Creating a liquid timeshare resale market

[ronparise]

Unless these resale weeks are in the hands of a competent real estate broker who is willing to take on this nightmare, a FSBO can forget it for the most part. So their options are nill in many resorts if HOA's refuse to deal with this situation. Of course there are exceptions in some resorts where obviously some weeks have value, but most owners of off season weeks are stuck like Chuck if a broker does not work in their resort.

Sadly I don't know too many realtors willing to take on the timeshare fiasco. I had proposed it to my broker (I'm a real estate salesperson here in FL) and he laughed it off. He wasn't interested in treading in those shark infested waters where a broker can easily be burned by the FREC. He's got too much at stake to lose with his regular business.

I applaud Boca for trying to be a part of the solution. Yeah he's making a profit and so he should, but at least he's putting those weeks into the hands of paying owners. At least BG allows resale brokers to deal with them directly. Why other brands don't is beyond me. They need a way to move dead inventory off the books quickly. Working with a realtor who is willing to take on the challenge seems like a no brainer, but what do I know.

I approached my broker as well. She said she couldnt buy enough E&O insurance to protect us

 

[chriskre]

I approached my broker as well. She said she couldnt buy enough E&O insurance to protect us

Well now we know that there will never be resolution, with that issue looming over real estate brokers. :ignore:

 

[Carolinian]

Wow, prices and sales volume both up since 2007

Just finished running the Nags Head sales for August to December 2007 for comparision to the same months of 2011, and both prices and volume are actually UP iin 2011. I will run 2007 for comparision in Kill Devil Hills tomorrow to see if the pattern holds.

Those who say that the timeshare market has tanked since the economic crisis better look at some real numbers, and it would be interesting to compare some other areas to see what the real market has actually done.

Here are the 2007 numbers:

Prime red - 3 sales, average price $3433
Pink - 11 sales, average price $1059
White - no sales
blue - 2 sales, average price $100

There were 13 family gift deeds; 2 prime red, 6 pink, 3 white, and 2 blue
There were 7 gift deeds that could not be determined if family; 4 pink and 3 blue

There were 6 foreclosures; 2 pink, 2 white, and 2 blue
There were 12 deedbacks; 1 pink, 3 white, and 8 blue

There were 13 HOA gifts to individuals; 5 pink, 3 white, and 5 blue, all from Ocean Villas II which has been pressing members to take up HOA weeks

There were 2 HOA sales, both blue (and included in sales above)

PCC activity was 1 blue week deeded in and 1 pink week deeded out.

In trying to get a more recent handle on the resale situation, I started taking a look at OBX sales in the August to December 2011 timeframe. I have just had time to do Nags Head before I had to stop for now. I will run Kill Devil Hills 2011 and for comparision both for the same months of 2007 when I get more time.

Here's what I have found so far for all timeshare resorts in Nags Head for these months:

prime red - 3 sales - average price $5,000
pink - 12 sales - average price $1917
white - 4 sales - average price $175
blue - 2 sales - average price $400

There were also 6 intra-family gifts, 1 prime red, 4 pink, and 1 white

There were 6 HOA gift deeds, 2 pink, 1 white, and 3 blue (all from a resort that has been pressing existing members to take on HOA weeks)
There were 5 HOA sales ranging from $100 to $4,000 - 1 prime, 3 pink, and 1 white

During this period, there were no PCC transactions, in or out.

There were 11 deedbacks - 9 blue, 1 white, and 1 pink
There were 10 foreclosures - all blue.

Initial thoughts before running comparisions is that resales are about the same, perhaps slightly down in numbers but not much, intra-family gifts are higher than what I have seen in the past, HOA resales and gifts are about normal, but deedbacks are up, perhaps foreclosures, too.

Kill Devil Hills, which has more timeshare units than Nags Head will be interesting.

 

[Carolinian]

I approached my broker as well. She said she couldnt buy enough E&O insurance to protect us

How odd! It seems that many can! Deanna Hull on the Crystal Coast of NC and Outer Banks Resort Rentals (Rhonda Williams) on the Outer Banks have been timeshare specialist real estate brokers for years and make a decent living at it. I am sure they are sufficiently insured. Rhonda's predecessor, the late Marvin Beard started OBBR back about the dawn of timesharing.

 

[Beefnot]

The problem with some sort of "deed-back system" is not whether HOA's can (legally) or should (morally) take deed-backs.

Nor is the problem whether interval owners can (legally) or should (morally) just walk away from the ongoing obligation of ownership.

The problem with any sort of "deed-back" system is agreement on the value (or lack of) of the intervals involved = appraisals.

