Free Market Solutions for Timeshare Resale, Part I

This is the first installment in a 3 part series where we'll examine the current push for regulation of the timeshare resale industry, its effect on timeshare resale values, and some free market alternatives to regulation that allow for additional industry growth and improved residual values.

Anyone familiar with the timeshare resale industry knows it's come a long way over the years, but there are still problems with today's system. These include: rogue resale companies that use deceptive trade practices to solicit advertisers then provide little actual advertising, resorts that pitch the 'ability to sell' as a reason to buy timeshare while actively disparaging the resale market to potential buyers, and confused owners that vent frustrations with their resort and resale companies online, creating thousands of reasons for someone not to purchase timeshare resale at their resort.

Several States have already taken measures to regulate the timeshare resale market, and it's been suggested Federal laws and guidelines be established. While regulation is, at first glance, an appealing idea, its effect would be to freeze market conditions where they are now, and to reduce the market to its lowest common denominator. For instance if, in a highly regulated market, it could be verified that identical units at a given resort had sold for between $2,000 and $16,000 resale, the value of all potential timeshare resales at that resort would be $2,000, as that is the highest
guaranteed resale value.

It's also important to note the source of such regulation, as there are no existing State or Federal agencies specifically regulating the resale of timeshares. Who would create these regulations? Certainly not the individual timeshare owner.

Is self- regulation an option? Possibly, though this involves its own set of conflicts. Specifically, that the least ethical resale companies would be unlikely to participate in such a forum, and that self-regulation would inherently apply to either resale companies or developers, but not both; effectively solving only one part of a complex problem.

What approach represents a viable option to improve resale values and promote growth? In the next installments of this article, I'm going to suggest some effective free market solutions to the timeshare resale dilemma. These are steps that timeshare owners can begin to take immediately, using
existing free market controls to maintain resale values, and protect themselves from unscrupulous developers and resale companies alike.