BUYING DEVELOPER vs RESALE (typical scenario)

patrickd79 asks: >>How do you determine a good resale price? Do you just watch the listings for a while to try and gauge the market?<< ===============================================

Listings identify the range of ASKING prices, but they don't reveal actual SELLING prices. I'd venture to say that even in the resale market, selling prices are usually at least somewhat lower than the asking prices.

One way to see actual selling prices is to review completed auctions of timeshares sold on eBay. You may not find a completed sale for the specific resort or week you are considering purchasing, but it's worth at least checking, since you'll then have a real SELLING figure to use as a current reference point. On eBay, truly worthless timeshares sell for a penny (or not at all) and timeshares with any actual market value generally sell for 10-20% less (in my observations, anyhow) than the same week would sell for via advertisement on a timeshare site (like RedWeek, MyResortNetwork, etc.) However, eBay purchases are often complicated by lots of inaccurate info posted within the auction listing and / or the mandatory use of a (sometimes incompetent) closing company identified by the seller. The BUYER should always have the right to choose and use his/her own closing company of choice, since the BUYER is the one paying those closing costs in the first place. Personally, I would NEVER accept a seller-mandated closing company unless I knew and trusted that company already from my own prior personal experience. Private sales directly with an actual owner generally seem to go more smoothly than sales by third parties or by sellers representing so-called "Postcard Companies".

If you buy, my recommendation is to decide in advance the maximum you are willing to spend to buy a week and then don't exceed that figure under any circumstances. If you have to exceed your comfort level to own a week, then you're much better off foregoing purchase at all and just renting instead. If buying, consider only weeks which are available when AND where you would actually want to (and be able to) visit. A week in an undesirable or far away location, or an off-season week, even if acquired for free, is still completely worthless (or worse, a financial burden) if you won't use it, can't rent it and/or can't sell it later. Don't buy anything just to "trade" either; in many instances these days even good deposits don't get much that's decent in exchange, with exchange companies now renting out the best deposits themselves. Bad weeks won't get you anything but OTHER bad weeks in "exchange"; you don't get "shiny gold bars" in exchange for depositing "rusty iron pipe"... Proceed with caution --- and good luck.

ken1193 wrote:

patrickd79 asks: >>How do you determine a good resale price? Do you just watch the listings for a while to try and gauge the market?<< ===============================================

Listings identify the range of ASKING prices, but they don't reveal actual SELLING prices. I'd venture to say that even in the resale market, selling prices are usually at least somewhat lower than the asking prices.

One way to see actual selling prices is to review completed auctions of timeshares sold on eBay. You may not find a completed sale for the specific resort or week you are considering purchasing, but it's worth at least checking, since you'll then have a real SELLING figure to use as a current reference point. On eBay, truly worthless timeshares sell for a penny (or not at all) and timeshares with any actual market value generally sell for 10-20% less (in my observations, anyhow) than the same week would sell for via advertisement on a timeshare site (like RedWeek, MyResortNetwork, etc.) However, eBay purchases are often complicated by lots of inaccurate info posted within the auction listing and / or the mandatory use of a (sometimes incompetent) closing company identified by the seller. The BUYER should always have the right to choose and use his/her own closing company of choice, since the BUYER is the one paying those closing costs in the first place. Personally, I would NEVER accept a seller-mandated closing company unless I knew and trusted that company already from my own prior personal experience. Private sales directly with an actual owner generally seem to go more smoothly than sales by third parties or by sellers representing so-called "Postcard Companies".

If you buy, my recommendation is to decide in advance the maximum you are willing to spend to buy a week and then don't exceed that figure under any circumstances. If you have to exceed your comfort level to own a week, then you're much better off foregoing purchase at all and just renting instead. If buying, consider only weeks which are available when AND where you would actually want to (and be able to) visit. A week in an undesirable or far away location, or an off-season week, even if acquired for free, is still completely worthless (or worse, a financial burden) if you won't use it, can't rent it and/or can't sell it later. Don't buy anything just to "trade" either; in many instances these days even good deposits don't get much that's decent in exchange, with exchange companies now renting out the best deposits themselves. Bad weeks won't get you anything but OTHER bad weeks in "exchange"; you don't get "shiny gold bars" in exchange for depositing "rusty iron pipe"... Proceed with caution --- and good luck.