Half the HOA can scream "if we take or are forced to take deed-backs it will make my unit worthless and my unit is solid gold" while the other half screams "if we don't take deed-backs it makes the resort topple over under debt and then my unit will be worthless and my unit is solid gold"

Without a system of reasonably accurate appraisals nobody knows who is right.

Add to the mix speculators, landlords and PCC's all adding their own numbers into the value mix and of course you get confused interval owners.

Look at used cars - as the "blue book" became widely available to everyone the "wild west" era of used car buying and selling came to a close and now it is much more orderly.

The FIRST step towards any sort of "timeshare cure" is accurate valuation.

The value of an item is what another is willing to pay for it. The only way to really know is to slap a sticker on it. After repeated cycles of negotiation and closing of deals, that is only where an appraiser is relevant. Appraisers simply compare the characteristics and price of a property to comparable properties that have recently sold in order to ascertain an estimated valuation.

Even "blue book" car values, it's not like there is some car wizard who every month says "this year/make/model shalt now be worth...". Those values are a reflection of current supply and demand in the marketplace.

 

[zeld]

MF increases without a limit

One very common problem with HOA is that the maintenance fees are not enough to cover long term maintenance. During the first 20-40 years the the owners pay less than they should to save a proper amount of reserves. They the tides change the owners pay more than they should. Then the vacancy number increases and reduces the number of owners who then have to pay more to make up for the non paying units. Then more owners decide to not pay. These are the $1 units on EBay. Their MF are too high.

Having appraisals like buying houses would greatly benefit the industry and change it from high pressure sales.

Requiring the timeshare to deed back a timeshare would go a long way to stabilizing this industry. I do not specify whether the owner owes money or not. If somebody has a timeshare for a couple of years and owes a great deal then the owner has also paid a substantial amount. The timeshare should be in better shape to forgive the remaining debt and resell the unit. If the original concept of buying a perpetual contract without deed back could be declared against the law then existing timeshares could be forced to take back timeshares.

There are not many products that you can buy that have the ability to set your yearly payment each year and prevent you from ending the contract. Taxes fall into this category and there is of course a great deal of government regulation.

 

[Ridewithme38]

There are not many products that you can buy that have the ability to set your yearly payment each year and prevent you from ending the contract. Taxes fall into this category and there is of course a great deal of government regulation.

good point

 

[ronparise]

How odd! It seems that many can! Deanna Hull on the Crystal Coast of NC and Outer Banks Resort Rentals (Rhonda Williams) on the Outer Banks have been timeshare specialist real estate brokers for years and make a decent living at it. I am sure they are sufficiently insured. Rhonda's predecessor, the late Marvin Beard started OBBR back about the dawn of timesharing.

I doubt that its true, just that she didnt want to be involved with such a sleezy business...as for me I revel in sleeze

 

[AwayWeGo]

Timeshare Companies Are 1 Thing. Timeshare Resorts Are Something Else Again.

These are the $1 units on EBay. Their MF are too high.

Maintenance fees on my $1 eBay timeshare are not excessive.

They might get that way some day, but for now they are not too high.

If somebody has a timeshare for a couple of years and owes a great deal then the owner has also paid a substantial amount. The timeshare should be in better shape to forgive the remaining debt and resell the unit.

Wait -- if somebody who borrowed money on a new timeshare purchase has been paying on that loan for a couple of years, all those payments went to the timeshare company, not to the timeshare resort.

Likewise the remaining balance on the loan is owed to the timeshare company & NOT to the timeshare resort -- the 2 are not 1 & the same.

No way the timeshare itself (i.e., the timeshare resort) can forgive anything owed to the timeshare company, which is a separate business entity all its own.

If the original concept of buying a perpetual contract without deed back could be declared against the law then existing timeshares could be forced to take back timeshares.

Timeshares are typically perpetually deeded property or fixed-term RTU leases, not contracts.

How could perpetual real estate deeds, including timeshare deeds, ever be declared against the law ?

Good luck with that.

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

 

[ronparise]

The value of an item is what another is willing to pay for it. The only way to really know is to slap a sticker on it. After repeated cycles of negotiation and closing of deals, that is only where an appraiser is relevant. Appraisers simply compare the characteristics and price of a property to comparable properties that have recently sold in order to ascertain an estimated valuation.

