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.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.
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.
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.