Timeshare
In many, many, many cases Timeshare on my scale of values is a scam.
DO YOUR RESEARCH BEFORE YOU BUY
See how many people want to get rid of it but cannot. This would be a very good indication of what you are just about to get into. If you've made a mistake of buying it and woke up within 7 days, know that you have a right to rescision. You can legally get out of your contract, but you have to act fast.
RESELL VALUE
It is nearly non-existent. According to what I’ve seen you’d be very lucky if you can sell your timeshare for 5% of what you bought it for. What I’ve also seen is that people cannot get rid of their timeshare even for free – it is hard enough to find someone who would take over your maintenance fees alone, not to mention to pay you anything for it. Do your research before even thinking of buying timeshare!
INVESTMENT VALUE
It is nearly non-existent. Add yearly maintenance fees (ever increasing), RCI fees, transaction fees and other fees to the initial amount you paid. After you add all the fees to your initial investment, you would be better off if you just invested the same amount almost anywhere and at least have a chance to get your money back.
CHEAPER FOR CASH THAN USING TIMESHARE
Let us say you are not holding your timeshare as an investment and you are actively using it. Does it really save you anything? My experience shows that it does not. You can almost always find much better deals around, again if you count all the fees and your original investment. Not to mention, that while you are getting a better deal elsewhere you are not locked in for life to your timeshare contract.
MAINTENANCE FEES
The maintenance fees are very often exorbitant. It looks OK at first, when you think of it as a yearly fee, but what many people forget about, is that you can use your “property” maybe only one week a year. So multiply your maintenance fee by 52 weeks and you will see how much your timeshare company really charges per year to maintain that property. I’ve seen it typically 10 times more expensive than maintenance fees in strata buildings in the same areas where timeshares are sold. Also Maintenance fees are almost never the only fees you are going to pay. Even if you already pay for maintenance, people are often charged for electricity, taxes and other hotel fees on top of the maintenance fees.
TRANSACTION FEES AND OTHER FEES
Beyond maintenance fees and RCI membership fees there are also transaction fees. Every time you use your points, you will be charged fees on top of your yearly RCI membership fee. Plus more fees if you use a property outside of your "Home Group".
You also have to pay more fees if you want to have someone else to use your points to let someone else to use your "own" property. Nevertheless the liability is still yours. If your friend damages something during his/her stay you will be responsible.
What is about exchange rate? I’ve seen cases when people were charged 35% over the official exchange rate.
What if you have not used your points this year? There is another "Saved Points Fee", even though you can accumulate only 1 (one) year of points (anything unused for more than a year is simply lost forever if you did not know).
In many hotels if you stay for less than 7 days, you have to pay Housekeeping Fees per each night.
If you are lucky to sell your timeshare package, there is another "Administration Fee".
LIABILITY
Under the contract you have a liability to pay special assessments, if any, on top of your maintenance fees. Special assessment is a mechanism of passing the cost of major repairs to the members. Such repairs may include any unexpected major expenses like fixing the envelop if the building appears to be leaky, replacing the pipe system, replacing the roof and so on. As with Maintenance Fees if you fail to pay a special assessment, your membership along with your initial investment will be lost. If you think of that risk, it is really so much cheaper to just pay for a hotel and not lock in for life.
DEED AND TITLE
In most cases timeshare is not real estate. Your name is not going to be on any real estate property title. Make no mistake about it, in most cases you are not buying any real estate! Promises that you are gonna be listed on some list with real estate held in trust for you are just that – promises, because unless you have your name on the title, in case of any problems between you and the timeshare company – you are screwed and you have almost no rights. Only obligations. It is often hat even though you are told you are buying real estate, in reality they call it "not directly", which is you are only buying a "right to use" timeshare program. It is like a club membership which they can easily cancel if you missed a maintenance fee payment for example. But if it is only a right to use, then what your initial payment of thousands of dollars is for? It is just for a membership, like if you joined a private club and it is not for your piece of any real estate. It is not even your share in the company's assets or any share in the company as if it was a public company. It is not even for the actual use of that "real estate", because the use is covered separately by maintenance and other fees.
TIMEFRAME FOR BOOKING
It is often ridiculously small window of opportunity to book your timeshare. I’ve seen cases with only one month window which is 10 month ahead from the date of booking. Not less, not more. You often won’t be able to book a room for next week or next month or even 6 months ahead. The earliest date that the system will accept (still not a guarantee that it would be available) is exactly 10 months ahead from any given day when you try to make a reservation. Not a day earlier. Then there is only one month window, the timeframe for which bookings are possible. Yet it is often the case that you can easily book a room in the same hotel at the same time if you don’t use any timeshare.
PEAK SEASON
In many places when they sell the timeshare to you they show off a case when it is “off peak season” telling you that most of the time it is off-peak season and you can rely on all the numbers and conditions they are giving you and you don’t need to be concerned about the peak-season. In reality you may realize that their peak-season is 51 out of 52 weeks per year and off-peak season is only 1 week a year. Of course the prices and conditions would not be even comparable for off-peak and peak seasons. Not to mention that it is likely that nothing going to be available for you off-peak season.
