A bad market has some advantages

[kjd]

Obviously, the timeshare market for both resales and developer sales has tanked. With people bailing out for unheard of resale prices and Marriott not excercising ROFR in many places (If at all), should owners join in the selling or ignore it? I suggest that you either ignore it or take advantage of it.

If you are a buyer these low prices may be a good thing. This is an opportunity to add to a timeshare portfolio at cheap prices without the apparent threat of ROFR.

If you are an owner of a Marriott timeshare who bought just for the enjoyment of good vacations, the present poor market conditions might even have an advantage or two for you.

The current market is flushing out a lot of the weak hands that probably should not have bought a ts in the first place. Hopefully, they will be replaced by buyers better able to pay the maintenance fees and assessments. They are probably the only ones with money these days. If this happens, the present owners will not be burdened with additional assessments due to shortfalls in income.

Another benefit might be that present owners might find a better reservation enviornment as the weak hands struggle to pay their loans and fees. More units may be turned in for points as people save money by not taking a vacation. It's possible that Marriott owners will have a better selection of choice dates at their home resorts.

It's unclear what affect the bad market will have on II but one would think that there might also be a better selection of dates or at least better deals for getaways. I hear rumblings of non-Marriott ts companies having to take back recently sold units and cancel plans to build new ones. Will we actually see some ts companies in bankruptcy? Maybe, but no one will benefit from that.

 

[ondeadlin]

I have a friend who is on the board of one of the largest and most popular Marriott timeshare properties. He said the number of units behind on MF was 135 percent higher in October than it was the previous October.

I don't think A) that situation is going to be the exception to the rule, or B) that there's any way such a deficit is good for current owners.

I think it's very, very difficult to find a silver lining in which you can't get the money back you spent, your annual costs are certain to increase - MF always do, it's just a question of how much - and your obligation of paying those MFs is absolute, unless you want to sell at a significant loss.

And I think the buying opportunities might actually bring in people who are even less capable of paying MF than the people who were selling. I mean, really, who should be a better risk - the person who buys for $30k developer or the person who buys for $5k on eBay? At best, it's a situation that can be argued both ways.

 

[AwayWeGo]

Good Pay & Bad Pay.

Who's more apt to pay timeshare maintenance fees reliably & on schedule in good times & bad ?

Some laid-off yutz whose credit cards are all maxed out who only bought the timeshare in the 1st place because he got fast-talked into paying full freight for it on the never-never plan even though he couldn't afford it ?

Or some semi-savvy bottom-feeding bargain hunter who snapped up a desirable resale timeshare for pennies on the full-freight dollar ?

-- Alan Cole, McLean (Fairfax County), Virginia, USA.​

 

[Dave M]

I mean, really, who should be a better risk - the person who buys for $30k developer or the person who buys for $5k on eBay? At best, it's a situation that can be argued both ways.

I agree with Alan. I would guess that, on average, the person that buys on eBay for $5k might well be the better risk, at least for paying annual MFs. Why? Many people that bought from Marriott might well have been enticed by a slick presentation to buy something that they didn't really want and couldn't afford, likely financing the purchase through Marriott. Conversely, the eBay $5k purchaser will most likely pay cash for the purchase and is making a conscious decision without any slick salesperson trying to convince him/her to purchase.

 

[ondeadlin]

In general I'd agree with you - but that's mostly because I'm a timeshare bottom feeder who has never spent more than $5,000 on a timeshare and has never missed a payment for anything.

But I think declaring most low market buyers reliable and most high-market buyers risky is a superficial analysis that's undercut by the fact that - on the whole - most timeshares are sold by the developer and most timeshare owners pay their MFs.

Again, I'm not strongly coming down on either side, I just think it's a debatable point.

 

[Latravel]

I sort of agree that a person who purchased the timeshare at the original price probably has a higher level of disposable income and a higher level of income in general. Marriott was/is targeting this level of consumer (by evidence of the minimum $75K income level to sit through a presentation) and now that the price has lowered, Marriott will be available to anyone, and they may not be able to make the payments. I personally don't like this dynamic so I don't see a silver lining.

 

[Stefa]

I also don't see anything good about this bad market. We were actively shopping for a Marriott ts but have backed off because of the bad state of things. The reason prices are so depressed right now is that there aren't enough buyers for all those resales. Maybe a lot of the "weak hands" will be gone, but there may not be enough "strong hands" to sustain many resorts.

 

[pwrshift]

Rentals are tougher this year too...

The market is difficult this year...but for rentals as well. I put my studio BeachPlace for President's week on Ebay .. first time out I got 12 bids with the max bid $304, so it didn't reach the $995 reserve. Ran it again and while 147 people viewed the item, didn't get one bid -- and the starting bid was just $69. That has never happened before.

Won't run it again as I have to decide 60 days prior to check in to put it with II ... or to just give it to my top performer at work. The reserve, I think is fair, as Marriott wants $2338 for that week plus taxes...so if they can't afford $995 (same as the last 3 years that did rent on Ebay) at least I have other alternatives.

Brian

 

[falmouth3]

I sort of agree that a person who purchased the timeshare at the original price probably has a higher level of disposable income and a higher level of income in general. Marriott was/is targeting this level of consumer (by evidence of the minimum $75K income level to sit through a presentation) and now that the price has lowered, Marriott will be available to anyone, and they may not be able to make the payments. I personally don't like this dynamic so I don't see a silver lining.

I sat through a timeshare presentation and the only evidence that we earned $75K or more was that we answered yes when they asked us. Anyone can do that.

