- Does it seem like your timeshare fees are out of control, spiraling up until they're just not worth it anymore?
- Are you feeling the pinch, as this takes an ever-bigger bite out of your budget?
- Do you kick yourself every time the bills come in, and question why you're in this situation?
- Do you wish you could just get rid of the thing?
If you're looking for an exit plan from your timeshare, here's a possibility from Diamond Resorts.Some timeshare owners are happily heading for the exit
The Diamond Resorts "voluntary surrender" option
Here's the plan in a nutshell... (more details further down)
- Your timeshare must be fully paid for, and all current fees paid up, in order to participate in this.
- You send an email to Diamond's loss mitigation saying you would like them to take back your timeshare, and why (e.g. financial hardship, medical condition). This is a voluntary surrender.
- They review your case, and decide whether to accept it. It seems that most (but not all) cases have been approved recently.
- If accepted, they send you some paperwork with instructions. You follow the steps and pay them a $250 fee per contract.
- They take back your timeshare. After the process is finished, you are no longer the owner.
NOTE: If you talk to Diamond employees outside this specific group (e.g. call a different phone number, or ask a salesperson), you will probably be told that Diamond has no plan to take back timeshares from owners. It seems that they only share this information with a small subset of employees, and don't want the plan to be too well known. This will only work if you follow very specific instructions.
Is this a good deal for owners?
- First of all, I think it's laudable that DRI does have an exit mechanism for owners who want out. One of the issues with the industry is that some owners are stuck paying for timeshares that are difficult to sell. (See the Blue Week Blues for more on this...) They have little or no control over escalating fees, while being locked into a contract with no end. This DRI plan is not ideal (see more below), but it does offer relief to quite a lot of timeshare owners.
- You can avoid the scams, and deal directly with the company. There have been numerous scammers who target timeshare owners who are desperate to get rid of their timeshares. A typical scenario is that you pay them thousands of dollars up front, and then get no results, accomplishing nothing except lining the pockets of some unscrupulous crooks. With the Diamond plan, you know exactly who you're dealing with, and it's definitely legitimate.
- Once this deal is complete (assuming that they accept your timeshare), you will be free of it completely. You don't need to worry about a buyer getting cold feet, or a sale not being approved by the resort. Once it's done, no more fees! 🙂
- It's fairly fast in most cases, and relatively painless. Once you get an answer from them, all you need to do is follow the instructions. Selling a timeshare on your own (or through a timeshare sales company), you never know how long it will take. Some people spend a long time trying to sell less-desirable timeshares.
- They accept almost all DRI timeshares, both deeded weeks and points. Exactly what they accept could vary over time, but recent results are encouraging. As of April 2016, a survey by the Timeshare Users' Group shows a 93% approval record.
- Say you paid $50,000 for your timeshare. If you go this route, then you get absolutely nothing in return for that $50K. In fact, you need to cough up another $250 in order to buy out of your agreement. You eliminate future fees, but your initial purchase money is down the drain.
- Some companies exercise a "Right of First Refusal" clause, where once you find a buyer for your timeshare, they have the right to buy it from you at that price. In that case, they actually pay you real money for your timeshare. With this DRI deal, you're paying them to take your timeshare, not the other way around.
- They don't accept everything. Some rejection notices include specifics like "currently, we are not accepting properties back from Los Abrigados Resort and Spa," while others are more vague. The criteria aren't published, and it is quite possible that they change over time as inventory fluctuates at different locations. The only way you'll know for sure is to try.
Why pay to get rid of a timeshare?
Why would you PAY somebody to take a timeshare off your hands? In addition to general timeshare resale issues, there are a couple of other factors at play specifically with Diamond.
- Business model. Diamond Resorts is active in buying out other timeshare properties in order to increase their inventory, as opposed to building their own new resorts. These properties may be in some financial distress at the time of the purchase, and could need a fair amount of maintenance and refurbishment to bring them up to Diamond's standards. The cost for this can mean a steep jump in maintenance fees for existing owners.
Los Abrigados in Sedona is one example of this. After Diamond bought the property, the fees jumped steeply, to a point where it became less expensive to rent a week there on the open market than to pay the annual fees. Why would somebody buy your timeshare, when they could get the same vacation for less money with no on-going obligation? This makes it very difficult to sell.
