Timeshare Trap: Why That ‘Free’ Vacation Could End Up Costing You
Timeshare Trap: Why That 'Free' Vacation Could End Up Costing You - Beware the Hard Sell
Timeshare presentations are notorious for their high-pressure sales tactics. You may be enticed by free gifts, discounts on accommodations, or even straight cash to attend a 90-minute "no obligation" presentation. But once you're there, the hard sell begins.
Sales reps will compliment you, build rapport, and make you feel special. Then they'll emphasize all the amazing benefits of ownership - gorgeous condo units around the world, hassle-free vacations, creating memories with your family. It all sounds pretty good.
Next comes the Cruise Line Vacation Club style pricing reveal. They'll quote an astronomical figure like $50,000 for a week of timeshare vacation, making your eyes pop out. Then they'll keep dropping the price and adding more "free" incentives until it seems like an unbelievable deal.
By this point, your sales rep has befriended you and you feel ready to sign. But when you hesitate, the pressure ramps up. They may say things like "I'm not supposed to do this, but..." to make you feel like you're getting insider info and the deal of a lifetime.
They will try to overcome every objection you raise. And if you keep resisting, they might go get their manager who will turn up the heat even more. You may be isolated from your spouse or kept there for hours until you break down and buy.
Unfortunately, their tactics work. Otherwise, they wouldn't keep using them. Under this pressure, your logic and reasoning shut down. You forget to consider the negatives and get swept up in the emotional aspects they've carefully built up.
So before you agree to a presentation, know what you're getting into. Talk with your spouse beforehand and agree you won't purchase anything. Research common tactics so you recognize pressure when it starts. And don't feel bad walking out - you don't owe them anything, even if you got free gifts.
What else is in this post?
- Timeshare Trap: Why That 'Free' Vacation Could End Up Costing You - Beware the Hard Sell
- Timeshare Trap: Why That 'Free' Vacation Could End Up Costing You - Hidden Fees Add Up
- Timeshare Trap: Why That 'Free' Vacation Could End Up Costing You - You Don't Actually Own Anything
- Timeshare Trap: Why That 'Free' Vacation Could End Up Costing You - Getting Out Is Hard To Do
- Timeshare Trap: Why That 'Free' Vacation Could End Up Costing You - Maintenance Fees Keep Going Up
- Timeshare Trap: Why That 'Free' Vacation Could End Up Costing You - Limited Options for Trade-Ins
- Timeshare Trap: Why That 'Free' Vacation Could End Up Costing You - Resale Value is Negligible
- Timeshare Trap: Why That 'Free' Vacation Could End Up Costing You - Vacation Rental Sites Offer More Flexibility
Timeshare Trap: Why That 'Free' Vacation Could End Up Costing You - Hidden Fees Add Up
According to timeshare owners I've spoken with, one of the sneakiest fees is the annual maintenance fee. This mandatory charge covers the upkeep and management of the timeshare resorts. Fees often start around $600 but can be as high as $2,500 per year. And they tend to increase each year, even when no renovations or improvements have been made.
There are also numerous nickle-and-dime fees that can drive up costs. Owners may get hit with fees for making a reservation, cancelling a reservation, splitting up a week, banking unused time, making changes, adding guests, WiFi access, parking, utilities like air conditioning, and more. These annoying fees can range from $25-$250 each.
Trading companies like RCI and II charge their own ridiculous fees too. To deposit your timeshare week for exchange costs around $200. Then you pay another $200+ to confirm an exchange. Phone assistance fees, membership fees, upgrade fees, and transaction fees also apply. And these costs go up year after year as well.
If owners fall behind on their maintenance fees, the consequences can be severe. Most contracts allow the resort to seize and sell your timeshare if fees are delinquent. Not only do you lose your initial investment, but you're still on the hook for any unpaid fees too. Your credit score also takes a huge hit.
But non-payment is shockingly common because fees get so out of control. One industry report I read estimated 30-50% of timeshare owners had stopped paying their annual fees. And servers like Timeshare Exit Team are flooded with owners desperately seeking a way out of these endless fees.
Timeshare Trap: Why That 'Free' Vacation Could End Up Costing You - You Don't Actually Own Anything
Despite what sales reps may tell you, timeshare contracts don't give you actual ownership or real estate rights. You're not buying a piece of property when you purchase a timeshare. Instead, you're acquiring the right to use the property for a specified number of years.
This distinction is made clear in the dense legal jargon of timeshare contracts. Phrases like "right to use", "license to use", and "right to occupy" reveal you don't truly own anything. The resort still holds title to the property and retains full ownership.
So what rights do you have? You can use an assigned unit for a specific week every year. But that's it. You don't have a deed giving you ownership. You can’t rent out your unit when you aren’t using it or bequeath it to heirs. You can't even stay in a different unit at your home resort without paying an upgrade fee.
And your home resort has total control over managing the property. They can shut down amenities, raise maintenance fees, and make renovations without owner input. You have no vote on the HOA board or say in decision-making.
Trading also highlights the lack of actual ownership. Let's say you own Week 7 in Beach Resort A. If you trade for Week 4 in Beach Resort B, you temporarily acquire the right to use that unit. But you don’t own or control anything there.