Sometimes if you plan in advance and are a little lucky, you can exchange a "rusty pipe" for a "gold bar". I have a few times exchanged a studio in quiet time for a 2br unit for a week that rents on RCI's extra vacations during that week for $1500.00 dollars. The studio is not as bad as a "rusty pipe" , but the unit I received for it was definitely close to the "gold bar". Stan.

We once owned a one bedroom week at a popular gold crown resort in Kissimmee, Florida. When I wanted to exchange it, I always chose resorts that had two bedrooms only. That's another way to maximize a studio or one bedroom purchase.

I am thinking of a property that is in an area we usually rent a house for 2 weeks in each year. I am wondering what is a good rule of thumb as far as equating a timeshare purchase with normal rental fees. Is there a standard as far as it should equal no more than X years of rental fees + maintenance fees? I know the marketing guys always talk about how it will pay for itself in a few years but I am wondering if there is a more realistic payback period.

ken1193 wrote:

patrickd79 asks: >>How do you determine a good resale price? Do you just watch the listings for a while to try and gauge the market?<< ===============================================

Listings identify the range of ASKING prices, but they don't reveal actual SELLING prices. I'd venture to say that even in the resale market, selling prices are usually at least somewhat lower than the asking prices.

One way to see actual selling prices is to review completed auctions of timeshares sold on eBay. You may not find a completed sale for the specific resort or week you are considering purchasing, but it's worth at least checking, since you'll then have a real SELLING figure to use as a current reference point. On eBay, truly worthless timeshares sell for a penny (or not at all) and timeshares with any actual market value generally sell for 10-20% less (in my observations, anyhow) than the same week would sell for via advertisement on a timeshare site (like RedWeek, MyResortNetwork, etc.) However, eBay purchases are often complicated by lots of inaccurate info posted within the auction listing and / or the mandatory use of a (sometimes incompetent) closing company identified by the seller. The BUYER should always have the right to choose and use his/her own closing company of choice, since the BUYER is the one paying those closing costs in the first place. Personally, I would NEVER accept a seller-mandated closing company unless I knew and trusted that company already from my own prior personal experience. Private sales directly with an actual owner generally seem to go more smoothly than sales by third parties or by sellers representing so-called "Postcard Companies".

If you buy, my recommendation is to decide in advance the maximum you are willing to spend to buy a week and then don't exceed that figure under any circumstances. If you have to exceed your comfort level to own a week, then you're much better off foregoing purchase at all and just renting instead. If buying, consider only weeks which are available when AND where you would actually want to (and be able to) visit. A week in an undesirable or far away location, or an off-season week, even if acquired for free, is still completely worthless (or worse, a financial burden) if you won't use it, can't rent it and/or can't sell it later. Don't buy anything just to "trade" either; in many instances these days even good deposits don't get much that's decent in exchange, with exchange companies now renting out the best deposits themselves. Bad weeks won't get you anything but OTHER bad weeks in "exchange"; you don't get "shiny gold bars" in exchange for depositing "rusty iron pipe"... Proceed with caution --- and good luck.

patrickd79 asks, in relevant part: >> I am wondering what is a good rule of thumb as far as equating a timeshare purchase with normal rental fees. Is there a standard as far as it should equal no more than X years of rental fees + maintenance fees? I know the marketing guys always talk about how it will pay for itself in a few years but I am wondering if there is a more realistic payback period.<<

First off, developer sales weasels are pathological liars, so don't believe a single word they say --- not now, not ever. If their lips are moving, they are probably lying and if you don't see something overtly expressed in writing within the contract, then it most likely doesn't even exist at all. The sales weasels want to make a sale, and telling you the truth does not help (or in any way factor into) that particular objective...

