The post How to Get Out of a Timeshare: Exit Strategies that Work appeared first on Club Thrifty.
So, you bought a timeshare. Now what?
By now, you’ve probably realized that it wasn’t the best investment and you’re wondering what to do with it. With annual fees, maintenance costs, and other expenses that can add up to thousands of dollars a year, selling it might be your best option.
How to sell a timeshare depends on what type you bought and the specific details of your contract. Since you’ve already spent a considerable amount of money on it, you want to sell it quickly and without sacrificing any more of your hard-earned cash.
How People Get Roped into Buying Timeshares
It’s easy to get caught up in the excitement of owning a little piece paradise. The lure of having a place you can escape to without the expense or maintenance of buying a vacation home sounds great, right?
Except the idea that a timeshare is an affordable way to enjoy a vacation isn’t exactly right.
Even though there are better – and cheaper – options when it comes to taking a trip, there are still 9.1 million households in the U.S. that own a timeshare.
So, if it isn’t a good deal, why do people buy timeshares?
- Brand-name credibility – Household names have started selling timeshares, which adds a layer of credibility to the sales process. With big players like Disney, Four Seasons, Hilton, Hyatt, Marriott, Wyndham, Starwood, and Ritz-Carlton selling timeshares, people seem to be more comfortable sinking thousands into buying one.
- Bit by the travel bug – Families are looking for a vacation that’s packed with amenities and experiences to truly unwind. Most timeshare plans now are flexible and allow you to use your time at more than one resort within a brand. But, there are still restrictions about when and where you can choose to take your vacation.
- Perceived money-making opportunities – When you’re not using your timeshare, you might have the option to rent it out. If yours has low maintenance fees, you could make money by renting it for more than your costs. Of course, that’s assuming you could find someone who wants to rent it.
While traveling, vacationers tend to leave reality at home. There’s a “travel high” that takes over and your emotions and desire for pleasure influence your decisions. This is why people tend to eat more, sleep more, and spend more money while on vacation.
And, if you’re not careful, your emotions can convince you that buying a timeshare is a good idea.
Why Timeshares are a Bad Investment
In the early days of timeshares, resorts and developers would bribe you with free show tickets, free vacation packages, and unlimited lunch buffets in exchange for your attendance at a sales presentation. These would generally last for hours and include high-pressure sales tactics to convince you to buy a timeshare.
These days, you don’t have to visit the resort or sit through a lengthy presentation if you don’t want to. There’s more transparency in the buying process, and you can talk with live agents by phone or online chat. Still, the industry tends to target hopeful vacationers who have their guard down.
So, why are timeshares typically a bad investment? Here are a few reasons to avoid them.
1) Never-Ending Fees
It costs you a considerable amount of money to buy a timeshare. There’s an upfront fee to purchase it, and there are maintenance fees and other costs throughout the year.
Depending on the size of the unit, location, and condition of the property, these fees span quite a range. According to the American Resort Development Association, the average sales price is $22,180. Plus, annual maintenance fees average several hundred dollars each year. Even worse, maintenance fees have historically increased each year, as well!
2) Huge Resale Market
After spending tens of thousands to buy your timeshare, you’re considered lucky if you can sell it at all. The resale pool is diluted with millions of other sellers who are trying to unload their timeshare.
Right now, there are over a thousand listings for timeshares on eBay, and many of them have prices of $1 or less. Could you imagine buying something for $22,180 that has a resale value of less than a dollar?
3) No Return on Your Money
Instead of buying a timeshare, you could invest that $22,180. If you did and added the $980 average annual fee to it each year, you could earn a significant amount of money in interest. After ten years, assuming a modest 7% return, you’d have $57,171.54, which is more than double the money you started with.
If you really want a piece of property, you could learn how to invest in real estate and make additional income that way as well. Whether you invest in rental property or a vacation property/rental, when you go to sell, you’ll have something that holds at least some value – and hopefully much more!
4) You’re Not in Control
After you sign on the dotted line, you only own a tiny slice of the vacation property. You’ll quickly find that your “prepaid” paradise vacation is tough to schedule because you have to share ownership. It’s hard enough to plan a vacation that fits your busy schedule, but with a timeshare, you often have to plan your travel around the schedules of all of the other owners, too.
Options to Get Rid of My Timeshare
When timeshare ownership doesn’t fit your family situation anymore, you might consider selling it. How to sell your timeshare depends on your contract and you need to become very familiar with the terms.
