Five-star oceanfront rooms for $129 a night? Luxury Hawaii for $79 a night? These can be yours with a secondhand timeshare (yes, timeshare).
When Denver aerospace engineer Doug Laczkowski and his family were planning a trip to Hawaii in 2007, he was hoping to keep costs down. Underwhelmed by hotel packages he saw online, he tried a different tack. After reading about a Web site where he could rent someone else’s timeshare, he found a two-bedroom condo at the Hilton Grand Vacation Club at Waikoloa Beach. He booked with the owner, confirmed with the resort, then spent a week in a spacious condo right on the golf course.
The best part? It was $1,200 for the week—about $700 cheaper than if he had booked a rental through the resort itself. “It turned out to be much more economical than staying at a resort and eating every meal in a restaurant,” Laczkowski said.
Laczkowski had taken advantage of a booming market: renting or buying someone else’s timeshare. While there are usually a lot of units on the selling block, the slumping economy is inspiring owners to unload at a faster pace—or at least rent them to cover maintenance costs. “If you have to put food on the table and you get your bill for maintenance,” says Ed Hastry, president of the National Timeshare Owners Association, “what do you pay first?” The upshot is a plethora of great deals for buyers—and renters—of timeshare condos at all price points.
Timeshare, of course, refers to the practice of buying a share in vacation real estate that gives the owner access to that condo or resort for a specific length of time (usually a week) over the course of several (or even unlimited) years. An owner’s week may be “fixed” to one specific week during the calendar year, or “floating,” meaning that it can be used in a wide array of times during the year.
Timeshares started in 1960’s Europe, where a few ski resorts in the Alps started selling guaranteed vacation accommodations, and first appeared in Hawaii and Florida during the 1970’s. But shady companies and scams made timeshare a dirty word for years. (A popular joke: How can you tell when a timeshare salesman is lying? When he’s moving his lips.)
Still, the industry exploded in the 1990’s when hotel brands like Hilton and Disney got into the business and the term vacation ownership increasingly replaced the much-maligned timeshare; regulation and name recognition brought the practice into its heyday. There was even an enticing new model called vacation clubs, in which buyers owned not just a one-week share at a certain property, but rather a certain number of points to spend at a “home” resort or partner resorts elsewhere. (A “fractional ownership,” meanwhile, refers to ownership of two weeks or more, usually at an ultra-high-end property.)
The changes certainly worked. In 2006 (the last year for which data is available), timeshare sales reached $10 billion—a 16 percent jump over 2005, according to the American Resort Development Association, the main trade group for the timeshare industry. The appeal?Condo comforts, resort amenities, and the ability to swap your share for locations around the world. “Year after year timeshare continues to be a fast-growing segment of travel,” says John Locher, vice president of marketing and sales for RedWeek.com, a Web site specializing in timeshare resales, rentals, and exchange.
But the weak economy gives secondhand timeshare seekers a potentially great opportunity. “There’s a lot of inventory, a lot that’s online, and that gives the buyer some real leverage,” says David Simmonds, a Mexico relocation consultant who closely watches the Mexican real estate market. Better yet, “with rare exceptions, these properties are exactly the same as those being sold new at much higher prices,” says Larry Hayden, president of the brokerage Timeshare Resales Worldwide.
Indeed, the price differences can be staggering. While the average new timeshare sells for about $18,000, according to ARDA, experts say that the typical resale price is anywhere from one half to one third of the original sale price. And in the vast majority of cases, there are also significant savings to be had in timeshare rentals as well: typically as much as one- to two-thirds lower.
We checked out rentals and resales—great places to look are RedWeek, eBay, real estate brokers’ sites, or in newspaper classifieds and Timesharing Today, an owner-advocacy magazine and Web site—and found that the destinations and resorts go far beyond the expected sprawls of Orlando, Las Vegas, or Cancún. At press time, we found a Four Seasons unit in southern California for $129 a night, a Wyndham on Hawaii’s Big Island for $71 a night, and a Disney property in Hilton Head, South Carolina selling for arguably one-tenth of its original price.
Of course, you still have to do a little homework. Some timeshare resales end up being for less desirable locales or times of year, but some have more expensive issues. “You have more responsibility as a consumer,” says Howard Nusbaum, president and CEO of the American Resort Development Association. “It’s kinda like a sale at Filene’s Basement—you gotta go through the rack and see what you would actually want.”
Granted, buying a timeshare from the property gives you the security of buying from a big established name—as well as first pick at the newest units and possible perks such as bonus weeks. “It’s like buying a car—people like buying one new from the dealer,” says RedWeek.com’s Locher. “But if you can find one that’s certified pre-owned—well, there are some real savings.”
- Make sure the seller is paid up on his past maintenance fees. If not, you’ll inherit the back bills.
- Know about any special assessments coming next year, like the shared bill for a new roof. A trustworthy seller should provide you with that paperwork, but you should also confirm the unit’s standing with the timeshare property’s company. “Call the home-owners association, call the resort,“ says Howard Nusbaum, president and CEO of the American Resort Development Association. “A legitimate seller should want to share that with you, and can show you the copy of the budget for the HOA.“
- Check with the resort itself to see if it offers resales too. We found property-offered resales, such as those at the Trapp Family Lodge in Vermont and The Banyan Resort in Key West, that were priced at the same or even lower than those on the outside resale market.
- Beware of brokers who list any vague fees attached to the sale (it’s a good idea to run the broker’s name by the Better Business Bureau or the state’s real estate licensing agency), and beware of any seller who balks at using a closing service, which is a great way to make sure the property is legit and that money gets handled properly. (Two commonly used services, which charge flat fees, are Resort Closings, and Timeshare Closing Services.
- Once you’ve bought a resale, join the club that the original owner belonged to—such as RCI or Interval International (usually about $100 a year). You can then swap your newly acquired timeshare for weeks at other affiliated resorts, or get access to member upgrades.
- Renters should have the owner contact the timeshare property to put the reservation in your name, and then confirm that with the property before you arrive (similar to the closing services, an escrow service can handle the funds). You can also approach properties directly about renting out a unit for a week—just realize that you’ll get invited to hear a legendary sales presentation during your stay. “Everybody gets those,“ says Ed Hastry, president of the National Timeshare Owners Association. “You just gotta say no, no, and no.“