Association 'auctions'

[Teresa]

One of the resorts where I own periodically has 'auctions' by mail. They send owners a list of units that are available and then will send a bid packet to anyone (I'm assuming owners but maybe not) who asks for one. Bids must be in a special envelope and must be in the Association's hands by a certain date (not just postmarked). Then all the envelopes are opened and the highest 'bidder' for each week wins. I'm not sure if they have minimum bids (I'd probably have to ask for a bid packet but I've got enough timeshares right now and don't want the resort to waste the postage sending me one).

I think this is a good approach for getting these units off the books. I'm pleased that this resort board is taking a proactive approach to getting rid of 'unowned units' on a regular basis. It is interesting that they also send out a list of 'delinquent' units (unit # and week #) with the listing of these 'for sale' units. Sorta gets those owners moving on paying back fees or maybe just signing over the unit to the Association (instead of waiting for foreclosure).

Another resort I own at is constantly selling these taken back units to a resaler. This resaler is responsible for paying m/fs on the units they sell to him (I have NO clue how much he pays for them - I'm guessing not much as he takes nearly everything they get back - red/white/blue/yellow/etc.).

Another resort gives the rights to sell their excess units to a 'reseller' (developer type outfit) who then gives the resort a percentage of the sales price if/when they sell it. I don't think ownership changes - so the resort still, technically, owns it until it is sold. I'm not exactly sure how this works but I think the 'reseller' is taking advantage (but the board doesn't always seem too 'bright' to me when I attend meetings). I hope I'm just not understanding their explanation of how this works because if it works like I'm hearing them explain it to me, it sounds like we might be paying them something - yikes!.

What other ways are resorts getting rid of 'excess units owned by the resort'? I'd like to hear what other resorts are doing to get rid of 'bad debt' and 'unowned' units (yes - I know they are owned by the resort which means the owners).

 

[timeos2]

Get the fees paid

Thats the approach at two resorts I'm most familiar with. The number one goal is to keep payments current. For the hard core delinquents that have shown they won't pay a system was worked out to have a third party take the weeks, go after the owner, get the use rights and pay the fees. If they manage to collect (plus interest, late fees, etc) then the owner gets reinstated. If they can get a deed in lieu or if it goes to foreclosure (which they pay for, not the Association) then they own the week and can keep it or sell it. They have a standing agreement to sell the weeks to a buyer that runs a multi-resort club type system. Everyone is happy and the fees never go unpaid.

For the few weeks the Association gets back directly through deed back (no foreclosure involved) the weeks are auctioned to the high bidder. So far none have made it to public auction as every one has been purchased by a current owner when the offer was made.

You are absolutely correct that any Association that isn't aggressively trying to minimize delinquent owners and doing everything possible to maximize direct collections is hurting the owners. Fees are the lifeblood of every resort and anything that isn't collected means the paying owners are charged more. No one should be OK with that

 

[johnmfaeth]

You can also really hurt the owners in the process if not careful.

The Pelican on St. Maarten foreclosed in over 1000 units at once in 2005. These were then offered to the owners at about 2x MF's.

Well, the market overhang is one of the things that drove the resale pricing at this resort down to $1.

And by obviously waiting too long to properly enforce, the MF's were able to climb above island avarages which also contrbuted to owner's capital losses.

It's a great resort, clean rooms, well maintained. One would think it's a dump if one just judged by price.

Every timeshare owner should inquire to their BOD as to the delinquency rate and what specific actions are taken to keep that number low.

John

 

[Carolinian]

Some approachs on the OBX-

1) Some HOA's handle resales in-house, and have a licensed real estate broker as their manager or other staff position - Seascape and Golden Strand / Strand South do this.

2) Some HOA's use the local rental / resale brokerage, Outer Banks Resort Rentals, which charges a commission on each sale and pockets most of the closing cost (other than paid for deed prep to a local attorney and recording fees). Hatteras High, Ocean Villas II, Dunes South, The WIndjammer, and High Dunes do it this way.

3) The Barrier Island Station resorts have HOA inventory resold by the developer, which takes title to all weeks. I have heard of owners questioning the exact financial arrangement between the developer and the HOA's, which the developer controls, but never heard any satisfactory answer. That would be one issue an independent board should probably look into - if they ever get one!

4) Some depend on the management company to handle resales. OBBC and Sea Ranch II go this route.

5) One has a member who is a licensed real estate broker, who handles the closings, but the HOA does most of the marketing, including using internet auctions such as eBay and others, and print advertising in various publications. This is Ocean Villas I.

6) Some resorts have sold weeks in bulk to a reseller in the past, but none that I am aware of have done that recently.

7) Some do have the member auctions from time to time. Ocean Villas I and Ocean Villas II have both done this.

8) Some resorts will occaisionally offer free blue weeks, but no one does this on a regular basis. Some resorts will also occaisinally offer free closing costs on blue weeks, but again not on a regular basis. Dunes South, High Dunes, Hatteras High, and Ocean Villas II have done one or both.

 

[JLB]

Of the three weeks we now own, at the same resort, the first one was a foreclosure that we bought through a local realtor. the other two are from a quiet title action by the association.

The association used to sell weeks but now that is handled by the local realtor we bought our week from. There is a newsletter, print and on-line, and owners can advertise in the classifieds.

One of the dangers is that one owner may wind up with a lot of unit and what they do may hurt other owners. In our case one owner fully owns 47 out of 252 units. Another fully owns 12.

I would have to check the records but I believe there are only 16 weekly timeshares and 87 fractionals.

 

[Carolinian]

Some other methods of HOA's selling weeks on the OBX are 1) using newspaper and other print advertising, 2) setting up a resale table at a local festival - Dare Days in May, 3) mailing past exchange guests and renters at that resort, 4) mailing recent buyers from another local resort still in developer sales.