The Biggest Timeshare Scam

[JLB]

IMO, the biggest scam in timesharing, because it has been a problem for so long and so few have done so little about it, is the price difference between developer and resale. The resale (true market value without all the overhyping) price is so low that it is almost laughable.

It's hard to understand how someone can sleep well when all day long they lie to people to get $25000 out of them, knowing the same thing is readily available for a few thousand, a few hundred, or a buck on eBay, and when the person they are sitting with now wants to sell, they will be OL (outta luck).

Is it not obvious that folks are not going to just stumble in off the street, $25K in hand, demanding to buy a timeshare, so that it takes all the hype, gifts, and lies, to convince folks what a wise, investment it is. Can we not see that that is an unnatural, forced, hyped transaction?

At the same time, in this day of purported enlightenment, it's hard to believe there seems to be an undepletable supply of victims. But, when you are there for the first time, going through it, and you see it, it seems like what they are saying just has to be true. Or else they couldn't be saying it, right?

If the sellers--industry-wide--would make some attempt to assist the folks they have already sold to, at least a half-hearted attempt to make good on their words, the industry would not be so tainted.

And it's hard to believe that it is allowed to continue, with all the hoopla, bell-ringing, and ceremony.

Timesharing is a product that has a value, a natural balance, a supply and demand, and many of the older resorts have gotten to that point, and a real price level. It just seems a shame that all the smake and mirrors, the fake, and the ill will associated with it has to come first, and, in the case of resorts where the developer/seller won't let go, continue.

 

[TUGBrian]

there are quite a few sessions discussing this at arda I am going to make an effort to attend.

there is also one about "internet posts/blogs/etc and the impact on the industry" as well...that should make for some entertaining listening.

 

[JLB]

Yup, the resale problem is pretty much an annual topic with ARDA, thus my point.

I have ideas, so I'm sure others have had ideas, but not many seem to be acting on them.

Until they do, resales will be a big ugly zit on the forehead of timesharing.

 

[beanb41]

No one forces a purchaser to buy from a developer. When I bought my first timeshare it was from a developer, but over time I have learnt that resales are the way to go. One must bear in mind that developers have to recover the building costs, marketing costs and profit margins from the initial sale. In some instances they may go through a number of marketing companies to sell off the resort. The developer also has to meet the differential in ongoing maintenance costs until the resort is sold out.
Timeshare was expected to be an investment in Real Estate for new owners but as we all know just the reverse has happened. It is in actuality an investment in a perpetual holiday. Many people around the world but particularly in the USA with the sub prime mortgages situation are experiencing that the property they purcahse just a few short years ago is now worth less than what they paid for it. Those purchasing today are in many cases getting a bargain. Timeshare is no different. Someones loss is someone elses gain. Timeshare is not the right model for everyone. Like all investments one must do ones homework before making a committment. If one does their homework properly then they shouldnt be disappointed at the results they get.

 

[Steamboat Bill]

there are quite a few sessions discussing this at arda I am going to make an effort to attend.

there is also one about "internet posts/blogs/etc and the impact on the industry" as well...that should make for some entertaining listening.

I would love to read a transcript of those two sessions. How fast can you type/blog from the conference?

They should also have a topic - "DVC hold strong resale values...so should you!"

 

[TUGBrian]

ha..well for some of these items a low profile might be prudent =)

ill have the laptop...but I doubt I can dictate that fast.

 

[london]

Well Said

No one forces a purchaser to buy from a developer. When I bought my first timeshare it was from a developer, but over time I have learnt that resales are the way to go. One must bear in mind that developers have to recover the building costs, marketing costs and profit margins from the initial sale. In some instances they may go through a number of marketing companies to sell off the resort. The developer also has to meet the differential in ongoing maintenance costs until the resort is sold out.
Timeshare was expected to be an investment in Real Estate for new owners but as we all know just the reverse has happened. It is in actuality an investment in a perpetual holiday. Many people around the world but particularly in the USA with the sub prime mortgages situation are experiencing that the property they purcahse just a few short years ago is now worth less than what they paid for it. Those purchasing today are in many cases getting a bargain. Timeshare is no different. Someones loss is someone elses gain. Timeshare is not the right model for everyone. Like all investments one must do ones homework before making a committment. If one does their homework properly then they shouldnt be disappointed at the results they get.

