Prospective buyers should not purchase a timeshare with the intention of of making a profit. Due to initial marketing costs, resale prices rarely appreciate to the point where a profit can be made. Vacation ownership is best suited for those people who want to invest in the idea of providing luxurious vacations for themselves and their families. Over time, this works out to be a cost-saving way to enjoy this style of vacationing. On the average, it takes approximately nine years to recoup the investment spent on purchasing a timeshare. The educated purchaser, however, can literally save thousands of dollars and "break even" with his investment much sooner.
When you decide to buy timeshare, you need to be aware of what costs are involved. Apart from your purchase price, (including closing costs), you will also be responsible for taxes, an annual maintenance fee and possible club fees. These annual fees normally range from $400 - $700, with some running even higher! If you want to belong to an exchange company, you will also have an annual subscription fee (approximately $xx - $xx per year). Each time you exchange your time, there is a processing fee to pay. These fees range from $xx to $xxx, depending upon what type of exchange is made (i.e. domestic or international).
The most important factor in deciding what "timeshare mix" is right for you is determined quite simply by how and where you plan your vacations. Do you plan far in advance? Do you like to go to popular destinations at peak times, such as Cape Cod in the summer, Vail in the winter, etc.? Can you travel only when your children are out of school? If this is the case, you will do best by purchasing time in high demand at an upscale resort, where and when yo like to travel most. Be prepared to pay anywhere from $5,000 to more than $20,000 for a timeshare at these prime destinations. According to the American Resort Development Association (ARDA), the average sales price of a new timeshare interval in 2008 was $20,152.
In reality, the cost of a deeded timeshare can range from $100 to over $40,000. The major variables in price include the desirability of location, the week of the year that you own, and what size your unit is (studio, 1, 2, or 3 bedroom).
The benefit of owning prime time at a prime resort is knowing that you have that time guaranteed for yourself, or if you choose to exchange that week, priority is given to you in the exchange system to fulfill your trade request when you plan far in advance.
Are you on the other end of the spectrum (or somewhere in between)? Can you travel on short notice? Are yo willing to be flexible on your vacation destinations? Can you travel when it's not peak season? If you can answer "yes" to these questions (at least for some of your vacation trips), then your goal should be to find a lower priced week (many can be found starting as low as $100) and exchange on short notice.
When purchasing your time, there are a number of sources to choose from. Resort developers most always operate their own sales programs. You might have been approached by an "OPC" (off premise contact) to solicit your attendance at a timeshare presentation. They most often offer an inducement, such as a free dinner or area attraction tickets to get you to attend. Other developer marketing methods include offers by mail, telemarketing programs, and owner referrals. Of all qualified prospects who tour resorts, historically 8 - 10% will purchase timeshare directly from the developer. Considering the costs of incentives used to lure all prospects to take that sales tour, paying the OPC for all tours generated, and the salesperson's commission, marketing costs usually account for 40 - 50% of the sales price!
Regardless of original sales price, prime weeks can be purchased at a discount. In timeshare studies, it has been shown that at any given time approximately 13% of timeshare owners are wanting to sell their week(s). That means that there are currently over 250,000 owners in the U.s. alone that want to sell their timeshare! Be on the lookout for distressed sellers. Check classified ads, estate sales, auctions, licensed timeshare resale companies, and with other timeshare owners. Look in the telephone directory in resort areas to locate the licensed resale companies. One word of caution: be aware that there may be a lien against a week if there are taxes and maintenance fees owed by the seller. Verify with the resort the current obligations of any week that you are considering purchasing. The title search will also reveal any outstanding liens against a week. It is always advisable to purchase title insurance, and use a title company that is in the area of your resort. They are familiar with any nuances to facilitate a smooth transfer of title.
Some resorts do operate a resale program for their owners, however most of them concentrate more on selling the developer's inventory rather than resale weeks. The costs and legal complexities of operating a resale program often prevent smaller resorts from running a resale program for their owners.
When a resort sells out, usually the day-to-day operations are turned over to a Home Owners Association (HOA). Many times the final available inventory (as well as foreclosures) will be offered at fire-sale prices. Deeded weeks have been known to be sold by resorts for as little as a few hundred dollars for a studio unit in off-season. Something like this can be your perfect entry to the world of enjoying luxurious vacations!
To further reduce your cost, a week may be purchased jointly with a friend, where you can alternate use of the week. This will allow both of you to take advantage of bonus weeks. It is advisable that both owners establish separate memberships with the exchange company for maximum flexibility and so that both can take advantage of all special offers. You should not purchase timeshare solely for the bonus weeks. While being a super perk available to members, the bonus week prices and the program itself are subject to change.
If you can travel on short notice (from 60 days or less advance notice, depending upon the exchange company), and are flexible on where you will consider vacationing, this is the best and most economical way for you to enjoy the benefits of vacation ownership. One word of caution on where you decide to purchase...make sure that the resort you are considering is in good standing with its affiliated exchange company. If a resort does not maintain quality standards that provide an adequate vacation experience, exchange privileges can be suspended or terminated. Ask to speak with other owners. Find out from them if the resort has been well maintained and if management is responsive to them. You can also call the affiliated exchange company to verify the resort's standing.