Timeshare resale limitations - a double edged sword

Resale limitations - a double edged sword

You can buy a timeshare either retail (directly from the developer) or resale (from a previous owner). Obviously timeshare companies would rather if you buy straight from them, since they make a lot more money that way.

Creating limitations on resale timeshares is one way they've come up with to get you to do this, but there are ramifications to this that cut both ways.

This sword can cut both ways Limitations on resale timeshares are a double-edged sword

Buying timeshares retail vs. resale

Buying a resale timeshare isn't like buying a used car, where mileage, maintenance, wear and tear can be very different than buying it new.

With a timeshare, whether you're paying retail or resale prices, it's highly unlikely that you'd really be the very first person to stay in that timeshare unit. Almost certainly, plenty of other people have stayed there before you, no matter how you buy.

If you're staying in unit #519 at a timeshare resort in Hawaii, this unit has various people staying it all through the year. Some of them could have purchased from the developer, while others bought from an earlier owner. They're all staying in the same unit, and getting the same vacation.

So how do the developers get you to pay higher prices to buy it straight from them? When "retail" and "resale" are the same product, how can they make their offering different and better?

Typical timeshare resale limitations?

That's where timeshare resale limitations come in. These are rules created by timeshare companies to differentiate between what you get when you buy straight from them (retail), vs. buying from someone else (resale).

The base product itself (the timeshare where you end up staying on vacation) is exactly the same, so the differentiation is in the features and perks that surround it.

They give you something extra when you buy from them, then make that unavailable to people who buy a resale timeshare. Nobody else can sell the same extra features as they can. Looking at it a different way, you can buy these features, but you can't sell them.

Here are a few examples:

  • At Marriott, resale owners who buy from a third party cannot enroll their timeshare in the Destinations Club points-based internal exchange system, or trade it for Marriott Reward Points to use for hotels. You can still exchange through other companies.
  • At Diamond Resorts, timeshares bought via resale do not include membership in THE Club, Diamond's internal exchange system. Resale points also cannot be exchanged through RCI or II, and have very limited usability. (Resale deeded weeks can still be exchanged through RCI or II.)
  • At the Disney Vacation Club, people who buy resale timeshares are excluded from using certain portions of the Member Getaways Program.
For Sale sign One way to buy is from another timeshare owner who wants to sell

Effects on buying a RETAIL timeshare

Going this route means you pay a premium and buy direct from the developer. The whole reason they created these resale restrictions is to give you a reason to pay that extra price and buy straight from them.

Here's the way they created it to work.

  • PRO: You get all the perks, and you're viewed by the company as a full-fledged owner, all of the features, and none of those pesky limitations. You're eligible for clubs, internal exchanges, elite status, or whatever that particular company offers. These are the extra benefits you get.

But here's the double-edged flip side...

  • CON: When you go to sell your timeshare at some point in the future, those resale limitations will kick in. That means you don't get to sell the same thing as you own. Whatever value you attach to those features and perks will disappear when you decide to sell the timeshare to the next person. You're guaranteed to lose that value when you sell.

It's like buying a house with a swimming pool, but knowing that when you decide to sell, the pool will be removed. You pay for the pool and you get the use of the pool, but you have no chance of recouping that extra cost when you sell. When you want to sell, potential buyers who want a pool would not be interested in your property, since you'd be selling yours without the pool.

Effects on buying a RESALE timeshare

Following this route, you buy a resale timeshare from a prior owner, either directly or through a broker. You pay a lower price than buying from the developer, but your ownership is subject to resale limitations.

Here's how they want you to view it, so this option is less attractive for you.

  • CON: Your timeshare ownership is subject to whatever resale limitations that company has created. You may not be eligible for their exchange club, premiere status levels, etc. You can still use your timeshare or exchange it via an exchange company (in most cases), but you don't get the perks of a developer purchase. In their eyes, you're a lower tier owner.

But here's the flip side...

  • PRO: You pay a lower price up front for your timeshare. Depending on the company and their fee structure, you may also save money on annual fees. For instance, if you can't be part of Diamond Resorts' THE Club, that saves you the $299/year membership fee they charge.
  • PRO: Also, when you decide to sell your timeshare, you'll be able to sell the exact same thing you purchased, so you're not facing an automatic loss due to a reduction in benefits.

This is like buying the house without the pool. You don't pay for the pool or get the use of it, and when the time comes to sell, you're selling the property just like you bought it.

Comments? Questions?

Do you have any experience, positive or negative, with limitations on resale timeshares? Let us know, and share your experiences with others in the comments below.

