How to Buy a Timeshare

Owning a timeshare is an appealing idea for people who love to vacation, but the timeshare market has a reputation for being full of scams and ripoffs. However, smart and safe timeshare deals happen all the time. You can make sure you are one of the satisfied timeshare customers by doing a little research on how to buy a timeshare.

1. Be sure a timeshare is right for you. Its resale value can be unpredictable.
2. Get the best price possible by paying in cash or by seeking financing from a local bank.
3. Avoid high pressure sales tactics by asking plenty of questions.
4. Don't sign any paperwork if you've been drinking.
5. Be sure all closing costs are included in the contract.
6. Check the seller's references, and have an attorney review the contract.
7. Never call a 1-900 number.

• A timeshare, or an alloted piece of time that you own a vacation property, is a popular way to own a little getaway in a desirable place without the expense of completely buying a property that you'll leave empty for most of the year.Wikipedia: Timeshare There are as many timeshare scams as there are bargains to be found, so you need to be smart when you're timeshare shopping.

(Creative Commons photo by muha...)

• Although it's certainly nice to think about owning a little piece of a vacation resort, timeshares are not right for everyone.

1. It's not a good idea to buy a timeshare purely as an investment property since their resale value can be unpredictable.Yahoo! News: Is it worth it to buy a timeshare?
   • Timeshares will typically be worth only 50% of their value in resale soon after purchase.Suite101.com: How to Buy a Timeshare
   • Although they are not a smart real estate investment, a timeshare can save you time and money on yearly vacations.Yahoo! News: Is it worth it to buy a timeshare?
2. An average two bedroom timeshare costs $18,000 with average annual maintenance fees of around $500.Yahoo! News: Is it worth it to buy a timeshare?
   • Ask yourself, honestly, does this fit in your budget, and do you see this continuing to fit in your budget for years to come?
   • Even with possible life changes such as the addition of children or the purchase of a new home?
3. A time share is definitely not for you if you don't plan on vacationing for at least one week per year and staying at accommodations costing over $100 per night. If this is not your current lifestyle, don't buy a timeshare assuming you'll suddenly change!
   • A financial planner can help you decide if a timeshare fits your budget and lifestyle.Financial Planning Association of Minnesota: Is it Your Year to Buy a Timeshare? Do Your Homework First
4. Another way to look at it: Let's say you paid $100 per night for a hotel room, and vacationed 10 nights per year. If you purchased a time share for $13,500 instead, you'd break even after 13 years.Yahoo! News: Is it worth it to buy a timeshare?
5. Unlike hotel rooms, timeshares typically include things like kitchens, washing machines, barbecue grills and hot tubs, so if you're the type who'd like to do some cooking and spend some time at "home" during your vacation, a timeshare might be a good choice for you.Kiplinger.com: No-Strings Timeshares
6. If you can afford it, and you will use it, a timeshare might be a smart purchase for you! Now it's time to start doing some research on timeshares.

(Creative Commons photo by Russell Bernice)

• If you're considering buying a timeshare, you should expect to spend the same amount of time planning and doing market research as you would with any other large purchase. The three main things to consider when buying into a timeshare are when you'll own the timeshare, where the timeshare is located and what type of timeshare you'd like to purchase.

• Your timeshare's trade value is decided by the timeshare exchange company that it's affiliated with. The two main timeshare exchange companies are Resort Condominium International (RCI) and Interval International (I.I.).MSN Money: Avoid the time-share sleaze

• Both systems divide timeshares into three levels of demand, categorized by color:

• R.C.I. Rating System:

1. Red week time = peak demand
2. White week time = average demand
3. Blue week time = lesser demand

• I.I. Rating System:

1. Red week time = peak demand
2. Yellow week time = average demand
3. Green week time = lesser demand

• In either system, the peak season is red season, and therefore the most valuable to resell.Timeshare Users Group: Timeshare Buying Tips and Advice If you own a red week timeshare, you can request to exchange it for any other week of the year. Red weeks typically coincide with holidays and school breaks.

(Creative Commons photo by Reiner Kraft)

• Obviously, you'll want to choose a timeshare in a location that you love and would like to visit more than once. At the same time, most likely you won't want to vacation in the same place every year for as long as you own your timeshare.

• One great thing about timeshares is that you can trade them with owners of timeshares in other parts of the world.