In addition, some owners wind up with legacy points from a company that no longer exists. For instance, Monarch Grand Vacations was taken over by Diamond Resorts. Owners of MGV points were offered opportunities to convert their ownership to DRI points (for a few thousand dollars), but understandably not everyone wanted to do this. Their MGV points can still be used for vacations, but it complicates the issue when it comes to selling the timeshare. Buyers tend to be wary of purchasing something like this because it's difficult to understand, compared to other straightforward timeshares.
- Resale limitations. DRI puts major restrictions on their resale points. You can only use those points at resorts in the collection where they belong (e.g. US Collection), and can't exchange them with Interval or RCI. While most companies have their own timeshare resale limitations, I'm not aware of any other company with such a draconian policy.
As a resale timeshare buyer, why would I want to buy something that I can't use with the big exchange companies? To me, access to those thousands of resorts around the world is a big part of the value of having a timeshare. Given a wide choice of resale timeshares to buy, I simply wouldn't select one that I can't easily exchange. That means a big hit to the value of DRI points on the resale market.
On the other hand, buying a resale deeded week can be a different kettle of fish. We've done this before, and own resale weeks at Diamond Resorts properties that we can freely exchange through both RCI and Interval. From a buyer's perspective, I'd much rather own this than the restricted-use points.
Why this is genius for the company
From my standpoint, this looks like a brilliant plan for Diamond Resorts.
- First of all, they get free inventory to sell again. If you paid $50K for your timeshare, they can get it back for free, and sell it again for even more (given price increases since your purchase). They don't need to build any resorts, or even buy another timeshare property in distress. Why deal with construction or renovation, when all it takes is a little bit of paperwork to get more product to sell?
- When they take back deeded weeks, they can then move those into the points program, making them part of a trust collection. This solidifies their control of any resort HOAs, and DRI also gets management fees for the trust. In the long run, I would think they'd want to convert all legacy weeks into their trust systems. It would simplify things for them to have fewer types of ownership, and it would be more profitable for them, too.
- It cuts down on competition. It used to be pretty common to see $1 DRI timeshares for sale. Although still available, the supply of these cheapies has been dropping since owners who want out of their timeshares are discovering this alternative exit route. This means that for someone who wants to buy a DRI timeshare or add points to their ownership, there are fewer opportunities to purchase at a bargain basement price. That means less competition for the full-price timeshares that Diamond sells.
- Also, it lessens the perception that DRI points are worth little on the resale market. If you look through For Sale listings and see lots of them going for $1, then you start to question why that is. Potential buyers doing their due diligence may start to get concerned. By reducing the number of these in the marketplace, the perception of value can be improved.
Want to proceed? Here's what to do...
- Does this make sense for you? Or does your timeshare have enough value that you'd be better off selling it? Check How much is my timeshare worth? If you choose to sell, you can do it yourself, or go through a company like TimesharesToGo.
- Get moving. There is no guarantee that this program will last forever. There was a similar program before that was discontinued, so you know this could disappear at any time.
- Make sure you're all paid up. If you have any outstanding bills, you cannot participate in this program, so get those wrapped up first.
- If you have a vacation booked, then take that vacation first. Once you do the voluntary surrender, any vacation you have reserved will disappear. You may need to weigh this against moving quickly on this deal.
- Follow the steps outlined here, thanks to the Timeshare Users Group:
DRI deedback instructions
- Include a reason. You don't need to go into specifics, but do say something along the lines of not being able to keep your timeshare because of changes in your health or finances.
- Follow all instructions to the letter. If DRI accepts your timeshare, they'll let you know what you need to do next. Rules may be different based on the type of ownership you have, or the state regulations where you own. Owners outside the US may also have different requirements.
- Once you're in the process, handle everything expeditiously. You'd hate for the thing to fall through because you took too long to get some piece of paperwork sent in.
- Keep copies of everything. It's ideal to have both paper copies and scanned copies of every piece of paperwork associated with this transaction. If you're surrendering a deeded week, make sure to get a copy of the quitclaim deed once it's processed (you might need to call DRI to request this). In case any future questions or problems arise, you'll have the paperwork to back you up.
- What if they decline your timeshare? Perhaps they met an inventory quota and closed the offer for a certain destination. I'd wait a couple of months and try again. Hopefully after they've sold more of their current inventory, they will open up the program again.
Does this sound like a good deal to you? Do you have a timeshare you'd like to get rid of? Have you made use of a deedback program, or sold your timeshare through other avenues? Share your thoughts and experiences in the Reply section below. Thanks!