Even "blue book" car values, it's not like there is some car wizard who every month says "this year/make/model shalt now be worth...". Those values are a reflection of current supply and demand in the marketplace.

exactly


Carolinian has done a good appraisal at Nags Head and Kill Devil Hills above. there were enough sales to come to a pretty good idea of value...

red $5000
white $1500
blue $500

If you want a quick sale, dont expect anything

 

[ronparise]

There is another thread on TUg that brings this whole, somewhat academoc discussion we are having into focus

It seems the poster has been trying to sell, donate or give away his timeshare for several years, and the only offers he has gotten are from someone offering to take it for several thousands of dollars (pccs) his intent is t default and wait for the foreclosure

Seems we have some real evidence that Boca is right..there is no effective, efficient, resale marketplace. at least for this poster

The question is what can be done about it.

I dont like Bocas suggestion that it be mandatory, but I do agree with him that the developers and the HOAs have to take the lead. There is no one else who cares.

 

[am1]

Do reported sales prices mean anything when deed are being recorded? I have had a few where the amount was $500 when I paid more for the deed.

Going forward RTU's may be an easier sell to timeshare marks. It is all in how the sales people think they will sell more timeshares. That may help to solve the problem of what happens when people no longer want a timeshare. But current RTU resorts are probably developer controlled.

So maybe the solution is deeded timeshare but with a defined exit plan. Or the ability to deed back the timeshares to the developer at any time.

Thinking a timeshare will be worth the total value of the resort divided by the amount of weeks sold is dreaming without a good exit plan.

 

[Ridewithme38]

exactly


Carolinian has done a good appraisal at Nags Head and Kill Devil Hills above. there were enough sales to come to a pretty good idea of value...

red $5000
white $1500
blue $500

If you want a quick sale, dont expect anything

I think this is a GREAT point ron that i wouldn't have thought about till you posted it....How long do you think these places were on the market to get $5000?

 

[ronparise]

Do reported sales prices mean anything when deed are being recorded? I have had a few where the amount was $500 when I paid more for the deed.

Going forward RTU's may be an easier sell to timeshare marks. It is all in how the sales people think they will sell more timeshares. That may help to solve the problem of what happens when people no longer want a timeshare. But current RTU resorts are probably developer controlled.

So maybe the solution is deeded timeshare but with a defined exit plan. Or the ability to deed back the timeshares to the developer at any time.

Thinking a timeshare will be worth the total value of the resort divided by the amount of weeks sold is dreaming without a good exit plan.

Often time the deed says something like "for $10 and other good and valuable consideration..." so you are right the deed gives little guidance as to price...In my state there are transfer taxes..and the tax paid is stamped on the deed when its recorded...if you know the rate, you can back calculate to the purchase price. with regular real estate you can probably believe the calculated number, as in most cases there is a licensed and bonded title company standing between the buyer and seller. and there is usually a title insurance policy for the sales price...With timeshares I wouldnt be so sure. There are, Im sure, lots of inflated prices shown (but not paid, to get through ROFR and lots more where the price is understated to get by with less transfer tax

 

[easyrider]

The free market will create liquidity with these unwanted timeshares as people get creative in dumping timeshares.

Some exit strategies could involve setting up family trusts where the good assets are separated from the bad and then impoverishing the owner to where they only have a social security income.

Younger people might consider bankruptcy and it might occur to this person to charge a cash fee to take over other peoples unwanted timeshare property.

I believe some people create LLC's that for a fee will take your timeshare and then go belly up. Doing this on purpose is securities fraud.

Eventually the free market system will find solutions to the many worthless timeshare contracts. Until then, imo, RTU and the few really good timeshares would be the smart buy if your wanting an exit stratagy.

 

[ronparise]

I think this is a GREAT point ron that i wouldn't have thought about till you posted it....How long do you think these places were on the market to get $5000?

Who knows, Carolinian is the expert here... Some people seem to like the beach and have more money than they know what to do with so it could have been an impulse buy.

Consider too, that a $5000 sale could actually be less than that, if mf was paid and current years usage went to the buyer and the seller didnt require compensation. and if the seller paid closing costs and transfer fees. Better stated, if fees and closing costs and current usage were included in the sales price, the actual sales price was a lot less.than want we can see examining the land records.

 

[Ridewithme38]

Who knows, Carolinian is the expert here... Some people seem to like the beach and have more money than they know what to do with so it coulds have been an impulse buy.

Consider too, that a $5000 sale could actually be less than that, if mf was paid and current years usage went to the buyer and the seller didnt require compensation. and if the seller paid closing costs and transfer fees. Better stated, if fees and closing costs and current usage were included in the sales price, the actual sales price was a lot less.than want we can see examining the land records.

Exactly, if a unit sold for $5000 but was for sale for 5 years with an $900 MF, that actual sale price is closer to an TS that sold for $500 within one year....i would think

 

[d2r4s]

No Time Share Market

It seems for some there is a secondary market, as time shares do sale; either at or near nothing or for some value where an person may want that perticular time share.