Your comments are well taken. First time purchasers should think twice before signing a contract.

No one forces people to buy timeshares...you have the option to say "no".

 

[jercal10]

TS shud never be regarded as an " investment"--rather as a "commitment"

 

[Steamboat Bill]

TS shud never be regarded as an " investment"--rather as a "commitment"

Never say Never.....many TUGers could show you that can make as much as (or even more) than putting money in the stock market or buying a CD.

It is still a game of buy low and sell high and collect dividends (rent)

 

[talkamotta]

Good thread, lots of things to think about....

Not all home purchases are good deals, even on the resale market. What about all the people who thought they could flip houses as an investment. They thought they could beat the system with fancy loans and the banks were more than willing to give it to them. There is a home I am looking at buying in Vegas, a bank repo originally sold for $475K now being listed for just over $300K. You would think it would be a stealler deal, but knowing the history of the house, etc. I would be willing to buy it for $260K and not just yet because housing is expected to go down further in this city. I will take the time to educate myself of this market, my ability to be prepared for the worst possible situations and this particular home before I do anything.

Not all timeshares are good deals, even on the resale market. Some ebay purchases for $1 will cost alot more than $1 to get rid of when you find out they are worthless. Yet, on another thread, some of the buys that were listed were much more money and the value is there.

The different between when I bought my first timeshare from the developer and my best buy bargain is education. With the internet being so widely available and easy to use, education is available and a necessity. "Buyer Beware" is as true today as it ever has been.

How lucky is it that people have come across TUG, the people here have helped others to make a wise decision. How many times have others tried to educated others when they are on vacation at the different resorts. What about our friends and families, we have tried to educate them by our experiences. We will continue to do our best. Some people will continue to buy from the developer, they find value in buying direct. ARDA gets alot of money from timeshare owners but much of that money is collected by the resorts that are still being managed by the developer. How will this affect thier prospective?

 

[UWSurfer]

I'll say that I knew next to nothing about timeshares other than the high pressure, sit through it to get a prize, presentations. When we were a young, newly married couple we went on a tour, presentation and eventually bought in Lake Havasu, AZ. We couldn't afford it and basically forfited our deposit and walked away after we got home and came to our senses. 20+ years later I stayed in one (HGVC LV Hilton) which was being rented out by convention housing for a few $ more than a conventional Hilton room.

Once I experienced it I wanted to experience more of it. We did the presentation, going in saying we wouldn't buy...and we didn't, mostly because we had home remodeling which was gobbling up money and we wern't about to buy a t/s.

Then on a whim, I did a search for HGVC on ebay and discovered the resale market. A few weeks later I discovered TUG. It's been an interesting experience.

 

[talkamotta]

Even a timeshare that is bought from the developer can over time become a good investment (or maybe not so bad), if the buyer/owner takes the time to learn how to use it.

Wouldnt it be a good thing, if for example, say Westgate (Im using them because thats who I bought my first timeshare from), when I came to visit my resort. Instead of saying "Come to a Maintenance Meeting" which is infact another sales meeting. Asked me if I had any questions about timesharing, how to trade (even to thier other resorts), how to use II, etc. Didnt try to sell me anything. There would be value in that.. Maybe they are afraid of the questions we would ask. If they answered my questions to my satisfaction, I then, would become good advertisement and maybe referral. Or at least I wouldnt try to talk others out of buying from the developer. There are some timeshares that buying from the developer does have value, Marriott for example. Dont know how much because I dont own a Marriott.