In fact, your original week may be rented out by the resort to recoup the cost of honoring your trade. So someone else is using "your" unit and generating profit for the resort, not you. Hardly what actual ownership entails.
So while the salesperson may have called it a "deed", you're not in the real estate or titled ownership business. You simply purchased the right to use accommodations for a designated amount of time. After that contract expires in 10, 20 or 30 years, you're left with nothing except memories and a lighter wallet.
This nuanced distinction is rarely explained to buyers, perhaps intentionally. Calling it real estate or ownership makes it sound more tangible and valuable. But educated buyers should recognize timeshares grant only temporary and limited usage rights.
Timeshare Trap: Why That 'Free' Vacation Could End Up Costing You - Getting Out Is Hard To Do
Resorts construct contracts purposefully to keep you locked in. They make voluntary exiting unattractive and create obstacles at every turn. It's a cunning tactic to guarantee steady income from annual fees over decades.
Cancellation periods are short - just 5-10 days in most states. So once the vacation glow fades and you experience buyer's remorse, it's usually too late. You're stuck with what you signed, for better or worse.
Selling or giving away your timeshare is also no easy feat. Scammers abound on sites like Craigslist, eager to exploit desperate owners. Even legitimate brokers or agents struggle, since supply exceeds demand in a saturated resale market. Maintenance fees also carry over to the new owner, limiting interest.
Donating may seem like an easy out, letting some charity or non-profit deal with it. But shady outfits may charge you exorbitant processing fees without ever taking possession. And most legitimate non-profits want nothing to do with timeshares.
Upgrades rarely make financial sense either. Sales staff may pressure you to "trade up" to a nicer unit, squeezing more buy-in from existing owners. But this just renews the same cycle of endless fees in the future.
Resorts count on the hassle of exiting to keep you paying those annual fees. But some fed up owners stop paying anyway, trashing their credit. Others inherit unwanted timeshares unknowingly via wills. And increasingly, scam exit companies prey on desperate owners facing financial ruin.
The only true exit is through the resort itself. But they have little incentive to let you out of your contract. If you're persistent and polite in requesting a surrender, some may eventually agree. But you'll need incredible patience and likely have to pay hefty surrender fees too.
Renting out your unit can help offset costs temporarily if allowed. But permanent freedom requires formally relinquishing ownership back to the resort. And that transaction only happens on their terms.
Timeshare Trap: Why That 'Free' Vacation Could End Up Costing You - Maintenance Fees Keep Going Up
Perhaps the most insidious way timeshares trap owners is through ever-increasing maintenance fees. These mandatory annual charges pay for upkeep, management, utilities, taxes, insurance, and operations of the resort. Fees typically start around $600 but can be as high as $2,500 per year.
And the costs almost always trend upwards each year. Owners report maintenance fee hikes of 4-7% annually, even when no renovations or improvements have been made. These steady increases compound over the decades of your contract until you're paying astronomical sums just to use your home resort a week a year.
- Special Assessments - Large, unexpected costs like natural disaster repairs or overdue upgrades often trigger one-time assessments. These can add hundreds or thousands of dollars more to your annual fees.
- Exchange Company Fees - As RCI, II, and other exchange purveyors increase membership, transaction, trade, and upgrade fees, resorts pass those costs to owners as well through higher annual fees.
- Reserves - Legally required contingency funds and reserves put away for future renovations also contribute to relentlessly rising maintenance costs.
These compounding factors create a toxic cycle of continuously escalating fees. Owners feel trapped paying ever-more for the same timeshare, year after year. Numerous online forums feature countless tales of woe from owners astonished by the skyrocketing fees and how developers misrepresented future costs.
Timeshare Trap: Why That 'Free' Vacation Could End Up Costing You - Limited Options for Trade-Ins
Trade-ins seem like they should offer timeshare owners an easy exit strategy. But the reality is far less appealing than the resort sales reps present it to be. Trading in your existing timeshare towards a new purchase unfortunately provides very limited relief.
The sales pitch goes something like this - upgrade to a nicer unit, in a better location, with more demand and trading power. Turn in your current timeshare to help offset the buy-in cost for something newer and shinier. Trade up to gain flexibility and take more vacations each year.
It sounds reasonable and enticing. But read the fine print first. Most resorts significantly mark up the trade-in value of your existing timeshare - often by 50% or more above market rates. So your older timeshare may book for $10k, but they inflate the trade-in value to $15k. This lets them purportedly discount the new purchase price, while still collecting maximum dollars from you.
Even legitimately generous trade-in offers carry long-term risks. You relieve yourself of one timeshare, only to burden yourself with a new one. Those ever-increasing annual maintenance fees start accruing again for another 10 or 20 years. Except now they're higher because your new unit is fancier.
And your exit problems persist, since the resort still retains ownership and control. The cycle continues - you're still locked into something you don't actually own, facing more fees piled on top of fees each year. When the next tantalizing offer to trade up comes along, how will you resist without getting sucked into perpetual upgrades?