Sue

 

[BocaBum99]

And I think the buying opportunities might actually bring in people who are even less capable of paying MF than the people who were selling. I mean, really, who should be a better risk - the person who buys for $30k developer or the person who buys for $5k on eBay? At best, it's a situation that can be argued both ways.

This is completely wrong. Resale buyers are way better credit risks because they almost always pay cash whereas most developer purchases are financed.

And, when a resale purchases buys a timeshare, they are making a semi-thoughtful purchase. The person buying at the resort makes an impulse purchase. There is absolutely no comparison.

 

[ondeadlin]

If that theory were true, shouldn't older resorts have significantly lower MFs in arrears than newer resorts? Yet I've never seen much evidence of that ...

Let's be honest, any evidence being offered on this thread is anecdotal. To really know the answer to the question, you'd have to access to a significantly sampling of timeshare accounting, over a span of years, over a span of quality resorts.

Again, I'm not coming down hard on either side (let alone expressing my opinion as a fact and declaring others "completely wrong"), I just don't think it's a slam dunk assumption that resale buyers default less than developer buyers.

And, going back to the original topic, I don't think the current state of affairs is good for current owners, however they purchased.

 

[BocaBum99]

If that theory were true, shouldn't older resorts have significantly lower MFs in arrears than newer resorts? Yet I've never seen much evidence of that ...

Let's be honest, any evidence being offered on this thread is anecdotal. To really know the answer to the question, you'd have to access to a significantly sampling of timeshare accounting, over a span of years, over a span of quality resorts.

Again, I'm not coming down hard on either side (let alone expressing my opinion as a fact and declaring others "completely wrong"), I just don't think it's a slam dunk assumption that resale buyers default less than developer buyers.

And, going back to the original topic, I don't think the current state of affairs is good for current owners, however they purchased.

Use logic.

Fact number 1: Most resale buyers pay cash. Most developer purchasers finance.

Fact number 2: When a resale buyer gets behind on maintenance fees, they can dump the unit on eBay or give it away if they have to do so. Someone else can take over the unit. No foreclosure.

Fact number 3: When a developer customer gets behind on maintenance, they are probably behind on their loan as well. Such buyers have no choice but to keep paying or have the resort foreclose or take a deed in lieu of foreclosure.

Just that alone will skew the delinquencies in favor of developer purchases.

I deal with hundreds of buyers and sellers every month. The sellers who have a mortgage are dead in the water. They have almost no options for doing anything. They keep paying or they get behind and default. The sellers who are free and clear have options to keep or dump their timeshares. The buyers who buy know the resale market and when they can't handle it, they come back to the source they got it and have them help them unload it. I have a person who bought a timeshare from me who just asked me to sell it and it hasn't even closed yet. If this happened to a retail buyer, they are hosed.

I'll bet in residential real estate that the risk of homeowners going into foreclosure is FAR higher for owners who financed their property vs. those who paid cash.

 

[AwayWeGo]

Anecdote, Shmannickdote.

If that theory were true, shouldn't older resorts have significantly lower MFs in arrears than newer resorts? Yet I've never seen much evidence of that ...

Let's be honest, any evidence being offered on this thread is anecdotal.

My "older" timeshare (1992-ish, I believe) is sold out & under management direction of an independent, owner-controlled HOA-BOD which understands that everything in the way of resort quality hinges on collections, so they made that Job 1.

As a result, collections are up, delinquencies are way down, occupancy is up, reserves are strong, quality (already very good) is improving, & it's actually hard to get a floating-week reservation if I wait too late in the year to put in a request.

Is that typical of other older, sold-out timeshares as well ?

I don't know.

However that may be, anybody who buys a timeshare resale for pennies on the full-freight dollar can pay years & years of maintenance fees out of the money saved & still be ahead of the game.

Speculation is no substitute for data, but even so I'd wager a timeshare tour freebie that, in general, resale timeshare owners have a better record of paying maintenance fees in full & on time than the timeshare owners who get fast-talked & high-pressured into buying at full freight on a whim during a weak moment.

-- Alan Cole, McLean (Fairfax County), Virginia, USA.​

 

[ondeadlin]

My "older" timeshare (1992-ish, I believe) is sold out & under management direction of an independent, owner-controlled HOA-BOD which understands that everything in the way of resort quality hinges on collections, so they made that Job 1.

As a result, collections are up, delinquencies are way down, occupancy is up, reserves are strong, quality (already very good) is improving, & it's actually hard to get a floating-week reservation if I wait too late in the year to put in a request.

Ultimately, Alan, I think this is the factor that separates older sold-out properties with reasonable and stable fees from older properties that have problems.

Much more so than any other.

 

[AwayWeGo]

Signed? Sealed? Notarized? Sworn?

I sat through a timeshare presentation and the only evidence that we earned $75K or more was that we answered yes when they asked us. Anyone can do that.

Sometimes the timeshare tour headhunters ask us about our age & income & employment before they sign us up.

But the in-house tour wranglers -- the ones who try to sign us up for "owner updates" & various special presentations., etc., when we're checked in at a timeshare resort as owners or on exchange -- don't even ask those things. If we're there & we're breathing air, they want to lay the sales pitch on us.

A headhunter recently asked if I'm between the ages of 18 & 70. My truthful answer = Yes.

Yet when we've vacationed in Orlando FL in the past, the kiosk headhunters have asked if we're between 21 & 65. At the time the truthful answer was Yes. Today, it's No.

So I'm wondering now if that means The Chief Of Staff & I have already gone on our final timeshare tour.

Wouldn't that be something ?

-- Alan Cole, McLean (Fairfax County), Virginia, USA.​