Do you recommend using an escrow service for rentals?

[Weimaraner]

We own a few platinum/platinum plus weeks [at our resort] and plan to rent them out in 2007. I've been concerned about how to protect our investment and also make potential renters feel secure. I've already been approached by a scam tenant in Cyprus who was eager to rent.

I found out there is an escrow service through Redweek which sounds good but costs an additional $50 for both parties involved. Is it worth the $100 to use an escrow service? Or is it best to just use Paypal? Also is it standard to require 50 percent deposit to hold the week with 50 percent remainder due paid 60 days prior to occupancy?

Thanks for any advice.

 

[Dave M]

Most TUGgers do not bother with escrow services for rentals.

If your communication skills are good, you shouldn't need an escrow service to convince a potential renter that you're legitimate. That means: Promptly replying to messages. Talking to the renter on the phone. Offering a copy of your reservation confirmation or most recent MF bill as proof you have the rights to the week you are offering. Giving the potential renter the name and phone number of someone at the resort where they can call and check on your ownership. (Make sure you clear that with the resort in advance.)Promising to immediately change the reservation after you get paid. (50% or 100%? Your decision.)

As for 50% down and then 50% later versus 100% now, there is no "standard". There are numerous advocates here for both methods, all with successful rental track records.

Read Perry's suggestions for landlords in the last part of the "how to rent" article, located at the top of the list of topics for this Buying, Selling, Renting forum. Also, take a look at the sample rental agreements in the TUG Advice section (link at the top of this page) for some ideas on what terms you should decide upon.

 

[jsfletch]

For the last 3 yers. I've used Redweek (1st Am. Title - escrow) to rent my HGVC property. I've been very satisfied with the results. To me the $100 ($50 to rentor and $50 to rentee) escrow fee is well worth it.

 

[Hawaiiker]

Redweek Rules

Make sure you read the rules if you rent on redweek. I don't know if they changed or not but you have to wait for your rental money. You don't get it right away. I would call before I would do anything with redweek.

They take their good ole time sending you your money but they want their's right away when you post!

Just be careful in your decision.

 

[rickandcindy23]

I used them three times

My first experience with that particular escrow company on redweek was not good. I didn't get my money until 5 weeks after the rental was over and done. I had to call and email to get the money, was promised the check immediately, but did not get it for about ten days after that.

They did refund the $50 I spent for the benefit of their services. That was mighty nice of them.

Unfortunately, I had two other rentals in the works with them and have pretty much decided that my payments will be late again. This last rental was July 22nd through the 29th. I doubt I will get the check anytime this week. You are supposed to get the check 11 days after the rental is over. I should have it by Friday at the latest. They are ever so nice about everything, but when it comes right down to it, this is all about protecting the renter.

I was very nice to this particular renter who asked for this service after seeing the ad on redweek. She called exactly 60 days before the day of the rental was to start (Consolidated has a rule that you can only cancel to that 60th day) and told me she had to cancel. She had First American Title paid in full. I cancelled the week for her that day and offered her another week. She thought she would be out the money completely, but I am not like that. She had a friend who reimbursed her and took over the reservation for a date in August. My original renter wanted to contact First American to change the dates. I asked her if I had not proved myself to be honest? Here I cancelled the week right away, booked another within a few hours for her friend, emailed her friend the confirmation of the week with his name on it. So she agreed that the title/escrow company did not have to know.

 

[regatta333]

Last time I listed with Redweek, they were using Chicago Title, which at that time was charging only $50 for the service. Not sure if they are still around, but I used them once and had no problems.

With the fee now at $100, I'd sooner list with an agent and pay them a 10% commission for finding a renter and handling the financial part of the transaction.

 

[Weimaraner]

WOW! What a response! I posted before lunch and came back to find a five very helpful replies. This was my first post on the board so I plan to visit often. Thanks everyone for your feedback

 

[PerryM]

Trust needs no escrowing

As a landlord, I’m always amazed when someone PayPal’s me thousands of dollars for a timeshare rental – they don’t know me from Jack. If I were to rent I’d have severe reservations sending cash via PayPal to the landlord – go figure.

Why would a person want to use escrow? Lack of trust is the only answer. As most of us know it’s simply a phone call to add a name to a reservation or have a guest certificate issued to any name I want. Then 10 minutes later I can call and change the name to someone else. However this kind of activity is fraud and the police and District Attorney would get involved.

There are basically 2 kinds of escrow services offered:

1) Escrow the money until the renter gets their name on the reservation
2) Escrow the money until the renter checks-in and then leaves 7 days later

#1 can be eliminated by the landlord adding the renter’s name to the reservation BEFORE money is sent from renter to landlord.

#2 is time consuming and the landlord does not get his/her money until many months later – who pays for the lost use of the money until then? Of course, the renter pays for that lost use. The escrow agent wants money too.

I place the renter’s name on the reservation or have a guest certificate issued ASAP BEFORE I ask the renter for money. If the renter is still uncertain I suggest that the money spent on escrow is better spent in renter’s insurance – it covers any problems with the landlord and problems traveling. This is a much better usage of money than escrow.

Trust is something you must instill into the renter starting with the design of the ad and professional treatment of the renter from start to end. A renter who is treated politely and professionally will never ask for escrow – you have done everything to instill trust into the transaction.

P.S.
To the renter, the landlord is but one of a dozen things they don’t understand about renting a timeshare. It’s up to you, the landlord, to put on your teacher’s hat and explain how the rental works – don’t assume the renter knows squat about a timeshare rental.

When you educate the renter, you get to present your side of the transaction and how you want it handled. Tell the renter you want 100% of the funds up front and that once the agreement is signed, you have your money, and their name is on the reservation your job is done.

You must inform them that the rental is not assignable (if you don’t know what that means you need to do more homework) and that if the renter has a problem that you will assign the lease to anyone they can find to take their place - it's not your problem.

When you offer them a 50% discount over the resort’s rates, they must not expect a cancellation policy that goes with a 0% discount rate (developers rack rate). Tell them up front about that fantastic 50% discount and what does not go with it.

 

[jsfletch]

Why would a person want to use escrow? Lack of trust is the only answer.
.

In my case it convenience