Also consider what happens to your old timeshare that got traded in. It likely gets absorbed back into the resort's rental pool, generating profits for them. But you don't receive any compensation for relinquishing it. The resort ends up with a "free" unit to rent out, while you simply traded perpetual fees for more perpetual fees.
Perhaps the worst position timeshare trades can leave you in is with multiple ownerships. Savvy traders always upgrade to something that costs a bit more rather than doing a straight across trade. This incrementally increases buy-in over multiple exchanges. Before you know it, you're making mortgage-sized payments on maintenance fees for 3-4 weeks of vacation timeshare!
Timeshare Trap: Why That 'Free' Vacation Could End Up Costing You - Resale Value is Negligible
The minuscule resale value of timeshares is one of the harshest realities owners face. Sales reps tout timeshares as valuable vacations properties that will one day provide rental income or inheritances to your heirs. But the truth is timeshares have virtually no resale value, especially once you factor in the perpetual maintenance fees attached.
On resale websites like RedWeek, owners try in vain to recoup some of their initial buy-in cost, only to find there’s almost zero demand. New timeshares sold by resorts often cost $20,000 - $40,000. Yet on resale markets, you’d be lucky to get back 10% of that. A $30,000 timeshare might fetch just $3,000. And that’s if you can even find a willing buyer, which is uncommon.
This huge disparity stems from oversupply in a saturated market. Developers aggressively sell new inventory, flooding the market with more weeks than there are interested buyers. Exchange companies like RCI also rent out unused deposits, further ballooning supply. There simply aren’t enough people looking to buy timeshares on resale versus the glut of owners desperately trying to sell.
The perpetual maintenance fees that transfer with ownership also drag down resale prices. New buyers don’t want to take on thousands in annual costs for decades to come. So sellers must price units low enough to offset the ongoing fees. But then they recoup almost none of their original investment. It’s a no-win situation.
Timeshares are a depreciating asset, not an investment. Their value deteriorates rapidly, like a car driven off the lot. You’ll never “make money” on a timeshare despite what salespeople insinuate about rentals or appreciation. It’s a luxury you slowly pay for over and over through annual fees.
Ironically, the only valuable timeshares on resale markets are fixed weeks at highly demanded resorts. But those are exactly the ones developers won’t sell nowadays. Instead they peddle points packages with no set dates, properties, or units. This gives the resort maximal flexibility but leaves owners with nothing fixed to sell later.
Given the economics, timeshares are a terrible legacy to leave heirs. No child wants to be shackled to their parents’ bad investment and annual fees in perpetuity. Donating them is also nearly impossible, since even charities see no value. Timeshares bought on the resale market are the only sensible option, since you avoid massive markups. But buying from the developer is financial suicide.
Timeshare Trap: Why That 'Free' Vacation Could End Up Costing You - Vacation Rental Sites Offer More Flexibility
In contrast to timeshares, vacation rental sites like Vrbo, Airbnb, and Vacasa provide owners and renters much more flexibility and control. These platforms offer an appealing alternative to lock-in timeshare contracts with better economics for all parties involved.
On the rental supply side, owners of condos, cabins, and other properties enjoy numerous advantages over timeshare owners. They retain full actual ownership and real estate rights over their property. They can use it themselves, rent it out, or sell it whenever they choose.
There are no mandatory maintenance fees on individually owned properties either. Owners pay taxes, utilities, and upkeep only when occupying the property. Costs are predictable based on use, not imposed by a corporation. Homeowners associations exist commonly for shared amenities, but costs are modest compared to timeshare resort fees.
Renters benefit from abundant supply and competition on rental platforms, rather than a single corporation controlling inventory. Nightly rates are typically far below rack rates at hotels in the same areas. Guests can choose from thousands of properties to find the perfect location, amenities, spacing, and budget for their vacation needs.
The platform fees charged by Airbnb, Vrbo, and other sites seem minimal compared to timeshare exchange costs. Platforms also provide transparent pricing, user reviews, and flexible search tools - functionalities superior to opaque timeshare exchange processes.
Vacation rentals allow both owners and guests to select whatever dates they desire rather than being locked into fixed weeks. Owners can potentially earn income all year, while visitors enjoy more scheduling flexibility. No more begging an exchange company for proper trades months in advance.
Rental platforms also grant much more choice in terms of locations. Timeshares often restrict owners to one home resort. But with platforms like Airbnb, owners can list properties around the world. Renters enjoy browsing listings across hundreds of in-demand destinations to find the right trip.
Trading timeshares through exchange networks involves relinquishing your home unit temporarily. But with rental platforms, owners keep 100% usage and income rights from their property at all times. They're not dependent on external exchange mechanisms to swap weeks and points.
On peer-to-peer platforms like Airbnb, guests also get to experience residential accommodations with kitchens, living areas, laundry, and extra space. Timeshares typically offer hotel-style units without full amenities. The platform experience focuses on feeling "at home" when away.
Between vastly greater supply, pricing transparency, location breadth, flexible search tools, and home-like options for renters, platforms like Airbnb demonstrate a superior alternative to timeshare ownership models. Users on both the supply and demand side retain control over their assets, income, costs, and vacation experiences rather than ceding it to a corporation.