Timeshares never came back after the recession of 2008. Resales are not recovering value.

[OldGuy]

I find it hard to believe the big developers haven't figured out a way to profit from the resale market.

I always figured they hope prospects didn't know anything about the resale market.

Why would someone pay them $20,000 for something someone's trying to give away on Craigslist? . . . But they do.

 

[CalGalTraveler]

One factor depressing prices is that some hotel-branded sellers use a strategy to set their price artificially lower than the market because they want the property to be ROFRed so they can get out quickly and deal with a reputable buyer (namely the developer) who will cleanly take it off their hands instead of a resale which could take months and have a finicky buyer. The sooner that they can close a buyer at $100 the faster it will enter the ROFR process and be sold in 30 days.

I'd say that's a pretty fast way to get rid of a timeshare. If you are in a system that doesn't have ROFR or a market that would not readily take your timeshare as a gift then it must be a poor property (e.g. silver season, poor points value, garbage bin view, high MF relative to rents). (location, location, location) Some old cars and boats fit into that category too.

What they originally paid is what economists call a sunk cost and should not matter to the calculation as you have extracted your value out of the property over n years. The focus is to avoid future costs because that involves cash.

 

[OldGuy]

@OldGuy Ever try to sell an old car or RV when you don't want it anymore? Those don't have much value either. And they are hard to sell.

That statement has involuntarily grown on me.

I can't think of much that is easier than setting it out alongside the road with a for sale sign on it, or putting it on craigslist.

I have never, ever been unable to sell an old car. any old car.

It's certainly not a good comparison to how hard it is top get rid of a timeshare.

Even if it was hard to do (not), I could always take it to recycling and get $200.

But, it probably sounded good in your head.

 

[OldGuy]

One factor depressing prices is that some hotel-branded sellers use a strategy to set their price artificially lower than the market because they want the property to be ROFRed so they can get out quickly and deal with a reputable buyer (namely the developer) who will cleanly take it off their hands instead of a resale which could take months and have a finicky buyer. The sooner that they can close a buyer at $100 the faster it will enter the ROFR process and be sold in 30 days.

I'd say that's a pretty fast way to get rid of a timeshare. If you are in a system that doesn't have ROFR or a market that would not readily take your timeshare as a gift then it must be a poor property (e.g. silver season, poor points value, garbage bin view, high MF relative to rents). (location, location, location) Some old cars and boats fit into that category too.

What they originally paid is what economists call a sunk cost and should not matter to the calculation as you have extracted your value out of the property over n years. The focus is to avoid future costs because that involves cash.

There's been a bit of talk around here lately concerning the dichotomy of timeshare owners on this forum, and this is an example of that.

Millions of timeshare owners would have no idea what stuff in this post is all about..

 

[CalGalTraveler]

@OldGuy Your timeshare must have been pretty bad. I am sorry you had so much trouble. I've had two cars recently that I could not sell.

1) Tried the side of the road (actually several places plus craigslist) - bunch of tire kickers and no shows - what a waste. Finally took it to Carmax and we were able to recoup a proration of our 5 year service agreement when we bought it there for our teen a few years back - hows that for a deedback? It was a nice mustang convertible 2012 with leather seats and ran well. Took a big hit $ to get it off of our hands;

2) a car that would cost more to fix than it is worth. Trying to figure out how to get rid of that one now.

 

[OldGuy]

@OldGuy Your timeshare must have been pretty bad.

Another miss.

In the day, some were #1 in every Trading Power test, and could exchange for anything, anywhere, one-for-one, with a $300/year maintenance fee (20 years ago).

Others were Gold Crowns, luxurious gated golf community in popular regional destination.

All top-rated, great places to stay.

You can't do any better than the best information available at any time.

That is the essence of much of the problem.

 

[dioxide45]

I find it hard to believe the big developers haven't figured out a way to profit from the resale market.
It seems it could make their retails sales better.
Lower the default rate.
Provide better financing ...
Perhaps some corporation will figure it out ... fairly soon they'll have access to negative interest rates.

