Buying a Timeshare or Fractional Ownership
For the right people timesharing can be a great way to save money and ensure a high standard of holiday accommodation for years to come. However, it is vital that before you make any decision you understand all your options fully as a wrong move could be very costly indeed.
Below we will give you some practical tips and advice on buying, what timeshare might best suit you and look at developer sales versus the resales market.
Take your time when buying!
If you happen to be reading this whilst abroad because you're thinking of purchasing a timeshare then hold your horses! The decision to buy shouldn't be rushed! Consider how long you may have spent choosing and booking your last holiday, unless it was a lastminute deal you probably spent a good few hours looking through what was available and drawing up some sort of shortlist etc. Since a good timeshare should provide you with twenty or more holidays then it is only reasonable to put some time aside to look at a few different options and work out what one best suits you.
Don't sign anything abroad
No exceptions - never sign anything abroad! The fact that all timeshare transactions in the EU require a cooling off period by law should mean that salespeople should be more than happy for you to take home any contract or paperwork before signing it. However, rarely will you find a company who is that supremely confident in their product that they'll want you to do that. More often than not you may feel pressurised to make a decision on the day, offered a "special" discount or be lured with some kind of upgrade for the rest of your holiday abroad. It is not always easy to do this, but resist!
It could be that the timeshare product you are looking at is a brilliant fit for your needs, good value and from a reputable company. If that is the case then spending some time to make comparisons will only reinforce your decision and despite what you may have been told about "todays special discount" there is no doubt the company will honour whatever price has been offered to you whilst you were away. In fact, you may even be able to negotiate a better one!
Choosing The Right Timeshare for You
It is all too easy to fall in love with a timeshare resort which is testament to what great holidays you can enjoy if you get your purchase right. That said, it pays to approach this purchase as pragmatically as possible as whilst the resort you have visited may have stole your heart, you would probably prefer it left your bank balance as intact as possible! The better matched your eventual purchase is to your needs then the more likely you are to have some fantastic, great value holidays. A lot of timeshare negativity is a result of people buying (or rather being sold) a product which was not fit for their needs.
Write down some bullet points about how you currently holiday, how this might change in future, how often you think you would return to any one resort and how often you would exchange. Get some clarity before you start considering anything specific.
Developer V Resales
There are two main ways you can go about purchasing a timeshare. You can purchase directly from the developer or buy a resale (essentially a second-hand timeshare if there is such a thing). Both routes have pros and cons and below are some sweeping generalisations.
Developer Pros: You'll almost certainly get some kind of inspection visit (although it will of course come with an onsite sales presentation too). Some developers offer heavily subsidised holidays at their resorts in return for you agreeing to attend a sales presentation which will write off pretty much a whole day of your holiday but will give you the chance to test-drive the standard of accommodation first. Developers are likely to have the greatest choice of their brand products available and you are likely to get a greater level of disclosure as part of any paperwork than if you purchase via a resale company. In some cases, developers sweeten deals for owners who purchase directly from the resort although the flip side to this is that resorts operating such schemes are widening the gap between the initial purchase price and resale value because not all of your member privileges are passed on to the new owner.
Developer Cons: The cost of purchasing from a developer is generally the most expensive route. This is partly due to the very high costs arising from promoting and marketing a resort and partly from the high profit margins required on each sale to make for a viable business. Developers have massive upfront construction costs and some resorts will take many years to sell out, imagine all that upfront investment sitting there for years until the initial outlay has been repaid from proceed of each sale. This all means that a very large percentage of the initial purchase price will be covering costs which bare no relevance on the actual value of your purchase.
Another disadvantage to consider is the sales process itself. Whilst not always the case, most developers have mild variations of just one timeshare product on offer and so you wont be getting any kind of market overview. The presentation will fit the product to you - that could be a square peg in a round hole.
Resale Pros: Because of marketing and business expenses can be very high for developers, it means that the resale value of a timeshare is much lower than the original purchase price. Think of the brand new car scenario. As soon as you drive a brand new car home it will have lost a significant chunk of its value. The same is the case with timeshare and so buying a resale is a way of getting much the same product at a vastly reduced price. Sometimes savings of 90 percent can be made.
In addition to savings on the initial purchase price, the resale market gives you the benefit of being able to compare various different resorts or products. Also, if you are dealing with a resale agent, you should be able to get some guidance as to which timeshares should deliver the best value or those which are most suited to your needs. Provided your speaking with a reputable resale agent (see below) then you should be able to get some good advice. Of course, the agent will want to sell you a timeshare although at least you can hear the reasons why an industry professional believes one product is more suited over another.
