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Timeshare Study Contents : Barriers to an Effective Resale Market

Barriers Timeshare Brokers face to an Effective Resale Market

Conflicting regulatory requirements raise barriers to effective resale efforts on behalf of widely dispersed sellers and buyers. If timeshare brokers are required to hold multiple licenses, few sales, if any, will be completed.

These regulations make it harder to resell a vacation timeshare to the detriment of resale prices and ultimately timeshare consumers’ equity. These conflicting regulations further exacerbate the “timeshare resale problem.” There are not enough true timeshare resale companies to satisfy demand and supply forces in this market place much less require a licensed timeshare broker to represent every state’s interest.

Most timeshare sales involve more than two states. The graph below shows that approximately 90% of our resale transactions involve three or four states. 

In 2007 over 41% of our timeshare transactions the buyer, seller, timeshare broker and timeshare property were all in different states. Also in 2007 over 89% of our transactions involve at least three different states.

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Graph/Table #1

2007 timeshare brokers resale transactions by state 

Year

One State

Two States

Three States

Four States

2003

0.5%

6.0%

32.4%

61.1%

2004

0.6%

8.4%

37.8%

53.3%

2005

0.4%

10.1%

42.4%

47.1%

2006

0.6%

9.8%

47.8%

41.9%

2007

0.5%

10.1%

48.4%

41.1%

On a typical day in a national timeshare resale office the buyer will be living in one state buying a property in another from a seller in even a different state through a timeshare broker in a fourth state. Prior to completing a sale, several sellers may have to be called to find the right property involving even more states. It is not feasible to shop each situation for an agent that has the right combination of licenses to conduct such a transaction. The call from each buyer has to be answered and processed on the spot to maximize efficiency or the timeshare shopper may call someone else and the sale will be lost. If every agent or even just the timeshare broker had to be licensed in each and every state to be prepared for circumstances like these, those persons would spend half the year maintaining the various continuing education requirements for each license alone. 

Timeshare reselling is not the first type of real estate to run into this issue. Ask commercial brokers how they sell in different states. They will tell you that they have been doing it for years. 

Look at any major city or town that lies on the border of another state. Most of the brokers on either side of the state line have listings on the other side of the border. Also think about the mobile American broker or agent. Several agents travel into other states. Where ever they go they run into selling opportunities. It is natural for salespeople to sell.

This is why the American Real Estate License Law Officials (ARELLO) have placed license reciprocity on their top ten list of things to accomplish. ARELLO Reports have noted that virtually half the states agree that license reciprocity is appropriate. This is so because the goals of licensing—adequate education, ethics training, and policing of licensee conduct—can be adequately protected by the Timeshare Broker’s licensing by its state of residence.

When one drives across the state line one does not stop at the border to take a driver’s license test. This is America and timeshare reselling is truly Interstate Commerce and the framing fathers thought out the system and foresaw states abuse of power favoring their own residents’ interests. This type of “Protectionism” is about ensuring the earning potential of the resident timeshare broker over non resident timeshare brokers rather than actually protecting consumers. Be thankful for the U.S. Constitution.

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Timeshare Resale Study - Table of Contents



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