1. It's the law of supply and demand: The most highly desirable timeshares for trading are those in an area with lots of vacationers, but relatively few timeshare resorts.Wikipedia: Supply and Demand
2. Travel to the region where you would like to own a timeshare, and visit several timeshare resorts in the area. Talk with guests there about how satisfied they are with their timeshare.eHow.com: How to Buy a Timeshare Cheap

1. Points System: A points system timeshare will assign your time share a certain number of points, decided by how desirable the time of year your timeshare is in plus its location.MSN Money: Avoid the time-share sleaze You then have that number of points to use towards a timeshare in any location or also things like rental cars or hotel rooms.
2. Fixed Timeshare: A fixed timeshare is available at the same time every year.eBay Guides: Understand Timeshares
3. Floating Timeshare: A floating timeshare means that each year, you can reserve the timeshare for a different week or weeks.eBay Guides: Understand Timeshares
4. Deeded vs. Right-to-Use: It's also important to note whether the time share you're considering is a "deeded timeshare", which means you can pass on ownership to your heirs or just "right-to-use," which is not actual real-estate ownership.MSN Money: Avoid the time-share sleaze

• If you plan on trading your timeshare for vacations in other places, you'll want to buy a timeshare that will be easy to trade. Key factors to consider are:

1. Number of bedrooms (the more, the better)
2. Number of stars the timeshare resort is rated asTimeshare Users Group: Timeshare Buying Tips and Advice
3. The week which you own the timeshare (as referenced above, peak weeks are always in much higher demand)

(Creative Commons photo by Katie White)

• Once you've decided on the right timeshare for you, it's time to concentrate on buying that timeshare for the lowest price possible.

1. Buying a timeshare from the current owner rather than a developer can seem like a great idea, since you'll save 50-70%. But if you choose to go that route, you need to proceed with caution. The government regulations and consumer protection that apply to the initial contract may not apply to a resale contract.Yahoo! News: Is it worth it to buy a timeshare?
2. The smartest way to pay for a timeshare is always with cash.MSN Money: Avoid the time-share sleaze An upfront payment can save you money, as it will with any big purchase.
   • When you are ready to pay the entire purchase price up front, you may be able to negotiate a much lower price as you'll save developers the administration costs of financing the purchase.
   • The interest rates most timeshare developers will offer you will be extremely high. Since they offer financing to almost everyone who wants to purchase a timeshare, rates are often around 15-20%.Suite101.com: How to Buy a Timeshare
   • If you must finance your timeshare, talk to a local bank. Many offer timeshare loans for roughly 7-10%.Suite101.com: How to Buy a Timeshare
3. Be prepared to deal with high pressure sales tactics that will try to get you to agree to a set price. One of the best ways to divert the pressure from yourself is to ask questions. Some important questions to ask so that you're fully informed are:
   • Does the property do special assessments, and how much are they?Suite101.com: How to Buy a Timeshare
   • What are the maintenance fees and how often do they increase?
   • If it's a point system timeshare, are the points inflation-proof?MSN Money: Avoid the time-share sleaze

(Creative Commons photo by Reiner Kraft)

• Once you've decided to purchase a timeshare, don't let your excitement get in the way of following through with caution. Here are a few things to look out for when signing your timeshare agreement:

1. Though it may sound obvious, remember never to make any kind of purchase or sign any paperwork if you've been drinking.Financial Planning Association of Minnesota: Is it Your Year to Buy a Timeshare? Do Your Homework First Many timeshare presentations offer free alcohol!
2. Be sure that all closing costs maintenance fees and any other costs (such as maid service) have been clearly discussed, explained and written into the contract.Financial Planning Association of Minnesota: Is it Your Year to Buy a Timeshare? Do Your Homework First
3. Consider making the purchase through a licensed real estate broker. They can use a trust account to hold your funds until the sale is finalized.
4. The current year's weeks can be a confusing topic. Make sure that it is written into the contract whether you receive the current year's remaining week or any possibly banked weeks.Timeshare Users Group: Timeshare Buying Tips and Advice
5. If you are buying a deeded timeshare, be sure your contract includes title insurance.Timeshare Users Group: Timeshare Buying Tips and Advice

• Buying a timeshare can be safe, rewarding and financially smart move. But unfortunately timeshare customers are also frequently the victim of scams. Follow these tips to avoid becoming a victim:

1. Never feel pressured into making a same-day purchase.Yahoo! News: Is it worth it to buy a timeshare? Take at least one day to think the deal over.
2. If the sales presentation promises you a prize as an added "incentive," be sure to read any "fine print" and never pay for delivery of the prize.Scambusters.org: Timeshare Scams The only thing you should have to pay for is the timeshare!
3. Have the sales contract reviewed by an attorney before you sign it.Scambusters.org: Timeshare Scams Everything that the salesperson mentioned as being included should be mentioned in the contract.
4. Ask the seller for several references, and follow up with them all.
5. Never call a 1-900 number as part of the timeshare buying process.Scambusters.org: Timeshare Scams A legitimate timeshare sale should never require you to call a 1-900 number!