Some developers have and they call it right of first refusal. Marriott tries to acquire weeks back at 30% of what they can resell them for.

 

[CalGalTraveler]

Another miss.

In the day, some were #1 in every Trading Power test, and could exchange for anything, anywhere, one-for-one, with a $300/year maintenance fee.

You can't do any better than the best information available at any time.

That is the essence of much of the problem.

Ha! But that is the risk of traders vs. owning desireable properties where people want to go (location, location, location). The trader has the best trade value but then the rules change, the MF skyrockets because it was artificially too low/not building reserves, then it is not such a good deal anymore and NO ONE wants them. There is a reason MF was only $300. The owners didn't even want to stay there and the only reason it had value was for trading. When that value disintegrates all you have is swampland in Florida.

 

[OldGuy]

Just curious . . .

How is it that you know so much about something when you don't even know where or what it is?

 

[CalGalTraveler]

Well tell us what it is. You were the one that said, "#1 in every Trading Power test, and could exchange for anything, anywhere, one-for-one, with a $300/year maintenance fee."

You were the one that said you couldn't get rid of it...

We are simply responding to what you are saying.

 

[OldGuy]

You can't do any better than the best information available at any time.

That was true 20 years ago and it's true today. History tells is what the future will likely be.

How will the favored timeshare program du jour fare in 20 years?

 

[OldGuy]

@OldGuy a car that would cost more to fix than it is worth. Trying to figure out how to get rid of that one now.

$200 at recycle

Still easier than getting rid of a timeshare.

 

[OldGuy]

I can see a lot of what I have experienced and have been talking about in the things Cindy has been saying lately.

It's pretty widespread for those who have been timesharing 20 or 30 years.

 

[Todd Fogelberg]

A newbie (me) doesn't go through a thread like this and rush out and buy a timeshare. Semi-retired this Spring (still working FT during the tax season) and sold a 2nd home. More time and money than I've ever had. One of my clients bought into Marriott (retail) and got me thinking...maybe a timeshare would fit into my semi-retirement lifestyle. So I landed here and have been reading and exploring. Timesharing doesn't work well in my 2 or 3 favorite US cities.....Boston, New York, and Las Vegas. By that I mean, I can simply rent a hotel room or suite, often with a hot breakfast, for the # of nights (hint 7 is too many) I want to visit, and avoid this whole scene. I gather it works better for folks who return to high demand beach locations on an annual basis, but that isn't my need. Ownership is a myth, who on earth would want to get mixed up with the complexity of owning a big resort run by absentee owners, lawyers, and accountants? (Staying in a clean hotel room with a small table and place to plug in my coffee maker is not the apocalypse.)

 

[CalGalTraveler]

@OldGuy you speak in generalities and have skirted questions. Growth comes from learning from failures and that is what everyone is trying to do here but you have provided no specifics to learn from. You continue to whitewash the entire situation negatively just because you had a bad experience and got stuck.

No one said this works across the board. But there are niches that work and several posters gave examples of how they work which is what the OP asked for. The sky is not falling. Like all things in life YMMV applies here. (And you really have to pay attention to location, location, location)

You even stated on another thread how valuable you found RCI getaways. You would not have access to RCI if you didn't own a timeshare at one point. It sounds like despite your negative experience, you even found a niche that works for you.

 

[OldGuy]

I cannot be any clearer than You can't do any better than the best information available at any time.

But to give it yet another try . . . those who followed the advice of the day on TUG, or anywhere, 20 years ago . . . are the ones posting about problems getting rid of them, or having finally gotten rid of them, or outrageously high maintenance fees (which we have never had), or a total collapse of resale value, and Sunset Clauses, and foreclosures, and etc., etc.

Well, at least it's clear to me . . . that even if you follow the advice of those who are convinced they have the best deal going, wait a few years and see what happens.

 

[CalGalTraveler]

I cannot be any clearer than You can't do any better than the best information available at any time.

So what's new here? I could say the same about our stock portfolio, our real estate, my career. Nothing in life is guaranteed. You take calculated risks and hedge your bets. Risk/reward.