 

[timeos2]

Even a timeshare that is bought from the developer can over time become a good investment (or maybe not so bad), if the buyer/owner takes the time to learn how to use it.

Wouldnt it be a good thing, if for example, say Westgate (Im using them because thats who I bought my first timeshare from), when I came to visit my resort. Instead of saying "Come to a Maintenance Meeting" which is infact another sales meeting. Asked me if I had any questions about timesharing, how to trade (even to thier other resorts), how to use II, etc. Didnt try to sell me anything. There would be value in that.. Maybe they are afraid of the questions we would ask. If they answered my questions to my satisfaction, I then, would become good advertisement and maybe referral. Or at least I wouldnt try to talk others out of buying from the developer. There are some timeshares that buying from the developer does have value, Marriott for example. Dont know how much because I dont own a Marriott.

I can't believe I'm writing this when you reference Wastegate but the type of "training" on timeshares you mention would cost money. Unless the Association is willing to pay someone to do that (easily done by the manager or another high ranking resort employee during a weekly, legitimate owners update meeting that actually offers useful information. If a developer is going to do it you can bet they will have a sales pitch involved. Thats how they make money so what do you expect?

 

[JLB]

Most of the replies are predictable, what someone says every time this topic comes up, and, probably, why the industry has never felt it was really a serious problem, one that really ought to be addressed.

Should, coulda, woulda, it's their own fault and they didn't have to buy, etc. . . . .

Call me crazy, but if I just forked over $25K for an EV unit at OLCC, came on TUG and read the posts from the ecstatic person who bought their EV unit for $1000, resale, I would not be a happy camper. I would not be thinking about how I might, maybe, possibly, some day get my $25K back out of it, when no one else was.

If I spent $25K for anything that others at the same were buying for $1000, I would not be happy.

I'm guessing most others would not be happy either.

That's my point. Why should an industry conduct itself in a manner that will cause ill will when people learn the truth?

Of course, the person posting here that they bought the week for $1000, likely bought it from someone who paid $20K or $25K, and no one was there to help them when it was time to sell.

And, of course, all of us already know all of this, and it either bothers us or it doesn't.

 

[td0804]

how is this different than buying a new vs. a used car? As soon as you drive the new car off the lot, it depreciates by 20%. There are naive car buyers as well as naive timeshare buyers. Getting caught up in the greed aspect of "appreciation" or return on investment is ridiculous.
It is just too bad that many people (i can be included) can not do enough homework and then not pay fair value. How different is that vs. also buying a home? If you're going to plunk down 10's to 100's of thousands of your own money, wouldn't you have a house inspected? wouldn't you do research about schools, resales, etc? Of course you would! Why people don't do it before buying a timeshare is they're own damn fault.

 

[timeos2]

Don't fall for Weasel spin - buy resale

how is this different than buying a new vs. a used car? As soon as you drive the new car off the lot, it depreciates by 20%. There are naive car buyers as well as naive timeshare buyers. Getting caught up in the greed aspect of "appreciation" or return on investment is ridiculous.
It is just too bad that many people (i can be included) can not do enough homework and then not pay fair value. How different is that vs. also buying a home? If you're going to plunk down 10's to 100's of thousands of your own money, wouldn't you have a house inspected? wouldn't you do research about schools, resales, etc? Of course you would! Why people don't do it before buying a timeshare is they're own damn fault.

There IS a difference in a new vs used car. That new car smell - near zero miles - full warranty a chance to treat it as you want from day one - are lost with even a slightly used car but at a good savings. Not 90% savings! With timeshares every one is used - there is no new and the same "new" week is sold to at least 51 buyers. Plus the depreciation isn't 10-15 maybe 20% at most but 50% on the day the rescind period ends and maybe more - much more. With a home most appreciate - unless you buy at the peak of a bubble or for a flip - so that too doesn't fit. Timeshares stand alone as a losing proposition if purchased as "new" at retail. Whereas purchased at resale, with a little research, they can be one of the great bargains for vacation value.

