If you’re genuinely considering how to purchase a timeshare, it’s crucial to approach the process on your terms, not the salesperson’s. Don’t fall for the false urgency of limited-time offers. You have the power to make informed decisions and secure the best deal possible. In this article, we’ll provide you with essential tips and strategies to navigate the timeshare buying experience wisely. From recording the sales presentation to researching the resale market and leveraging your existing timeshare, we’ll empower you to make confident choices. Remember, it’s your investment, and it should align with your needs and preferences. Read on to discover how to buy a timeshare on your terms and protect yourself from potential pitfalls.
Timeshare salespeople will always tell you that their offer is good only for that day. This is not true. You can return the next day or later and get the same deal—always.
Your Terms to Purchase a Timeshare Should be as Follows…
Always record the entire sales presentation. At the end of the day, you are responsible for what you sign. Local law enforcement, consumer protection agencies, state departments of real estate, and each resort developer only recognize what is written in the contract, not what was said during the sales presentation.
You want to have full access to the resort’s website during the entire rescission period. Unfortunately, too many new owners or members do not have access to the website, and when they learn that it is not what they thought or were told, it is too late. The rescission period has ended.
During the closing process, ask to be removed and review the timeshares for sales at that resort on www.sellmytimesharenow.com. Most likely, the listed prices will be a fraction of what the resort is asking. Show them the listing and ask them if they can beat that price. By this time, the sales presentation is over.
You only purchase a timeshare if you are guaranteed in writing that you can confirm a reservation at their property whenever you please, so long as you provide enough notice. This only applies to buying a fixed or floating week. It rules out a points-based program, as they cannot guarantee a reservation. Availability is based on supply and demand.
Negotiate
After researching the resort reviews and the resale market, you will know the market value and negotiate from there. Be sure to ask about the benefits or lack of benefits of buying directly from the resort as opposed to secondary market points or weeks. Stay away from timeshares that have virtually no secondary market. Imagine buying $100,000 worth of timeshare points today, and ten years later, something happens, and you need to sell, but the secondary market does not exist. Similarly, what would happen to the primary housing market if the secondary market didn’t exist?
Determine whether you want an every-year or every-other-year usage.
Timeshare developers will add closing costs on top of the purchase price. Do not pay the closing costs. Ask them to deduct it from the purchase price. Closing costs are bonus money for the sales staff. Vacation points are a right-to-use product, like a country club. There should be no closing costs at all. If you purchase a vacation club in Mexico or any of the Caribbean Islands, there should be no closing costs or maintenance fees, as they typically do not own any of the properties where they sell.
Ask for a copy of the maintenance fees over the past ten years. They can always provide it unless they have something to hide.
Always Read The Contract
If you decide to purchase a timeshare, read the entire contract. If there is not enough time, don’t buy it. Some things cannot be determined by reading the contract, like over-promised availability.
If you did make the purchase that is eligible for rescission and regret it, then two days before the rescission period ends, proceed to cancel the purchase. They should always reduce the price to their bottom line just to get the sale. This is where you want to be. Negotiate from a position of strength. If a new contract is prepared, make sure they restart the rescission period as this is a new contract. Beware that some trial products do not have a rescission period in some U.S. states, like Nevada and Missouri.
Ask if you can sell or transfer the timeshare to another party. What are the procedures and the costs? Try to find out in your research if you resell the timeshare, will the new owners get all the benefits. If they don’t, then why buy? EVERYTHING should be in writing or don’t buy at all.
The RCI or Interval International Credit Card Trap
If you are on a timeshare presentation but do not have the full down payment when you want to purchase, they may arrange for a loan with monthly payments until the full down payment is received, or they’ll encourage you to apply for a credit card through RCI or I.I.
In the U.S., Barclays Bank is often the credit card vendor. If a credit card application is approved, the new credit card can be used for a full down payment or, in some cases, the entire purchase.
Avoid paying for the entire purchase using a credit card because if you are in a dispute later, your dispute is with the credit card company rather than the timeshare company. It’s easier to cancel a loan with a timeshare company than to cancel credit card debt because the credit card company did not sell you the timeshare.
To further encourage consumers to apply for a credit card, the credit card companies will offer you a low introductory interest rate for the first six to twelve months. Some offer 0 percent for a period of time, but the rate will go to as high as 24 percent after the interest-free period. A luxury item should never be financed at 12 to 24 percent.