Most resale purchases are small so it shouldn't bankrupt anyone. If it does, you are taking undue risk and should not be in this game. So far with a very small amount of capital spent on resales we are well ahead of the game compared to renting. We could sell both of our resales for about what we paid or a bit more. But if they depreciate, we will still be ahead compared to what it costs to rent 2 bdrm oceanfronts in HI in peak season because we only needed 3 stays to recoup our capital cost.

If we lock-off our unit in the future we can rent half to pay for the entire MF so our stay on the other half is free. Or we can have a 2 week stay in an oceanfront 1 bdrm during peak season on Maui for only $1300 week at the Westin. Try getting that deal in an oceanfront rental and being given preferential priority for the best units during whale season. (You won't)

Besides, using a TS is lot more fun than the stock market

 

[CalGalTraveler]

A newbie (me) doesn't go through a thread like this and rush out and buy a timeshare. Semi-retired this Spring (still working FT during the tax season) and sold a 2nd home. More time and money than I've ever had. One of my clients bought into Marriott (retail) and got me thinking...maybe a timeshare would fit into my semi-retirement lifestyle. So I landed here and have been reading and exploring. Timesharing doesn't work well in my 2 or 3 favorite US cities.....Boston, New York, and Las Vegas. By that I mean, I can simply rent a hotel room or suite, often with a hot breakfast, for the # of nights (hint 7 is too many) I want to visit, and avoid this whole scene. I gather it works better for folks who return to high demand beach locations on an annual basis, but that isn't my need. Ownership is a myth, who on earth would want to get mixed up with the complexity of owning a big resort run by absentee owners, lawyers, and accountants? (Staying in a clean hotel room with a small table and place to plug in my coffee maker is not the apocalypse.)

This doesn't work for everyone. If you are happy with a hotel, then this is not for you. Just note that not all timeshares require 7 days. Worldmark, HGVC, Marriott DC are points programs and can be reserved for as little as one day and they have properties in the cities you mentioned.

 

[OldGuy]

I can see a lot of what I have experienced and have been talking about in the things Cindy has been saying lately.

It's pretty widespread for those who have been timesharing 20 or 30 years.

In that regard, I agree with Cindy that something happened around 2008 or 2009, the resale market collapsed, and has only gotten worse.

In the Gold Crown, gated golf community, the first 15 units of timeshare had "golf rights", so there was a very strong market among locals to purchase a week to get annual golf rights. There was a waiting list and resale weeks were going for $7000-$8000.

I made arrangements with a post card company that I would take any they got, for next-to-nothing. I got four and my buddy, who was on TUG at the time, got three. We thought it was a no-brainer way to make a few bucks.

I sold one right away for $4900 (only semi-greedy), and then BOOM, it just stopped. No one wanted to buy and everyone wanted to get rid of theirs. It took years to get rid of (give away) two more, and I kept one, for golf. My buddy still has his three.

So, yeah, Cindy, something happened, and it was widespread, and it's only gotten worse.

As for what has held it's value, the older legacy resorts in SW FL have, and are still doing well in resale.

 

[CO skier]

What do you think has caused the devaluation even further from 2008?

In a word "eBay".

The auction site revealed that most timeshares are worth $1 or less. It is like the Stock Exchange where everything there is to know about the timeshare market is priced at any given moment. And timeshares are nothing more than penny stocks.

Every informed buyer does their own value analysis. I paid more than $1 for my timeshare, because my personal dividend rate is more than 50% versus renting equivalent accommodations. These dividends have more than paid for the timeshare purchase over the last 10 years.

I believe that for the sellers of my timeshare purchases, the timeshare must have represented a loss each year, and they were happy to be freed from the annual maintenance fees, which I find to be a bargain that keeps on giving. Win-win.

 

[bogey21]

@OldGuyI've had two cars recently that I could not sell.

Here in the DFW area it is not a problem. You just call a charity, Kars for Kids. They have been doing it for many years and will take anything. If it has value, you will get a tax deduction. If no value, you are rid of the car...