There is really and truly no clinical, mathematical "one size fits all" or "rule of thumb" answer to your question. In my personal opinion, you really cannot and should not consider "payback period" as being a particularly important or relevant factor in a timeshare purchase. It's not at all like real estate investments and it may actually never show a MONETARY payback at all! Values can (and do) skyrocket or plummet with surprising speed. Maintenance fees will always increase. You have to examine whether your purchase is actually something you want to and will actually use, can afford, or can EASILY rent out when you can't use it. Unless you own a prime week in a high demand location and season, you can NEVER really assume rental as being a sure thing. Moreover, rental rates can and do change, and the cheapest one advertised as available at your resort / week instantly becomes the standard of reference and comparison for shoppers. Moreover, people can often rent "last call" or "extra vacation" weeks --- quite possibly at your your resort and in the very same week you own --- directly from one of the exchange companies for just a few hundred dollars (i.e., much less money than an owner's annual maintenance fee amount)! Buying a timeshare just to exchange it or to rent out is, in my opinion anyhow, truly a fool's errand, unless you are somehow able to purchase a prime week in a highly desirable U.S. mainland location at a reasonable price.

Just my two cents' worth, to take or ignore as you may see fit. Whatever you do, don't ever lose sight of the indisputable fact that it's almost always much easier to "buy now" than it will ever be to "sell later"....

ken1193 wrote:

patrickd79 asks, in relevant part: >> I am wondering what is a good rule of thumb as far as equating a timeshare purchase with normal rental fees. Is there a standard as far as it should equal no more than X years of rental fees + maintenance fees? I know the marketing guys always talk about how it will pay for itself in a few years but I am wondering if there is a more realistic payback period.<<

First off, developer sales weasels are pathological liars, so don't believe a single word they say --- not now, not ever. If their lips are moving, they are probably lying and if you don't see something overtly expressed in writing within the contract, then it most likely doesn't even exist at all. The sales weasels want to make a sale, and telling you the truth does not help (or in any way factor into) that particular objective...

There is really and truly no clinical, mathematical "one size fits all" or "rule of thumb" answer to your question. In my personal opinion, you really cannot and should not consider "payback period" as being a particularly important or relevant factor in a timeshare purchase. It's not at all like real estate investments and it may actually never show a MONETARY payback at all! Values can (and do) skyrocket or plummet with surprising speed. Maintenance fees will always increase. You have to examine whether your purchase is actually something you want to and will actually use, can afford, or can EASILY rent out when you can't use it. Unless you own a prime week in a high demand location and season, you can NEVER really assume rental as being a sure thing. Moreover, rental rates can and do change, and the cheapest one advertised as available at your resort / week instantly becomes the standard of reference and comparison for shoppers. Moreover, people can often rent "last call" or "extra vacation" weeks --- quite possibly at your your resort and in the very same week you own --- directly from one of the exchange companies for just a few hundred dollars (i.e., much less money than an owner's annual maintenance fee amount)! Buying a timeshare just to exchange it or to rent out is, in my opinion anyhow, truly a fool's errand, unless you are somehow able to purchase a prime week in a highly desirable U.S. mainland location at a reasonable price.

Just my two cents' worth, to take or ignore as you may see fit. Whatever you do, don't ever lose sight of the indisputable fact that it's almost always much easier to "buy now" than it will ever be to "sell later"....

What I was getting at is that I currently rent a house in the same area. I am trying to determine if buying a timeshare there makes financial sense versus just renting. If the cost of the rentals would exceed the purchase + maintenance fees after a given point it may make sense to just buy. I am wondering if there is a realistic timeframe in which that break even point should occur.

patrickd79 wrote:

What I was getting at is that I currently rent a house in the same area. I am trying to determine if buying a timeshare there makes financial sense versus just renting. If the cost of the rentals would exceed the purchase + maintenance fees after a given point it may make sense to just buy. I am wondering if there is a realistic timeframe in which that break even point should occur.

In that case, you would have to consider several criteria; initial investment, yearly maintenance fees and possible special assessments vs paying a rental fee each year.

The main consideration if you want to purchase to use yourself every year is initial cost. If you buy resale at a reasonable price, then I think you can break even sometime in future years if maintenance fees are kept reasonable and there are no special assessments.

However if you decide that you don't want/can't use the timeshare any longer sometime in the future then you are legally responsible for paying maintenance fees and special assessments until it's sold to another party. With renting you have no future responsibilities or emcumbraces except paying rent.

patrickd79 wrote:

What I was getting at is that I currently rent a house in the same area. I am trying to determine if buying a timeshare there makes financial sense versus just renting. If the cost of the rentals would exceed the purchase + maintenance fees after a given point it may make sense to just buy. I am wondering if there is a realistic timeframe in which that break even point should occur.