It seems today that resorts will take in other resorts denpending on there value and how much the resort can get from you in the transaction which in the end will benefit them.

Thee are some resorts which will take back a resort and while it is not common knowledge at least ask.

Having said this and use each of these methods, there is not a large market and if one understands the industry then it is going to be difficult to create a secondary market.

Resorts that are sold have boards which do not have the ability to take back unts or market them. Resort systems look to new markets where they make there money and have no use for a secondary market. In fact if you buy a resort you have use of the unit, trade of the unit but no value within in a system like Wyndham as counting towards your status within that resort.

Resorts are created to produce revnue or stock dividends and a secondary market would reduce that value. You can't buy a MacDonalds or a Strarbucks and sale it back to them even for 10c on the dollar.

Most sales often comes from existing onwers in a system so thiss works well because the value of an owner placed on his resort system would not allow so much new sales to existing owners if they didn't see the value.

Developers close doors to people wanting to exit there system and graeat marketing systems to keep them in buying in the system.

If you own title and have no loan its can be easier to unload a time share, just thing about all those who owe money and are stuck.

J. Beyer

 

[ampaholic]

The CRT TV analogy does not address the primary issue of ongoing, and continually increasing, maintenance fees. It's a poor analogy.

I am crushed that you couldn't follow my analogy and find it "poor".

I was just emphasizing the nature of being "stuck" with something hard to sell because of no market value, but that you could still just use (as you can still watch a CRT TV with no resale value) - I never claimed an analogy to all aspects of timesharing.

Ride got it - so it's OK.

A much better analogy to buying a timeshare is buying a gym or fitness club membership with a huge non-refundable initiation fee, and an annual membership fee which goes on indefinitely. Even if you want to terminate your membership, you can't. Timeshare ownership is more like a gym or fitness club membership in which you are stuck paying ever-increasing annual club membership fees even if you can't use it.

:hysterical: :rofl: :hysterical: Talk about a POOR analogy - no one is "stuck" with a gym membership - if you don't want it, just quit paying - duh

And who but a dumb bunny would ever buy a gym membership with a huge non-refundable initiation fee? Talk about a stretch.

Please re-read the thread title - it's about liquidity in SALES not how bad mf's have become

 

[bdh]

I approached my broker as well. She said she couldnt buy enough E&O insurance to protect us

Ron,

Isn't there one of your Ft Myers realtor brethren that deals in somewhat of a select TS resale market? (only Monroe County properties)??

 

[ampaholic]

... You can't buy a MacDonalds or a Strarbucks and sale it back to them even for 10c on the dollar.

If you buy a MacDonalds or a Starbucks you certainly can resell it for 100 cents on the dollar or even more.

Both Franchisers will not allow franchises to be built in such poor locations that you would expect to lose money when reselling your franchise. The franchiser might not want to buy it back - but someone will.

:hysterical:

 

[CalBoomer]

Most Timeshares can't even be given away

Please note this is not true for good ski resorts, Hawaii, Newport Beach, Aruba, and the Virgin Islands.

Crummy timeshares--you can fill in the blanks--during offseason are truly worthless, and were so since day one.

When you buy a Brooklyn Bridge, you get what you deserve.

 

[Ridewithme38]

Please note this is not true for good ski resorts, Hawaii, Newport Beach, Aruba, and the Virgin Islands.

Crummy timeshares--you can fill in the blanks--during offseason are truly worthless, and were so since day one.

When you buy a Brooklyn Bridge, you get what you deserve.

The thing is, in ski resorts, unless they are one of the 2-3 4 season resorts, they only have 3-4 good months of red weeks....so that leaves 8 months of weeks that can't even be given away...same with a lot of beach locations...

So i stand behind my "most timeshare can't even be given away" because, 8 months out of 12 being worthless equals a worthless resort IMO

 

[ronparise]

Ron,

Isn't there one of your Ft Myers realtor brethren that deals in somewhat of a select TS resale market? (only Monroe County properties)??

I know Pinnacle Vacations...http://www.pinnaclevacations.com/ is the only authorized BlueGreen reseller..able to sell points with certain developer benefits intact

 

[Ridewithme38]

I know Pinnacle Vacations...http://www.pinnaclevacations.com/ is the only authorized BlueGreen reseller..able to sell points with certain developer benefits intact

I don't know if any of them are actually 'authorized' by the developers to sell....
http://www.licensedtimeshareresalebrokers.org/member-directory.php