Lo those many months ago I wrote about my Aunt Liz’s rude awakening when she tried to sell her timeshare — the one she and her late husband purchased four years ago for more than $50,000… which we’ve discovered is now worth…. about one-tenth of that. If she’s lucky.
While researching ways to sell her timeshare I came across Brian Rogers, who runs the Timeshare Users Group website, an online bulletin board for timeshare owners. Earlier this week we went to Jacksonville, Florida to interview Brian, to turn this into a piece for Nightline.
"It’s not that people are unhappy with timeshares," he says. "It’s just that they later learn down the road when they try to sell it that their timeshare is worth next to nothing or nowhere near what they paid for it. Anywhere from a 50% to 99% depreciation."
Breathtaking. And, it turns out, most timeshares are ‘deeded,’ meaning you own them until you sell them, just like a house. So they must be passed on to your heirs when you die, just like a house. With all the attendant maintenance fees and taxes, just like a house. Only maybe, hopefully, your house has appreciated in value, while the timeshare just lies there dormant.
Tallking with Howard Nussbaum and Lou Ann Burney of the American Resort Developers Association (ASDA) shows me that I’m thinking about timeshares all wrong. They should NOT be purchased as a financial investment, Nussbaum tells me, and you’ll be in for a jolt if you think you’ll get your money back when you tire of it. "Think of it like an automobile," he says. "You buy it to use. It does have some residual value, you can sell it later, but it’s going to be depreciated. Its value comes from use." Beware of sales pitches that say otherwise, he adds. "An ethical seller would not say it’s an investment," according to Nussbaum.
Lou Ann Burney tells me, "It’s a ‘use’ product, not sold or intended to be a real estate investment." Howard Nussbaum asks if I expect to get a financial return from any vacation I take — do I return from my trip and expect to see my bank account fattened because of it? Um, no. Well, he says, that’s what a timeshare is like. "It’s a lifestyle investment with an enjoyment dividend, if I want to be cute about it."
Timeshare owners may not make money on their units, but the industry pulled in $10.6 billion dollars last year. In 2007, the average price of a two-bedroom unit that sleeps 6 was just over $19,000, with maintenance fees averaging $550 per year. Over the course of ten years, Nussbaum helpfully points out, the owner of that ‘average’ timeshare would have spent $25,500 on it. Imagine, he says, if the same person had stayed in a hotel at $300 a night and eaten 21 meals out in the course of that vacation week. He or she would have spent about $42,000 over those ten years. "It’s a better way to vacation," says Nussbaum, quoting the ARDA slogan.
According to ARDA statistics from its consumer advice website, timeshares have an 85% satisfaction rate. But are there people for whom timeshares just do not work? Plenty. "If you don’t take annual vacations, or your idea of vacation is sleeping on Grandma’s sofa, then timeshares aren’t for you," Nussbaum says. Just ask Nancie Boggs, my cousin Leigh’s cousin, who agreed to be interviewed for our story. She’s owned two timeshares, one on Maui and another in Cancun. Maui sold for close to the original price when she listed it, but Cancun… Well, that was another story. After a hurricane damaged the property in 2000, the development raised maintenance fees — Boggs says her $150 a month payment jumped to $500 a month. She tried to sell her week but got no takers. Tried to give it to a charity. No, thanks. She finally paid a company $2000 to take it off her hands.
"It turned out to be a horrible waste of my money," she says. "I would have done just as well to take a stack of money and just light a match to it."
Brian Rogers’ solution is for potential buyers to do what he did: buy secondhand. People (like Nancie) who want out are generally pretty desperate, and, as Howard Nussbaum delicately puts it, "The resale market is not as mature as the primary market." Meaning, there are lots of units listed on sites such as Ebay or TUG or Redweek.com or even Craigslist, to name a few. It may seem too good to be true (and you should vet carefully before signing or paying anything) but you can find the same thing someone else paid thousands of dollars for listed at a fraction of the original price.