Ken’s response laid it out pretty well. Timeshare maintenance fees are all over the map. They can range from a few hundred dollars to over $1000, but my uneducated guess is that MFs average around $600-$800/year which is probably less than renting a house for a week. However, if you're renting during the off-season, you could probably rent a house for less than the cost of MFs (I’ve seen summertime house rentals in Florida for under $600/week). In addition, there can be unexpected special assessments that can be thousands of dollars. Personnally, if I’m renting a house for less than $1000/week I’d probably stay with the rental and avoid the potential headaches of a TS.

Now to the purchase price... Unless you are buying a resale such as Marriott, that has a Right of First Refusal Clause, you can buy a TS for literally pennies. Even if you spend a few thousand dollars and amortize that over 20 years, it only adds a $100 or so per week to the overall “cost”. Marriotts, Disneys, etc, are going to have a higher initial price tag.

Finally, if you buy a TS and the time comes where you no longer able to use it (or the fees get too high), it may be difficult to sell or rent; you still have to pay the fees. If you’re renting a home and for any reason you are no longer happy with the place, you can just walk away; there are no financial obligations.

So here’s a few questions... Where are you currently renting? Are you renting in a community that provides a lot of perks (golf, tennis, etc)? Are you renting in a high demand area and peak season where rents are HIGH? How big is the house (2 BR, larger)? How much are you paying for rent? If the current house owner decides to stop renting, how difficult would it be to rent a different house?

Take Ken’s advice and search the TS listings for the area in which you are interested (be advised that the MFs listed might not always be accurate).

Hope this helps a bit more

What a wonderful forum. My question: We are currently considering a second week purchase at Cypress Harbour through Marriott (Special week). The selling price is $18,400.00 I have looked at resales but skeptical of the process. Outside of the point loss through Resellers I also understand a resale week cannot be traded for points or rented by Marriott, nor can it be directly exchanged for a Marriott property (which I can do with my current week) but you must go through Interval International.Finally, there is no Marriott advisor available for the resale week. Any comments or suggestions would be appreciated. E-mail ronf9801@aol.com

Hi Ron, We currently own with Marriott and are pretty sure the only thing you loose on a resale is the Marriott points program. IMOP I wouldn't let Marriott rent your week anyway. You can get a better rental rate here and the customer is generally knowledgeable about renting weeks from timeshare people (as a rule).

hrff wrote:

What a wonderful forum. My question: We are currently considering a second week purchase at Cypress Harbour through Marriott (Special week). The selling price is $18,400.00 I have looked at resales but skeptical of the process. Outside of the point loss through Resellers I also understand a resale week cannot be traded for points or rented by Marriott, nor can it be directly exchanged for a Marriott property (which I can do with my current week) but you must go through Interval International.Finally, there is no Marriott advisor available for the resale week. Any comments or suggestions would be appreciated. E-mail ronf9801@aol.com

Unless money is no issue with you, $18,400 is far too much to spend for one week of timeshare when you can get the same product on the resale market for far less. Developer perks are very expensive. There is absolutely nothing to be skeptical about when buying a resale timeshare except saving tons of money.

If you got to www.tugbbs.com they have an entire forum related to Marriott timeshares.

Jayjay I am looking into buying a resale TS @ Pueblo Bonito at Cabos San Lucas every year asking for $1,500 with maintenance fee of $550/yr. I know you are an expert of on resale TS, please give me some tips on what to look for before buying resale. I know there is maintenance fee, exchange fee involve. How do we know if their maintenance fee is paid to date, is there any special assessment coming up? how much is the closing cost? and which closing cost is legitimate? Is there anything else that you know in addition to what I mentioned here. Thank you.

kimyn2 wrote:

Jayjay I am looking into buying a resale TS @ Pueblo Bonito at Cabos San Lucas every year asking for $1,500 with maintenance fee of $550/yr. I know you are an expert of on resale TS, please give me some tips on what to look for before buying resale. I know there is maintenance fee, exchange fee involve. How do we know if their maintenance fee is paid to date, is there any special assessment coming up? how much is the closing cost? and which closing cost is legitimate? Is there anything else that you know in addition to what I mentioned here. Thank you.

