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The Truth About Timeshare Resales
by Doug Milbrath, CMO

Published

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There is a lot of misinformation on the internet. The more one uses the internet, the clearer this becomes. While some of this misinformation may be deliberate, most of it is innocent; a manifestation of the democratic nature of the internet, where everyone has a voice.

The topic of timeshare (and timeshare resales) has literally millions of webpages dedicated to it, with nearly every possible viewpoint represented. In recent years, some of the more popular pages about timeshare have been those that purport to offer "the truth" about selling timeshare. I can understand how this could be an appealing concept to many timeshare owners - learning "the truth" in one sitting. Invariably, "the truth" seems to be a rather bitter pill to swallow: Your timeshare is worth 90% less than you paid, timeshare resale companies are a scam, and selling timeshare is difficult if not impossible. It is an abrasive and cynical message to be sure, and perhaps that's why it's believable to those looking for easy answers. But what if "the truth" is a bit more complicated?

There are over 5,000 different timeshare resorts worldwide; some are still under construction, some are new, some have long since sold out, and some still make sales daily. It is an absurdity to think that any one version of "the truth" applies to all of these properties, or even to a majority of them. And while it would be nice to distill the multitude of truths about timeshare into a catchy webpage or blog post, it would not be intellectually honest. What I will offer here are some proven ideas about the timeshare market that can help guide you toward your truth, as is relates to the timeshare you own or want to sell.

Realtors are Great (But Most Won't Sell Timeshare)

Since timeshares are real estate, only a licensed Real Estate Broker can sell them for you on a commission basis. Many supposed "experts" will tell you to only sell your timeshare through a commissioned broker, but very few commission brokers will list timeshares. (By telling you to only sell your timeshare via nonexistent means, these experts are actually telling you not to sell your timeshare.)

The real estate brokerage business model is not compatible with most timeshares, and thus there is no economic incentive for a broker to enter the timeshare arena. That said, if you can find a Real Estate Broker that will list your timeshare at a fair price, consider yourself lucky and give it a shot. Otherwise, you will have to sell the timeshare yourself - which will mean paying to advertise it for sale.

Developer Sales Drive Resale Demand

Timeshare is not a product that "sells itself." Resort Developers spend a fortune to bring families to their resorts, where skilled salespeople show them the property and explain its features and benefits. It is this process that creates the desire on the part of consumers to buy a timeshare, and many will buy right then and there. Many others will leave without buying, but still have a serious interest in doing so - these people make up the bulk of resale buyers. As long as developer sales continue at your resort, there will continue to be people shopping for resale deals. (You could say the demand trickles-down to the resale market.)

Generally, once a resort is "sold-out" of inventory, developer sales will end permanently. In the absence of both salespeople and consumers, the only people visiting the resort will be existing owners and exchangers who own timeshare elsewhere. Demand for resales plummets. Many of the people who complain about how difficult it is to sell a timeshare are telling the truth, but they fail to recognize why it is true; because they waited until after the resort had "sold-out" and now there are no buyers. Had these same people acted quicker, their "truth" would have been much different. (If you want to sell, the sooner you start the better.)

The Real Resale Value vs. The Right-Now Resale Value

What is your timeshare really worth? Timeshares cannot be accurately appraised, so their value is inherently subjective. According to some quite popular websites, "the truth" is that your timeshare is pretty much worthless. What is rarely mentioned is the element of time: how fast you need the timeshare sold. If you need your timeshare sold right now, then you may have to sell cheap.

My wife and I own a home in the Tudor Revival style, which we happen to like. As is common in this style there are some polarizing features: the second floor hangs out asymmetrically over the first, the roof is steeply pitched, and the windows have diamond pattern grills. Should we decided to sell, I'm sure we would find a buyer - but it would not be fast, as the architectural style of our home appeals to only a small minority of potential buyers. In fact, when we bought our home it had been on the market for over a year - despite having numerous advantages compared to other listings. Should we have to sell it right now, we'd likely take a substantial loss. Of course, no one sells their home that way, and no one should sell their timeshare that way either.

Consider a resort that sells fixed weeks (52 annually) and has a total of 3 floor-plans available: Buyers in this scenario are going to know which floor-plan they want, and they will likely have a range of 2-3 weeks that would be acceptable, if not only 1 week they prefer. An owner trying to sell 1 week at this resort may have it "priced right" and advertised effectively, but never more than 2% of all available buyers at this resort are going to be a good fit. It's important not to misunderstand this situation: The fact that there are few "qualified" buyers (qualified in the sense of wanting the exact week and floor-plan being sold) does not diminish the value of what's being sold, except in the mind of the seller. What is does mean is that predicting the time any 1 timeshare will take to sell is hard to do, if not impossible.

Assuming there are still developer sales going on at your resort, your timeshare is probably worth perhaps 20-30% less than the developer's current price - on a long enough timeline. Only 6% of Americans own timeshare, so it's still a niche market. The Truth is that it may take a few weeks or a few years for the right buyer to come along - given, on average, you have over $20,000 invested, as long it sells as fast as possible does it really matter how long? The difference in the real resale value and the right now resale value could be substantial!

Discovering Your Truth

It would be nice if understanding timeshare resales or selling your timeshare was simple, but it's not. "The Truth" cannot be summed up in a few paragraphs, or by a few key points that apply to all owners equally - but that does not mean there is no objective truth at all. I've done my best in this post to share some truths about the actual timeshare resale market; things I've learned over nearly 20 years working in the industry. Relating these truths to your specific circumstances is something only you can do, but you can do it. There is no need to buy-in to a negative, incorrect, and unempowering "truth" wherein you lose your shirt when you sell the timeshare. Think smart and walk away a winner!

 

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