The timeshare trap

Frustrated with fees, timeshare owners struggle to donate, sell or give away vacation property.

April 3, 2002: 1:01 PM EST -By Sarah Max, CNN/Money Staff Writer

NEW YORK (CNN/Money) – If you’ve attended a timeshare sales pitch for free Sea World tickets or a round of golf, you know how easy it is to walk out with not just the freebies, but a lifetime of annual vacation shares as well.

Trouble is, it’s not so easy to dump that timeshare down the road.

Even as developers continue to lure new buyers, the market is flooded with timeshare owners who are paying $100 to $1,000 in annual maintenance fees on vacation shares they bought on impulse or can no longer use.

Renting is one way to cover annual costs, but that requires work and is never a sure thing. Selling is perhaps the best solution, though that, too, is easier said than done. Supply of resale timeshares so outweighs demand that owners find it nearly impossible to unload their shares short of giving them away.

Laurie Deitz, who purchased a timeshare in Whistler, British Columbia, is among them.

“I wasn’t using it as much as I thought I would and found it was impossible to exchange my shares for the places I really wanted to go,” said Deitz, who was paying about $260 (U.S.) in maintenance fees each year. When she called a real estate agent, “he told me there were 50 people in front of me trying to sell their timeshares through him.”

Your worthless piece of heaven

Unlike most other real estate, timeshares typically don’t appreciate in value. They’re more like cars in that respect. “You don’t buy a

timeshare as an investment,” said Bill Rogers, founder of the Timeshare Users Group (TUG). “You buy it because you want to use it.”

You don’t buy a timeshare as an investment. You buy it because you want to use it.

Just as your car loses value the second you drive off the lot, so too does your timeshare. This is because developers typically add 40 percent to 60 percent onto the selling price to pay for their marketing expenses. After all, those free tickets and vacations they give away cost money. If you can sell your timeshare for half of what you paid, consider yourself lucky.

Fact is, most timeshares are still sold the old fashioned way – by a developer with freebies and a fine-tuned sales pitch – and few people realize that a resale market even exists. “Anybody selling in resale just doesn’t have the demand,” said Rogers.

Real estate agents know this to be the case. Although some do accept timeshare listings, they charge 25 to 35 percent commissions to sell this kind of property – more than five times their normal rate. Many also insist on up-front fees of several hundred dollars with no guarantee of success. “We strongly recommend that you avoid real estate agents who charge an up-front fee,” said Rogers.