When you get an organization like Wastegate who can even convince seasoned, knowledgeable timeshare owners to pay retail for a "special" unit/week/view when they don't have any guarantees about who will run it, what it will look like, if there really will be any demand, what rent might be - the place doesn't even exist yet - you know these guys are good. The average sucker - er, vacationer walking into the lair hasn't a chance. The best we can do is to continue to sound the alarm. Buy resale or don't buy at all. Pay no attention to those Weasels behind the curtain.

 

[JLB]

Sorry, folks, I'm not going there, down that dark, dead-end alley of illogical comparisons.

Come on now! Show some creativity!

Like buying a house!!!! :rofl:

Like buying a car! :hysterical:

Buying a timeshare is not like buying a house or buying a car, and y'all know it.

When you bought your first TS, you didn't just wake up one day and say, "You know, we need a timeshare. Let's go out and get one."

It's more like buying a set of stainless steel waterless cookware with a titanium heat-retaining inner layer. It's something people do normally only after listening to 2 hours of hype and falsehoods. You'd only buy the stuff after the guy cooked you a meal--roast, veggies, and pineapple upside down cake (all in the same pan--the Dutch Oven--at the same time)--using only the pilot light for heat, convincing you how much money you'd put in your pocket by giving him the money that was already there.

If it's like buying a house or buying a car, then just put some ads on TV and wait for the folks to come in and say they want one!!! :rofl:
- - - - - -
You know the market is a true market at a resort when the owners can post weeks for sale on the bulletin board or in the newsletter and another owner or someone another owner knows buys it at the posted price, or thereabouts. And the seller gets a little more than what they paid.

 

[UWSurfer]

Well what do YOU want people to say? This is a product which is sold.

If you are sold this product, you are paying largely for the sales commissions and other marketing expenses, plus an inflated price. It's sold with any number of claims and promises, but at the end of the day it's a right to use or deed to a sliver of time at a particular resort or system.

You can purchase it resale via a number of avenues which means, essentially, someone first payed retail. I suppose if you put together a sales force, a marketing team and a bunch of people out in the field to bring in 50 qualified prospects, you have a reasonable shot at getting one or more at buying in at your price. How much do you think those costs cost?

You'd likely find you make promises which stretch the truth to do it. You also would rely on the written contracts which state there are no other promises than which is in the contract.

One of the best bits of sales training I received back when I sold life insurance (a LONG time ago), a product you MUST die first to benefit from; was that people buy with emotion, then justify the purchase with logic. Successful sales forces tend to work on peoples emotions.

 

[JMAESD84]

JLB is making a very valid point. Why does this business model continue to exist or be tolerated?

In the vast majority of cases, the people who purchase from developers on the day of their tour are being fleeced out of their hard earned money or worse their future earnings. Why would an industry want the stigma of being associated with stealing from people?

I've made the point in several postings to include the developers when people are throwing the PCC's and up front fee listing companies under the bus for being thieves. They steal more money than any of them.

Why isn't there a surgeon generals like warning in bold print on every page of a required sales contract that states "WARNING: THIS TIMESHARE MAY ONLY BE WORTH 10 CENTS FOR EVERY DOLLAR PAID, IF THE PURCHASE IS NOT RESCINDED WITHIN 5 DAY RECESSION PERIOD. BUYING A TIMESHARE MAY CAUSE YOUR MONEY TO DISAPPEAR."

I would vote for federal legislation that requires a form with such an aggressive warning. I would go even further and require that all sales require a letter of affirmation be sent by the buyer to the seller, by certified letter post marked no sooner than 7 days nor later than 30 days after the date of the inital sales contract or the contract is null and void, with all deposits returned to the buyer.

If that didn't clean up the industry, I don't know what would.

 

[spatenfloot]

JLB is making a very valid point. Why does this business model continue to exist or be tolerated?

Because most developers are too scared to switch to a low pressure, low overhead model such as DVC. So they keep doing the same old thing.

