Are timeshare developers deliberately hampering the resale market?

This month's Ask RedWeek article tackles this topic -- on the heels of the announcement from Disney Vacation Club regarding new restrictions on resale buyers. Which other brands do the same, and why?

Read the article now: Are Timeshare Developers Deliberately Hampering the Resale Market?

Thank you for your article on this subject. My first timeshare purchase was from a developer in Grand Cayman (the Reef Resort). We paid approximately $30,000 for each week. We subsequently purchased a Marriott week direct from the builder at a Florida location. I would never buy direct from the developer again, now that I know about the resale market. It doesn't matter what benefits you may be forfeiting -- they won't even come near to the thousands and thousands and thousands of extra dollars you will pay to purchase directly from the developer. Don't be intimidated by that. Do the math.

We recently had an incident where our friend decided to buy one on the resale market instead of from the developer. At our annual "update," the sales manager assured us that if a week was on the resale market and price "too low," the developer would not sign off (and would exercise his right to first refusal). Even though the resale week my friend ultimately purchased on RedWeek.com was one-tenth of what we paid, the developer promptly signed the papers. It's a threat because they are sooooooooo greedy and don't care one coohoots about your finances. Do what's good for you and your family's future -- important things of the future, like having a college education -- and don't worry about them "punishing you" for being wise and careful with your financial resources.

Timeshare selling by developers/builders is nothing more than "legalized bullying," and it desperately needs to stop when we've all been good customers and patrons to their resorts. It's very sad. These new travel clubs and easier access to good value in a vacation via the availability of the Internet, which didn't exist in 1968 when timeshare concept was developed, will ultimately force a change to these timeshare companies. But for now, they are desperate to continue their reselling these units over and over because people get old and "give them back." If they were honest, appreciative, and noble about a loyal patron who helped them finance their venture year after year by paying a huge upfront amount and ever-increasing maintenance fees, they would offer at least a nominal amount to people who have to or want to get out of their timeshare.

Sad industry for people who merely want a nice vacation. Do what's best for your finances. When you can pay one-tenth of the price, why would you pay 100 percent? You'll never get your money's worth. And the new upcoming generation will not buy into the firm commitment of a timeshare, so naturally they're going to try and do everything to make you buy from them.

The article's best advice was buy a timeshare at a resort you are sure you want to return to, so if your options are limited or restricted for a short time, you'll still have a vacation. But their biggest selling point is that you can trade around and have access to go to thousands of other resorts/locations. So they will need to be affiliated with an exchange group, and that will give you great access.

A secondary strong suggestion I would have in hindsight is to rent off RedWeek.com or other reputable vacation sites. You are not tied down to an ongoing financial commitment that could lead to difficulties if unforeseen circumstances arise. Timeshare companies do NOT allow you to get out of your maintenance fees whatsoever and will threaten you and your credit report if you don't pay. They're merciless in that regard. That is why people give their timeshares back to the resort.

I own four weeks on the resale market, and they don't even come near to $5,000. Look at the great value I got buying resale. Saved $25,000 or more times 4 weeks. I can do without a few amenities and privileges and discounts, having saved $100,000 not purchasing from the developer.

And once you are in a trading group, they have extra weeks for rent, too, at great deal. My favorite is Interval International because I've used them the most. I've been able to stay extra weeks in a Marriott in Orlando (not my home resort) in a two-bedroom for less than $300 for the whole week. DAE is another good trading company that my sister uses.

Hope this helps you with your decision. It's possible if you are a huge Disney fan and an avid-park attender that this advice might not be as applicable, but I doubt it. I still think it would apply. Don't let them make you feel like you are "dumb" and others are smarter than you because they are purchasing (and you are not). That's their favorite tactic.

From Gloria - Howell, MI

They should be required to put in writing the restrictions they use to make resale less valuable and less practicable to do. That written statement should be required to be signed by prospective buyers at the initial sales presentation by the developer. That could give them another opinion of the practices they engage in. When they squeal like pigs that this would kill their initial sales, then it's clear they depend on deception to get the things sold.

very thorough and thoughtful response. More power to you in making the resale market work for you. Your suggestions are all valid.

Disney is actually rather late with their restrictions. Almost all of the developers (who have property or points product in active sales) place restrictions on resales. None that I know of allow resale to count toward elite perks (some allow it with another qualified developer purchase but this requires and addition purchase usually in the $20,000 range). About half restrict resales from conversion to hotel points. Some (like DRI and Westgate) do everything they can to restrict almost every aspect of usage with resale weeks. DRI resale points in 80% of their collections can't even be used with an external exchange company. Westgate allows retail float week owners to reserve weeks during float period months before resale owners can reserve. They also charge more for resale owners to use their internal exchange and to do things like banking weeks.

So yes the answer is developers are deliberately hampering resale market because they would rather you purchase at full freight than to pay 60-100% less buying resale.

Its' obvious that everything in these contracts are written by the developer for the developer. There is absolutely nothing in these contracts that benefit the owners. Why do you think they sell these contracts at timeshare locations while people are in a euphoric state enjoying their vacations . If they advertised these products and gave people time to read over the paperwork sales would plummet.

They claim that it is real property when you try to get out of your contract but then they also state that it is not real estate. It's amazing how they manipulate the system. They lobby the law makers to pass laws that they write themselves and obviously it works. We have the best politicians that money can buy. Can you say " corporate greed " . This is capitalism at it's finest .