Sometimes the resort will buy it back from you, but that’s pretty rare. The easiest option is to use a timeshare exit company like Newton Group Transfers. These professional companies know the industry and can guide you to a solution that best fits your specific situation.
If you want to talk with someone who can review your situation, consider calling Newton Group at 888-564-7048.
Resorts generally don’t want to get involved in the resale process. As long as you’re paying your annual fees, the resort is happy to collect them from you. However, they can turn you over to a collection agency if you stop paying, and that will hurt your credit score.
If you’re struggling to pay your fees or want out of your timeshare contract, checking with the resort is a good first option. They may not allow you to surrender your timeshare, but they might have a program to help owners with the resale process.
For Sale by Owner
No rule says you can’t sell your timeshare on your own. People do it all the time, and there are tons of timeshares listed on eBay and Craigslist. Plus, just like there are specialized websites for selling a house by owner, you can use sites that specialize in for-sale-by-owner timeshares, too.
Keep in mind, however, that a for-sale-by-owner transaction requires specialized knowledge of pricing, the market, and the legal aspects of how to properly transfer the timeshare. When you sell it yourself, you’re on your own to negotiate with your buyer and transfer ownership.
There are also scams that target people looking for timeshare exits, and you need to watch for these while looking for a buyer. Make sure you know who you’re working with before you exchange money or ownership rights.
1. Can you sell your timeshare back to the resort? – If you don’t owe any money on the unit and you’re an owner in good standing, the resort might take it back from you. They’re under no obligation to do so, however, and you’re stuck negotiating with the resort to get a deal you’re happy with. Keep in mind, there have actually been cases of people who went back to the resort to end their timeshare agreement and ended up owning more timeshare than they started with! Remember, they make money selling timeshares, not getting people out of them.
Also remember, isn’t in your best interest to stop paying your maintenance fees, no matter how badly you want out of your agreement. If you do, the resort can report you to a collection agency, and you’ll eventually have your wages garnished or be foreclosed on. Not only will this damage your credit, but you’ll likely have to pay a lot of legal fees, too.
2. Can I sell my timeshare if I still owe money? – Sometimes, family circumstances or your finances change and you can’t afford the monthly payments or maintenance fees. It becomes a more significant challenge to sell a timeshare when you still owe money because you might have to pay the balance in full before you can transfer ownership.
Find out if the property secures the mortgage on your timeshare or if it’s a personal loan. Often, you won’t have to pay off a personal loan before you sell. You can also contact the lender to ask if they will allow a short-sale of the timeshare. With a short-sale, you might still have to pay an outstanding balance, but at least you’ll be free of the annual maintenance fees.
3. Are there consequences if I stop paying my timeshare? – When you stop paying your timeshare, your dreams of a vacation can turn into a nightmare. You’ll face collections by the timeshare management company and could end up being sued in court for failure to pay.
For right-to-use timeshares, the company can sue you in civil court. If the judge issues a judgment for payment, the management company can garnish your wages or take the money directly from your bank account.
Deeded timeshare owners can face foreclosure, which is a court process that can result in your timeshare being sold at auction. When that happens, you’ll have to pay the difference of what you owed and what it was sold for, plus added fees.
4. Can a timeshare contract be canceled? – Generally, a timeshare contract cannot be canceled by the timeshare owner after the rescission period has ended. There are a few exceptions, but you have to act fast. If you buy one and have buyer’s remorse, most states have laws that allow you to cancel your contract legally.
In this situation, your contract will specify the number of days you have to cancel the contract. If it doesn’t, you can check your state’s laws or contact an attorney or timeshare broker for help. Remember: To cancel your timeshare, you must not hesitate because you only have a few days to take action.
Alternatives to Buying a Timeshare
You can get a great vacation full of amenities and experiences even without paying for a timeshare. If you prefer to vacation in the same place, you can buy a vacation home or condo, which may end up being a much better investment.
If you want to travel to lots of different locations or if buying a vacation property isn’t in your budget, you can save money by reserving a hotel. Or, if you’d rather have access to a kitchen and have more room to move around, you can always book a condo through VRBO or Airbnb.
When you want to sell your timeshare, it’s hard to know how to get out safely. You can start by reading through and becoming familiar with your timeshare contract to understand your options. Then, you can decide to sell it yourself or contact a timeshare broker to handle the process for you.
Have you ever sold a timeshare or gotten out of one? What kind of experience did you have? Share with us in the comments below!
The post How to Get Out of a Timeshare: Exit Strategies that Work appeared first on Club Thrifty.