George

 

[OldGuy]

Here in the DFW area it is not a problem. You just call a charity, Kars for Kids. They have been doing it for many years and will take anything. If it has value, you will get a tax deduction. If no value, you are rid of the car...

George

Dang! You're back to cars.

I think I gave a timeshare to that charity that used to take them way-back-when.

 

[Todd Fogelberg]

To the original post, why haven't values recovered? (We're in a booming economy for almost a decade). I guess it is a combination of factors including new options (VBRO, AIRBNB etc), booming hotel construction with more options (suites in some brands), busier people who don't take week long vacations, the change in air travel (it's not fun anymore), and the internet which has made resources like this readily available and shine light on the industry. The good news is that a timeshare is a better option for most folks than an RV (I own one but use it quite a bit) or a 2nd home. But I'm not sure it's a better option than booking resorts and hotels (or renting a TS) on an "as needed" basis. Timeshare "owners" are passive. The management can generally charge whatever they want. The legal and professional fees (all part of your MF) are very high due to the extreme complexity of these entities. And the complexity added to one's estate (I'm 58) is definitely a factor folks need to take into consideration. I simply don't consider timeshares a very user friendly option (fixed week or points or banking week) for most folks. The complexity of many of these systems is mind numbing.

 

[OldGuy]

The good news is that a timeshare is a better option for most folks than an RV (I own one but use it quite a bit) or a 2nd home.

We've got one of both of those, and a couple timeshares. Our cup runneth over.

But I'm not sure it's a better option than booking resorts and hotels (or renting a TS) on an "as needed" basis. Timeshare "owners" are passive. The management can generally charge whatever they want. The legal and professional fees (all part of your MF) are very high due to the extreme complexity of these entities. And the complexity added to one's estate (I'm 58) is definitely a factor folks need to take into consideration. I simply don't consider timeshares a very user friendly option (fixed week or points or banking week) for most folks. The complexity of many of these systems is mind numbing.

Agree with all the rest, too.

It used to be simple, then those who sit in rooms dreaming up obnoxious things, came up with ever-more-confusing ways of getting more money from their cash-cow owners, so they could keep doing what they were already doing. It would be fun to be in on those meetings . . .

Hey, think they will buy this?

No, way!

But, that's what you said to everything else we've dreamed up . . . and they did, they gave us more money.

OK, let's do it.

 

[CalGalTraveler]

@OldGuy Sorry to hear about your TS situation. Despite the best knowledge at the time stock market and real estate can go south too. No one bats 1000.

Besides it sounds like you took lemons and made lemonade. You made the best of the situation and it doesn't look too bad. You risked minimal capital ("paid next to nothing") and could rent out the unit or use so you had little at risk in the first place.

Here is a back of the envelope: If you rented until you gave away for $500 a week your burn rate would have been minimal assuming MF was $800/unit. So here is what it looks like assuming 3 years to give away:

- $400 Cost to buy 4 units (estimated)
+ $4900 Sale of one unit
- $7200 MF on 3 units for $800/year each for 3 years
+ $4500 Rental income of 3 units until disposed @$500 per week for 3 years
----------
$1800 Net gain @ 3 years


If you didn't rent:

- $400 Cost to buy 4 units (estimated)
+ $4900 Sale of one unit
- $7200 MF on 3 units for $800/year each for 3 years)
-----------
- $2700 Net loss if 3 years to dispose

Of course, I made some assumptions which may be different than your situation. Overall your net loss is estimated <10 k if you didn't rent. But if you rented until you disposed you could be at BE or slightly ahead. This is nothing. People lose a lot more in new RVs, Developer TS purchases, stock market, small business, and Vegas every day.

Plus, unlike stock market losses, you could actually use and enjoy the unit. The financial crisis could have made it longer to dispose and unable to rent some years but I'll bet it was sub $20k loss at worst. So what? People blow $50k on weddings for ONE DAY.

It sounds like you approached your TSs as an investment to flip and you got burned so your expectations were different than most seeking to save money on vacation rentals...the misalignment in expectations may exacerbate your dissatisfaction more than most.