 

[london]

Timeshare Scam

Developer pricing for timeshare weeks is made determined by a variety of costs, and marketing factors.

The resale market does reflect pricing in the market place, based on supply and demand.

I own at a resort which does have a bulletin board for owner listings.

Timeshares are a unique product, suitable to some, but not all people.

Developers and ARDA of course will continue to spin timeshare in a favorable light.

This thread can go on forever. Most TUG members are well aware of the pro's and con's of timeshare.

 

[UWSurfer]

Why isn't there a surgeon generals like warning in bold print on every page of a required sales contract that states "WARNING: THIS TIMESHARE MAY ONLY BE WORTH 10 CENTS FOR EVERY DOLLAR PAID, IF THE PURCHASE IS NOT RESCINDED WITHIN 5 DAY RECESSION PERIOD. BUYING A TIMESHARE MAY CAUSE YOUR MONEY TO DISAPPEAR."

You might as well do this for all new car purchases, retail computers, cell phones, refinance of morgages made two years ago.... There isn't anything special about time shares and instant depreciation EXCEPT that the time share isn't so much tangable property...rather it's more of a concept to share property.

[Not that I care for TS sales people or the industry as a whole.]

 

[JLB]

We all know why retail timesharer sellers sell the way they do, because they would not sell many if they did not.

I was in direct sales for 10 years (my road less taken) and the method bothered me then like it bothers me now. I/we experimented with delayed closes--here's the facts . . . think it over and we'll get back together in 24 hours. We did it to entirely take the pressure out of the intitial meeting. We told them upfront, not long after the handshake, that regardless of how much they liked what we had to offer, they could not decide at that meeting.

No, I didn't cook a roast and veggie and pineapple upside cake dinner, but I can!

It didn't/doesn't work.

So, however much the sales people dislike it, and however much the prospects dislike it, with stuff like tin siding and timeshares, if you don't wear them down in the first meeting, you won't get another chance.

As long as that is the case, and as long as some on both sides of the transaction, including victims, justify it, the industry will have their way with ARDA. Their sessions on the topic will continue to be insincere.

And TS sales people will continue to be regarded as bottom feeders, referred to as weasels and wenches.
- - - - - -

Those of you who know me, know that I normally have some ideas.

I will assume that sales will continue to be as unlikeable/distasteful as it always has been.

So, let's do something on the resale end, something to appear to try to do something like the purported story told upfront, that there will be a market if the prospect ever wants to sell, and at something resembling an increasing price.

My first idea is for the retail sales staff to include resale inventory. They could offer to sell for present owners, at a fair commission, at the same price they are selling to new prospects. Just work the resales in.

There, I'll let y'all chew on that. I am not naive and I have already heard all the reason why they cannot do that. But, as Ted Kennedy said in Bobby's eulogy,

"As he said many times, in many parts of this nation, to those he touched and who sought to touch him:

"Some men see things as they are and say why.
I dream things that never were and say Why not."

 

[Lisa P]

Wouldnt it be a good thing, if... Instead of saying "Come to a Maintenance Meeting" which is infact another sales meeting. Asked me if I had any questions about timesharing, how to trade (even to thier other resorts), how to use II, etc. Didnt try to sell me anything. There would be value in that...

I agree. On the upside, on several visits to Wyndham resorts, I've been invited to ask these kinds of questions during their "Owner Update" meetings. Some of the "Owner Services" reps are knowledgable , some are not .

On the downside, the ultimate goal of the meeting, of course, is to make sure owners know all the "benefits" of buying more points to get to VIP levels and then try to sell them. Still, these "Owner Updates" have been much lower pressure (and briefer) than a typical sales pitch and I think the opportunity to ask questions 1:1 can be so useful to newer owners - IF the rep is knowledgable.

 

[capjak]

ha..well for some of these items a low profile might be prudent =)

ill have the laptop...but I doubt I can dictate that fast.

Those little voice recorders might do the trick?