Another benefit of dealing with a resales agent is that you will be able to take more time over your decision making. Most companies deal on the telephone and via the web so it should be a far less stressful or pressured process.
Resale Cons: The main drawback of the resale market is that the resale agent will not tour you around a resort or specific apartment. This courting of clients is what partially inflates original prices in the first place and so don't expect an inspection visit. That said, if you have been to the resort previously then once you have an apartment number you should be able to figure out where the unit is onsite if this is important to you. If you haven't been to resort then a quick Google and you should be able to find a floor plan of the resort. Failing that, call the resort and ask.
Other drawbacks are that whilst the choice of resorts is much wider, availability at any one particular resort will be much less. This means that the narrower your criteria the less likely you are to find something on the resale market.
There are some resorts which have sold out their inventory and so now operate a much more low-key sales effort of promoting their own resales. This will generally involve a rep onsite managing any sales with the advantage being lower prices but still with the ability to be toured round the resort. We will be looking at what resorts offer this in due course.
What to Buy
To visit or Exchange?
If there is a particular resort you want to regularly visit then don't rely on exchanging into that resort via RCI or II and provided the resort's credibility stacks up buy at the resort. Most resorts can be found on the timeshare resale market although the more particular your request, the less likely you'll find it on the resale market. For example, if you wanted a two-week block spanning a highly demanded period such as Christmas and New Year at a popular resort in Gran Canaria, you might find the resale market just doesn't have anything to offer.
If you aren't so much a creature of habit and imagine yourself exchanging to other resorts every year then you may want to look at RCI points. Points are far more geared up for holidaymakers who want to visit different destinations and are likely to provide much better value. That said, there are hundreds of developers and suppliers operating in points and so it can be very confusing to begin with. Take a look at the RCI Points - Points To Remember Website or contact a TATOC affiliated resale company and ask to speak to someone who can advise you on points.
There is a big difference between how timeshare can work for couples and how it works for families so your stage in life is also an important consideration. If you have children at the beginning of their school years then make sure you buy a product that guarantees you can book your holidays during the peak periods. If you join an exchange company such as RCI or II then you will also be able rent extra weeks of timeshare accommodation at very good prices. These are still available for peak periods although may be priced accordingly and there maybe less choice. If you're children are almost grown up, be selfish! The offers that are available to couples that can holiday outside the peak season are numerous and can offer some great value.
There is a very good article on the Daily Mirror website which you can read here which looks at this in some depth. The article looks to have been sponsored by a timeshare resale company although the approach of looking at different types of potential purchasers provides some good food-for-thought.
Reputable Resales Companies
The resale market offers good value to those looking for a particular week in a resort of their choice as they can usually get what they want for a reasonable price. However, the resale market only offers what is available through private vendors and will have restricted availability on certain resorts and unit sizes. Still, great bargains can be found if buyers aren't too niche with their choice.
By sticking to UK resale companies who are TATOC accredited you will be making sure that any purchase adheres to UK and European law and also have some peace of mind that the company has voluntarily signed up to TATOC's code of ethics. The largest of these companies is believed to be Worldwide Timeshare Hypermarket although a complete list can be found from the TATOC website here
These companies provide an easy way to buy resale timeshares and should follow certain guidelines such as
- Providing a 14 day cooling-off period.
- Using a third party trustee to hold the purchasers monies
- Guaranteeing that the week being purchased is free of any debt
- Confirming when the timeshare can next be used
Management companies, Contracted Agents or Owners Clubs also provide an option for purchasing resales. The Management Company or Club at a resort will usually offer to sell an owners timeshare week for them once the developer has finished selling “new” weeks do it is worth contacting a resort to ask if they have a current owners resale program.
Buying direct from an owner via a site such as eBay is an option but one which should be approached with extreme care and caution. With many weeks costing as little as 99p it can appear a very cheap option however there are many issues to be aware of when dealing direct and transfer costs can run into hundreds and thousands of pounds in certain cases. Who pays this cost of transferring the ownership name needs to be agreed by both parties - “Right of Use” ownerships costs vary from £70 - £850 and for a “Deeded” ownership the cost can rise up to £1500.If there is any debt attached to the timeshare you could become responsible for this and there may be outstanding management fees which would need to be paid off before the transfer can complete.
Timeshare ownership is not a financial investment but more a holidaying investment. You may only recieve a small percentage of your initial outlay when it comes to sell although losses should be less if you buy from the resale market. Still, it is not a financial investment by any means.