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We recently attended a hotel branded developer presentation, and were amazed by the amount of attention given to financing the timeshare. Even though some of the timeshares were $75,000 to $130,000 they stressed a low cost per month price with a low down payment.
I read that the auto buying equation changed when automakers realized that financing an auto purchase eliminates pressure on the TOTAL sales price of a car. Instead of
"This car will cost $20,000"
they now say
"This car will cost only $xxx per month" (with a total price tag of $35,000.)
It seems that TS developers are following this logic in their sale process. While there is self-financing available from developers for timeshare purchases, resale buyers must either cough up the entire resale amount at the time of purchase, or self-finance from a Heloc.
This limits what resale purchases buyers can afford and places downward pressure on resale prices for upscale resale properties because there is significantly less demand when limited or no financing options exist. Many can come up with $5 - 10k on a credit card, maybe $25k, but $50 - $100k upfront is out of reach for most people. This is probably why most resale timeshares sell for sub $15k (if they sell for anything at all.)
Perhaps the developers like it this way because they can ROFR their property and replenish their inventory at a fraction of the price. On the other hand, defaults are costly and with increasing inventory to ROFR, this could be more than they can chew. As more and more TS developer properties go upscale, this could exacerbate the resale demand issue, and we could expect to see the greatest % price reductions at upscale properties which could negatively affect their brand as high-end buyers ultimately realize the largest financial losses given a cap on resale affordability.
I am not aware of commercially available, reasonable TS resale financing options.
Is there an opportunity in the TS industry to add resale financing options similar to financing options that came available for the auto resale market? When financing came available for the auto resale market, prices seemed to stabilize and the secondary market expanded and became viewed as a more viable purchasing option. Resale financing could expand the market, boost the price of TS resale, and prevent more defaults. It could also increase TS exit options thus reducing the fear of being "locked in" that many potential buyers have today.
Imagine if you sold your timeshare on Redweek or Tug and could offer the buyer "xx" per month financing via a reputable finance firm? There would be more demand for your timeshare and you could secure a higher price.
Your thoughts?
I read that the auto buying equation changed when automakers realized that financing an auto purchase eliminates pressure on the TOTAL sales price of a car. Instead of
"This car will cost $20,000"
they now say
"This car will cost only $xxx per month" (with a total price tag of $35,000.)
It seems that TS developers are following this logic in their sale process. While there is self-financing available from developers for timeshare purchases, resale buyers must either cough up the entire resale amount at the time of purchase, or self-finance from a Heloc.
This limits what resale purchases buyers can afford and places downward pressure on resale prices for upscale resale properties because there is significantly less demand when limited or no financing options exist. Many can come up with $5 - 10k on a credit card, maybe $25k, but $50 - $100k upfront is out of reach for most people. This is probably why most resale timeshares sell for sub $15k (if they sell for anything at all.)
Perhaps the developers like it this way because they can ROFR their property and replenish their inventory at a fraction of the price. On the other hand, defaults are costly and with increasing inventory to ROFR, this could be more than they can chew. As more and more TS developer properties go upscale, this could exacerbate the resale demand issue, and we could expect to see the greatest % price reductions at upscale properties which could negatively affect their brand as high-end buyers ultimately realize the largest financial losses given a cap on resale affordability.
I am not aware of commercially available, reasonable TS resale financing options.
Is there an opportunity in the TS industry to add resale financing options similar to financing options that came available for the auto resale market? When financing came available for the auto resale market, prices seemed to stabilize and the secondary market expanded and became viewed as a more viable purchasing option. Resale financing could expand the market, boost the price of TS resale, and prevent more defaults. It could also increase TS exit options thus reducing the fear of being "locked in" that many potential buyers have today.
Imagine if you sold your timeshare on Redweek or Tug and could offer the buyer "xx" per month financing via a reputable finance firm? There would be more demand for your timeshare and you could secure a higher price.
Your thoughts?
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