UNUSED POINTS TAKEN AWAY
You can accumulate only unused points from one last year. Last year's points can be transferred to the current year (for a fee), but anything older, even if unused is lost forever.
Nevertheless maintenance fees for the unused points that you have paid for are not refundable.
USE OF POINTS FOR PARTNER PROGRAMS
There are many other ways how you can spend your RCI points. You can rent cars, pay for cruises, pay for airline tickets, use for entertainment and much more. RCI flyer shows all that and states how much it costs. If you compare the price of your initial “investment” in timeshare and yearly maintenance and other fees to what you can spend those points on – again it is so much cheaper to just buy what you need for cash.
ASSET VALUE
If you count that you can stay in your timeshare for probably one week and if you take in consideration how much of a “down payment” you have to pay to join and use it for only one week, then multiply your “investment” by 52 weeks – you will realize that you are paying for a “property” (even if it was your property) in some cases 4 times as much as a similar property would cost you in the same area if you just bout it yourself without giving lion’s share to the timeshare developer.
INFLATION
Your maintenance fees are likely to go up much faster than the official rate of inflation. If your timeshare sales person tells you that you are protected against inflation ask them to show you the last 10 years or so of their records of when and how much maintenance fees were raised. Then verify it yourself. Speak with other timeshare owners. Verify every word and every number, then thank me later.
NO REPRESENTATIONS
The contract that you are going to sign may say something like "no representations, warranties or guarantees of any nature have been made". But what is the 90 minutes presentation that usually lasts much longer is all about? My understanding is that the whole point of such presentation is to give the potential customer a truthful representation and give some truthful guarantees. According to the contract, anything you are told does not count or never happened. My interpretation of this situation is that you cannot trust a single word of the presentation or what you are told during the presentation.
SIGNING OF A CONTRACT
It happens in timeshare industry when they do not show you entire contract, tell you that it is pure formality and let you sign only the last couple of pages of the contract. Also they give you a list to put your initials on with at least one provocative silly question that you are supposed to cross over, and if you do, then it indirectly proves that you have read the rest of the contract and conditions. They often cross it over for you. By the way, if you were not given time to read the entire contract or if it was not present entirely at the time of signing or if it had attachments such as disclosure which you have not read entirely before signing, then your contract is invalid and you can legally break it (actually nothing to break because it is illegal to begin with). Also in some cases the timeshare company by the law has to give you disclosure and a form before you sign the contract to sing that you have read and understood entire disclosure. If they have not done so, then your entire contract is illegal, invalid and subject to automatic rescission.
NOW OR NEVER
It is common that sales people put pressure on you telling you that this deal is so good that it will not last. It is only good right now if you sign it right here right now. If you leave this room it will no longer be available if you come back later. This is usually a lie and an indication that you are being scammed right here right now! It is a huge red flag. Run away from it the moment you hear anything like it. If you already bought it and you’ve heard something like it, re-evaluate the whole deal, you are being had somewhere, almost guaranteed. You are lucky if you are reading it within your rescission period. Then you have to act very, very fast and very firm. Well, unless you want to kiss your money good buy.
RCI MEMBERSHIP
Some contracts say that RCI membership is voluntary. Although in some cases timeshare owners are not allowed to book a room even in their own "Home Resort" unless you pay cash. You cannot redeem your RCI points without RCI. But if you have to pay cash on top of your initial investment, maintenance and other yearly fees, then it becomes more expensive than paying full price at the same hotel without any RCI membership.
COLLECTIONS
If you owe any money to the timeshare company you will find out very fast that what you owe is a simple membership that can be cancel at any moment if you have not paid your dues. This is absolutely not a property and you have no rights as a property owner would.
RIGHT OF FIRST REFUSAL
There is almost never a "buy back" program. There is not even a guarantee that you can sell your package to a buyer that you've found yourself. It is often that f you are trying to sell your package, you cannot promise anything to a potential buyer. Your timeshare company may have the right of first refusal.
What that means is that even if you've found a buyer who is ready to buy your package, you still depend on your timeshare company’s approval. You will have to lose time to fill out forms with the buyer's information and you will have to submit it for approval from your timeshare company. The purchase can take place only if approved by your timeshare company and usually there are no limits on how long they may take to respond.
Although if you find a buyer for a ridiculously low price then this mechanism allows your timeshare company to take advantage of it, and force you to sell it to them, but only after you did all the work and found a buyer.
If you try to sell on eBay, you may get a negative feedback. For example if I want to sell my timeshare package, I've found the buyer but the timeshare company did not approve the sale or if they forced me to sell to them instead of that person, I may get a negative feedback from the buyer because I may not be able to fulfill my duties timely (or at all) under eBay rules.
Needless to say there is another "Administration Fee" even if you manage to sell your package to someone.
NO WARRANTIES OR GUARANTEES
A typical contract that you are going to sign ,ay say often says that that there are no warranties or guarantees for any of the following and that Suite Accommodations are:
Not for Investment Potential
Not for Any possible Rental Returns
Not for Tax Advantages
Not for Resale Potential
Not for Monetary Advantages
Not for Financial Advantages
They are so right about it.