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Timeshare Study Contents : Developer Resale Issues

Resort Timeshare Developer Resale Issues

Some resort timeshare developer sales practices imply easy resale marketability. This creates a false presumption for the buyer that inflates the timeshare new sale value. When the time comes for owners to sell they are shocked when they learn about resale values. 

We also noted that understanding individual owners’ timeshare resale rights are clouded by confusing language in the condominium closing documents. Some have Right of First Refusal (ROFR) and Exclusive Rights to Resell imbedded deep in the new sale documents--not fully explained to the buyer.

Sometimes there are changes to the timeshare product after purchase by a consumer. The product seems to morph into what is more profitable for the resort timeshare developer and this further confuses the owners as to what they really own and how they can use it.

Many times property showings to resale buyers are blocked or restricted by the resort. Sometimes they are actually 100% occupied. Most of the time resort timeshare personnel are not accommodating prospects for owners wanting to resell, and whenever an owner or broker requests a showing to such a prospect. This will disappoint potential buyers and scare off some permanently from that resort. If the concept of reselling in the future is on your mind and it is hard to buy because of such practices, would you purchase at a timeshare resort with such restrictions?

Resort timeshares that charge excessive transfer fees to sellers unnecessarily burden the resale process. It has been noted that some resorts use this as a tool to further frustrate resales. This is based on our experience in closing thousands of timeshare resale transactions with willing buyers and sellers.

Point Systems and market values where usage value and rights are controlled by the resort timeshare or the exchange company are also falling suspect by not being in the timeshare owner’s best interest. The ability to trade for like accommodations is uncertain in the future for those owners. More controls are needed to help support owners’ equity. 

The resort timeshare developer new sale industry average of near to 50% marketing costs distorts owners’ perceived value and eventual resale expectations. For the most part developers spend upfront thousands of dollars per unit for sales centers, mailings, gifts, mini vacations, promotion, other marketing, commissions, overrides and draws to sell timeshare vacations. The developer invested upfront thousands of dollars to attract buyers to its marketing regime to sell new timeshares.

Most would argue that without an onsite ongoing organized efficient sales force experienced in selling timeshares, fully funded marketing programs in place, access to showing the units and with market financing, timeshare units cannot be sold for the same price or higher on the resale market. 

What would one have to charge to rebuild the scenario to help owners resell as efficiently as the resort timeshare developers’ new sale? Would the marketer need to charge a 50% marketing cost when they put the resale on the market for the owner? More than likely the owner has a mortgage and an expectation of some equity.

Who primarily has a vested interest to see that timeshare vacation properties resell? Only the reselling owners and the brokers have such a vested interest in seeing that a viable resale market exists.

<< Previous : Barriers to an Effective Resale Market - for Brokers | Next : Reasons People Resell their Timeshare Vacations >>

Timeshare Resale Study - Table of Contents



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