You must do your due diligence before purchasing any timeshare and that includes finding if maintenance fees are paid up to date and that there are no liens on the property. You can sometimes do this by calling the resort. You can also ask the resort about possible future special assessments. If the resort won't give out that information then ask the seller for proof of ownership and proof maintenance fees are paid to date. If they are on the up and up, they shouldn't mind at all doing this.

You can research (top left hand corner) for legitimate closing companies and related costs.

I don't know about Pueblo Bonito resorts, except that from what I've gathered most are gold crowns. It doesn't sound like a bad deal and the maintenance fees are reasonable, but be aware of rising flight fares now and in the future.

Just be sure of what you want and how much you're willing to pay. I assume you've researched and compared the different prices on the internet for the week you're looking for.

Thanks Jayjay. I will continue to research more about it.

How do points work in resale? If I have some points in the Diamond Club resort, can I buy additional points? We own at the point at poipu (on Kauai) and just got convinced to switch over our floating week every other year (2 BR) to the points program. They told us nobody can buy (resale) into their points program because they have first right of refusal, so if an owner was to try and sell, they'd be able to intervene and stop the sale. Now I'm questioning the truthfulness of that claim. Anybody know more about this?? thanks!

jacquelineb53 wrote:

How do points work in resale? If I have some points in the Diamond Club resort, can I buy additional points? We own at the point at poipu (on Kauai) and just got convinced to switch over our floating week every other year (2 BR) to the points program. They told us nobody can buy (resale) into their points program because they have first right of refusal, so if an owner was to try and sell, they'd be able to intervene and stop the sale. Now I'm questioning the truthfulness of that claim. Anybody know more about this?? thanks!

You might get more responses in the points forum here. I know nothing about points except there are so many different points programs out there that it boggles the mind.

Also, you'll probably find answers to your question(s) below concerning the Diamond system (copy and paste url):

http://tugbbs.com/forums/showthread.php?t=79944

Does anyone have any experience with trading resale Marriott weeks with II? I was told during a Marriott sales pitch that if I didn't purchase directly through them that I would not be able to trade it..

tylerh15 states in part: >>I was told during a Marriott sales pitch that if I didn't purchase directly through them that I would not be able to trade it.<< ===============================================

I admittedly know relatively little about the Marriott system, but I nonethesless believe this statement to be incorrect.

It is my limited understanding that a Marriott "VIP status" can be attained only through a developer-direct purchase, but that's really NOT the issue here at all. While that "VIP status" has some limited benefits (such as access to their "Rewards" program and some degree of priority in making internal reservations, for example), none of that really has anything to do with the ability to "exchange" through II.

In virtually any system (including Marriott, to the best of my knowledge), if you are an owner (regardless of whether having purchased developer-direct OR resale), you have the inherent right and ability to make your reservation and then "deposit and exchange" that reserved week through the affiliated exchange company (Interval International, in this instance).

A knowledgeable Marriott owner might be able to elaborate further and weigh in far more eloquently on the subject here, but I believe the above (admittedly limited) info to be correct. It seems (to me, anyhow) that there may have been some misunderstanding at your "presentation". Perhaps you misunderstood a statement, or maybe the salesperson was mistaken (or lying). Personally, I'd be inclined bet on the last (a lying salesperson) option, but I wasn't there. ;-)

I am a Marriott owner and I agree totally with the comments made by Ken. We attend Marriott sales presentations every chance we get for the freebies offered to those who attend and we are familiar with their sales pitch. I know from experience that the sales force will leave out vital information and offer misleading information at times. I have never caught them in an outright lie.

We bought our first Marriott timeshare from the developer and subsequent Marriott timeshares at resale and have never had trouble trading on II. We were told at the time we purchased from the developer that we could later upgrade to an oceanfront if we chose. True enough but misleading because we later learned that in order to upgrade we had to sell the existing unit through Marriott and pay them a 40% commission and then purchase the oceanfront at market.

I suspect what Tyler heard was the salesman saying that if one buys resale they can not trade the timeshare for Marriott reward points. These Marriott points can be traded for hotel rooms, cruises, flights, rental cars and even merchandise but the the value is not there when one considers the additional price paid to Marriott over resale.