Posted on May 26, 2023
Timeshares have been a popular option for decades for vacationers seeking more spacious and comfortable options for their holiday accommodations. They offer the luxury of owning a slice of paradise without the full financial commitment of buying a whole ownership vacation property outright. However, timeshares can be complex arrangements, so here are 5 things to know before you buy a timeshare.
A timeshare is basically a shared ownership model where multiple parties hold either a deeded ownership or right to use a vacation property, each for a designated period annually. While this arrangement may seem appealing for those who vacation regularly, it's important to understand that owning a timeshare is more akin to leasing rather than owning real estate in the traditional sense.
Especially with the growth of timeshare points programs, you're primarily buying the right to use a vacation property for a specific week or weeks per year, not necessarily the property itself. Even with deeded timeshare ownership, you can’t just change the furniture or the paint colors like you would with a vacation home.
Because of these differences, make sure your timeshare aligns with your vacation priorities. Consider the location and the amenities of the timeshare resort. Is it a place you'd be content to visit each year? Does it offer amenities and attractions that suit your interests and lifestyle?
Do you mainly vacation at the beach or in the mountains? Is a two-bedroom unit your preferred layout option or would a one-bedroom satisfy? Do you want a location closer to home for drive-to trips or is Hawaii the be-all-to-end-all? This is where points programs, such as Club Wyndham or Marriott Vacation Club, are a great option, which we’ll discuss later.
While the initial resort purchase price of a timeshare might seem manageable, it's vital to consider the resale market when choosing to buy a timeshare.
Most owners are introduced to the product through resort marketing programs, where they are toured through the facility and offered the chance to buy on the spot. The resort price carries a 50-60 percent markup to cover the marketing costs to get visitors onto the property, so those costs can be saved by buying timeshare resales. That’s thousands of dollars back into your pocket.
Keep in mind that the purchase price is just the beginning. The ongoing expenses include maintenance fees, which cover the general management and upkeep of the property and are an annual obligation. Utilities and property taxes are included in those fees, but special assessment fees can be levied for unexpected repairs or renovations, which can increase your financial commitment. This is why it is important to research the age of a resort and when the most recent renovations were conducted.
Exchange fees may also apply if you wish to exchange your timeshare week for another location through timeshare exchange companies like RCI, Interval International or 7Across. These additional costs should be a part of your calculations when looking for a timeshare.
One of the critical things to know before you buy a timeshare is understanding that your timeshare is a use product, so the longer you keep and use it, the more you benefit. Unlike traditional real estate, timeshares rarely appreciate in value, so the real value is in using it over a number of years, since the prorated cost of your annual vacations can far outweigh the cost of renting similar vacation accommodation every year.
A mistake buyers make is thinking they can buy a timeshare, use it for a few years, then sell it for a profit and move on. Timeshares are not structured that way and aren’t meant to be flipped, even though buying at significantly discounted resale prices may give that appearance.
It's important to enter the timeshare purchase with a long-term mindset rather than anticipating a quick and/or profitable exit.
Nearly every major hospitality brand with a timeshare program operates on a points-based system, offering owners greater flexibility. Instead of buying a specific week at a particular location, owners acquire points that can be used at different resorts and at various times of the year.
While this provides more flexibility, it can come with added complexity. Availability of popular locations and dates can be limited, especially during peak vacation seasons. Understanding how the points system works, such as advance booking windows, and whether it aligns with your vacation habits is key to making the most of this type of timeshare.
Timeshare points act as a type of vacation currency, with points used in the respective timeshare program to book accommodation from a variety of resorts within the program. For instance, Marriott Destinations points owners can use their points to stay in any of the 60 Marriott timeshare resorts in the network at any time of year, depending on availability. This type of flexibility goes far beyond the standard fixed week timeshare.
Even if you buy a timeshare week, flexibility is available through timeshare exchange companies where you can exchange the use of your week to choose from a selection of thousands of resorts around the world. Points owners can also use their points in exchange platforms as well, helping to alleviate some of the concerns regarding peak season availability.
Timeshare ownership documents can be complicated, with agreements filled with legal jargon that may be difficult for the average buyer to understand. As such, working with a timeshare resale broker who can help navigate the process is crucial. A licensed agent with experience in timeshare resales can help highlight any potential pitfalls, restrictive clauses, and financial obligations that may not be immediately apparent.
When working with agents such as ours, we do all the work so you don’t have to. A consultation is free, so the agent can go over your vacation priorities with you to help you find the right timeshare to buy. There are so many timeshares and points packages on the market that we can save you endless hours searching the internet since we know exactly how to find what you’re looking for.
Once our agent finds the right timeshare for sale, we begin the negotiation process and stay in contact with you until an agreement is reached. The agent handles the purchase and sale agreement, collects the deposit to be placed into an escrow account and works with a trusted closing company to complete the sale. You’ll be notified when the ownership is transferred into your name and the sale is closed.
Buying a timeshare can be a great option if you're a traveler who enjoys vacations every year. Now that you have the 5 things to know before you buy a timeshare - understanding what a timeshare really is, knowing the associated costs, keeping a long-term view, the flexibility of ownership, and the importance of broker advice - you will be well-equipped to make an informed decision.
Our agents are available to discuss your vacation needs with you and help answer any questions you may have about buying a timeshare. Call us on 877-624-6889 or send us your questions through our Contact Us page so we can help you with your decision.