Consumer Awareness Guide to Timeshares~~~~~~~~~~~~~~~~~~~~~~~
Resale limitations are one of the considerations in buying a timeshare, and there are a lot of others. If you're interested in getting into the world of timeshares, our free Consumer Awareness Guide to Timeshares explains the many factors to consider when you're making this important purchase. Discover 8 Mistakes to avoid when buying a timeshare, 7 Costly misconceptions about timeshares, 4 Steps to finding your perfect timeshare, and much more. It could save you a lot of money! It's also free, so check it out.
~~~~~~~~~~~~~~~~~~~~~~~

Hi! I'm Deanna, founder of Winning the Timeshare Game, and author of the books. After running an international tour company, I'm now into the fascinating world of timeshares. I enjoy sharing all the tips I discover, and I'd love to see everyone have as much fun with their timeshares as we do!

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PHOTO CREDITS:  Sword - Søren Niedziella, For Sale - Ian Muttoo

21 Comments

  1. Hortensia Fellenbaum

    Does your blog have a contact page? I'm having trouble locating it but, I'd like to send you an e-mail. I've got some ideas for your blog you might be interested in hearing. Either way, great blog and I look forward to seeing it grow over time.

  2. Awfully enlightening many thanks, It seems to be like your current readers may possibly possibly want even more blog posts similar to this continue the fantastic effort.

  3. I’m surprised at how quick your blog loaded on my cell phone .. I’m not even using WIFI, just 3G

  4. Timeshare fraud has been around since the timeshare idea was created, but they increase during poor economy. When times are difficult, timeshare owners are stuck with properties they can´t travel to or even afford. Desperate to recoup some money to pay for bills, they can easily become victims to scams artists pretending to be their timeshare salvation who will take upfront fees -as much as five number figures in some cases- but fail to fulfill their promise.

    • Hi Jessica - Yes, there are too many scammers out there trying to take advantage of people who are already in a difficult situation. Various states in the US have been taking legal action against these thieves, which is good to see, but people really need to watch out themselves. If someone cold calls you with a deal that's too good to be true, chances are it's a scam. Do your own research before giving anybody any money.
      Deanna Keahey recently posted...Timeshare Sales and Right of First Refusal

  5. Timeshares can be a terrific purchase for some families, as they also can be a giant rip off for others. 50 years ago, also known as Holiday Home Sharing or timeshare travel timeshares were created with the idea of offering fully furnished accommodations for a lower price than a full-time ownership

    • Hi Denisse - You're right that some people get a great deal and a lot of use out of their timeshares, while for others it is a waste of a lot of money. My goal here is to help people wind up in the first category! Thanks for your comment!
      Deanna Keahey recently posted...Urban Timeshares - San Francisco, California

  6. Great article, I really appreciate the insight. I like the appeal for families, I think timeshares can be a huge help. Even better, I like the tools left at our disposal to make sure we really get what we pay for. Thiago | http://www.cancelbyowner.org

  7. Lisa

    Thanks for the information! I didn't know that at the Disney Vacation Club, people who buy resale timeshares are excluded from using certain portions of the Member Getaways Program. That's really cool. I've been wanting to buy a timeshare for a long time now. My kids always love going on vacations, and I think it would be convenient to have a specific location to go to consistently, you know? Can you give me more information about the price of timeshares?
    Lisa | getridofmytimeshare.us/nov2014_002.htm

    • Hi Lisa -
      The price of resale timeshares varies tremendously. You mentioned Disney Vacation Club - those tend to hold their value, and you'll probably pay 5 figures to get what you want. Other timeshares go for $1, so it just depends on what you want, and what your budget is.
      Thanks! - Deanna.
      Deanna Keahey recently posted...RCI vs. Interval - Filtering and transparency

  8. Steven

    How can you find the specific resale restrictions for a timeshare? Would they be listed in the contract?

    • Hi Steven -
      That is an excellent question! Unfortunately, it's not so easy to answer. I'm not a lawyer, but what I've read is that there is no requirement for this to be in the original contract, because the resale restrictions don't apply to the original retail buyer. Companies aren't always willing to discuss these matters over the phone with non-owners, and salespeople sometimes claim there are more restrictions than there really are in the hopes of selling you at the retail price.

      If you're considering a resale purchase, you can post the details of what you're looking at on TUG (http://tugbbs.com/forums/), and see if another owner who's bought the same thing resale can give you the lowdown based on their experience. It seems to me there should be a lot more industry transparency about this than there currently is. Thanks for your comment!
      Deanna Keahey recently posted...Should I upgrade my week to RCI points?

      • Deanna,

        Our place was paid for in cash years ago. NO maintenance or taxes do in 2015.
        We have the deed.
        We'd like to sell our 3 bd rm / 3 ba deluxe lock off, platinum level fractional ownership, all season.
        The home location is in Orlando / Kississmmee, FL
        There are 24 total time share / resort locations for owners to exchange too when they want on availability....OR move their home location ownership to.
        With all your experience in this matter....what has worked out best for the seller and the buyer?

        Thank you,

        Steve L.

        • Hi Steve -
          For selling your timeshare, here are a few sites that I know have worked for other people:
          - eBay
          - Redweek.com
          - Tug2.net
          I would NOT advise paying anyone an upfront fee to sell your timeshare. This is often a scam, and you'll never see that money again (or any results). It's better to try selling it yourself on one of these sites above.
          Best of luck with it! - Deanna.
          Deanna Keahey recently posted...5 Ways to Avoid Getting the Exchange You Want

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