I've owned and used my timeshare for many years, but am getting to the point where it's time to move on and consider other options. I've looked into selling, but don't know whom to trust, since I get weekly out-of-the-blue phone calls from strangers who are offering to buy my timeshare or list it for sale. I know there are lots of resale scams out there, so what suggestions can you offer? How can I avoid getting ripped off?
This is an extremely serious question faced by most, if not all, timeshare owners. Over time, just about every single owner gets a call, if not several, from companies offering a deal too good to be true: the caller says they have a buyer for your timeshare or will promise to find one if you will only....pay them $1,500 to $5,000 for the privilege of getting rid of your timeshare.
RedWeek gets calls and emails about this kind of situation every day of the week. To answer these questions, we interviewed industry officials, including our own Gary Prado, RedWeek's vice president of business development. As a result of our research, here's what we can offer owners so they can protect themselves from unwanted — and maybe illegal — solicitations.
But first, a reality check. Most blind telephone solicitations are fraudulent efforts designed to part you from your money. According to law enforcement agencies that track illegal rackets, timeshare solicitation scams are more rampant, and sophisticated, today than at any time in the last decade. These companies used to send postcards to owners offering "guaranteed" programs to divest your timeshare. Today, they call owners posing as legitimate companies --- occasionally, even pretending to be companies you're familiar with, including RedWeek.com. Put another way, the scammers have gotten more cunning while law enforcement agencies, state and federal, launch crackdowns on the most egregious offenders.
The developer community, whose reputation is harmed by the illegal — and highly publicized — activities of resale scammers, has taken aggressive legal steps in the last year to attack several high-profile lawyers and marketing companies that buy Internet, TV and radio ads offering to help people get out of their contracts. To be fair, there are many LEGITIMATE companies that advertise resale services to timeshare owners, but they appear to be outnumbered, at least in terms of visibility, by the bad actors.
What's the Difference Between an "Upfront Fee" Firm and an Advertising Company?
Resale companies tend to use one of two business models: The first are so-called "upfront fee" companies that offer resale services in exchange for an upfront fee that can range from $1,000 to $3,000, or more. They generally promise to find a buyer for your timeshare, and provide advertising for a six-month or yearlong listing. Sometimes they also offer to buy the timeshare if they are unable, after a set period of time, to find a buyer for your interval. In many cases, unfortunately, these companies do not find a buyer, leaving the owner with nothing but a bill for the company's services. In worse cases, scammers transfer timeshares to a phony company, known as a Viking Ship, where it stays, like a ghost. Months later, the owner will get his or her next maintenance fee bill — and recognize that they are still the legal owner of their timeshare. They were scammed.
Most industry experts advise owners to avoid working with upfront fee companies because there is no guarantee that the upfront fees — which may equal a year or two of future maintenance fees — will lead to a successful resale.
"If a company asks for a large upfront fee to get you out of your (timeshare) title or says they have a buyer for your week, that is normally a big red flag that you should run away from," Prado said.
The second timeshare resale model involves companies that provide advertising and/or listing services to owners, such as RedWeek.com. Some of RedWeek's competitors charge $1,000 to $1,700 for an Internet real estate advertisement, with the money supposedly covering marketing costs. RedWeek.com, in contrast, charges 59.99 for a one-year do-it-yourself ad OR $125 + $899 or 3% of price when sold for full-service, where RedWeek handles all the paperwork and ensures a safe transaction. This low-cost and safeguarded model helps explain the organic growth of RedWeek's subscriber base, which grew from 2.3 million to 2.5 million subscribers during the past year. RedWeek's advertising service, moreover, is much more cost-effective for owners who want to work with a trusted source — and reach millions of visitors a year — instead of a company they just heard about on a radio or Internet ad. One final difference between RedWeek and other resale services that may be significant for owners: RedWeek will never call owners soliciting their business for resales.
Take These Steps to Protect Your Timeshare (and your credit)
- Call your timeshare resort, or developer owner services, to find out if they have an active resale or exit program that may fit your lifestyle and goals. For example, if you cannot sell your timeshare in a depressed resale market — and just want out — deeding back your timeshare to an HOA or branded resort may be an acceptable exit outcome. It may also provide the most peace of mind. Most brand-name timeshare companies have buy-back or deed-back programs, but they are selective: they don't take back all intervals or resorts. Some legacy resorts offer take-back programs if they have robust resale and rental programs. Many, however, won't take back units because the HOA can't afford to absorb the maintenance obligations.
- Do your research, on RedWeek, TUG and other owner forums, to investigate the value of your timeshare unit on the secondary market. Licensed realtors who specialize in timeshares will also provide a reasonable assessment of your interval's resale value. Also, do a Google search on anyone or any company that you're considering working with. If a company does not list its headquarters, phone number and names of executives on its website, be suspicious and ask questions before you agree to any contract.
- If you list your unit but have trouble selling, consider renting, on RedWeek or other legitimate sites, to help offset your maintenance fees. RedWeek charges a nominal $29.99 fee for a six-month advertisement, which is usually long enough to test the unit's rental marketability. Most Continental US resorts rent within three-to-six months of checkin. Rentals in Hawaii and the Caribbean, including Aruba, usually rent six-to-nine months out as travelers time their reservations with long-distance airline discounts.
- Contact a licensed realtor for assistance listing and selling your unit. Realtors typically charge $500 to $1,500 commissions, or more (depending on sale price), but they also take care of any mental hassles that may be associated with the resale transaction.
- Owners who have difficulties with their timeshares — and want out — may also seek legal help from attorneys who specialize in handling disputes, negotiating exits with timeshare companies and, on occasion, filing suit on behalf of an owner. As one might expect, these are high-risk ventures that usually require an owner to pay an upfront legal fee of $3,000 or more. Internet news sites are rife with stories about owners who sued to get out of a timeshare, with many mixed results.
- Finally, owners should use all the tools at their disposal to sell their timeshare. If you use only Craigslist or eBay, for example, you'll be using sites that have become famous for getting co-opted by consumer scams and $1 timeshares sales. Bottom line: buyer and seller beware.
