beautiful children, the target audience is clearly the Baby Boomer—happy, plump and deeply tanned timeshare owners told us how this is “our legacy to our grandchildren” and “the start of the rest of our lives.”
So if you own one (or more—a friend of my mother’s owns three), enjoy your vacations! Consider whether your heirs will regard the timeshare (and the annual fee—which, in the case of DRI, could be increased by the “homeowners association” by as much as 25% per year) as a gift or a burden. If you don’t own one, muster all of your sales resistance before you’re enticed to listen to a sales presentation. They play to win.
Want to rent a timeshare? My Lake Tahoe bargain was brokered by http://www.aztimesharerentals.com/
http://www.redweek.com/ is a popular consolidating site for both rentals and sales.
ORIGINALLY published in Rochester Business Journal 4/22/11