Think twice about the financial responsibilities you are about to incur.
The Timeshare Equity Exchange Scam
An effective strategy during the timeshare sales closing process involves the equity exchange or trading in your existing timeshare for a new timeshare. This is a great sales tool to overcome the objection from guests who would like to purchase but have already bought a timeshare before and do not want to possess two. If the guests prefer the new timeshare but want to get rid of the old one, an equity exchange is an option. The resort will offer to give equity for the old timeshare to purchase the new one. It’s not uncommon for guests to own a timeshare that they wanted to get rid of anyway.
Sadly, too many naive guests buy into this “equity” scam.
It doesn’t matter what you own, what price you paid, or where you bought it.
No Company Will Give You Money for Your Timeshare. Period!
But you can use your current timeshare as leverage to get them to reduce the price considerably.
Here’s how it works:
Like any sales transaction, there is a bottom-line price. Timeshares are no different. There is a bottom line for every studio, one, two, or three-bedroom or beyond. The objective of the timeshare sales process is to get as much money as they can without going below the bottom-line price. This is why owners pay different prices for the same product. If the sale goes below the bottom line, the difference or loss will come out of the salesperson’s commission, or the deal will simply not go down at all.
Let’s suppose that the ANYTIME price is $45,000. But the TODAY price is only $25,000, supposedly saving you $20,000. Although this might seem like a good incentive, the guests might still resist and not buy. So, they will try a different strategy—a trade-in.
The Customer Survey is Just the Beginning
The information gathered from the survey at the beginning of the presentation about the guest’s timeshare ownership would be secretly shared by the salesperson to the closing manager, who would then fill out a “trade-in” sheet to present to the guests later. The manager will use this tactic to “justify” a trade-in amount.
The sales rep may inform the guests that they will give them “equity” or buy their timeshare if it is paid off. They may offer the guests $5,000 for their timeshare. Now, the price is only $20,000. If the bottom-line price for the timeshare is $15,000, the company still has $5,000 before they reach their bottom line. The deal goes down as $20,000, and the guests will go for the deal, thinking that they have a great deal, but still overpaid $5,000 above their bottom line. The guest could have purchased the same timeshare on the resale market for a fraction of that price.
Free is Never Free When You Purchase a Timeshare
Even if the guests continue to resist, the company still has $5,000 to offer as further incentives: a FREE week at the resort, a “free” vacation elsewhere. Regardless of the deal, the GUESTS ALWAYS PAY FOR THE EXTRA GIFTS, either in the purchase price or built into the closing costs.
The guests will sign away their old timeshare for the new one, believing the company took in their old timeshare. Sometimes the company doesn’t fulfill this promise, so they are now stuck with two timeshares and two maintenance fees, and there is nothing in the documentation that details the deal. It only specifies the new purchase price of $20,000. Some contracts will state that the company is not responsible should the traded-in timeshare not transfer to the company.
Nevertheless, if you are genuinely interested in purchasing the new timeshare, use the current timeshare as leverage. Inform them that you have decided to keep your current timeshare. The deal will still go down with the same $20,000 price because, in actuality, the company did not give you anything for your old timeshare.
This is the perfect scenario to demonstrate the pressure that has become common in today’s timeshare industry.
Signing the Paperwork
The purchase agreement will include all the information needed to prepare the documents. This document would include the purchase price, sales tax (this can also be used in negotiations), closing costs, and the payment schedule if you agreed to a loan. The closing costs can range anywhere from $499 to over $2,000. This money is used for the exchange enrollment, new owner’s kit, and gifts, with the remainder usually split amongst the sales staff, depending on the resort and the deal. The gifts are NEVER free.
Once you have signed the purchase agreement, they will take your credit card and identification to start the paperwork. During this time, they will usually have you fill out some preliminary paperwork, agreeing to the terms. Be warned that some companies will make a copy of your identification and credit card, which is illegal in many countries.
The VLO Seals The Deal
When the contract arrives, you are usually sent to a VLO (verification loan officer), or they will come to the table after the champagne has been popped and you have been announced as the resort’s newest owner. They will explain the paperwork. Alas, it is now hours after the presentation, and you want to just get the heck out of there. Few people read the contract. They just sign and leave.
I worked as a VLO at one resort whose agreement was thirty-six pages. Who would want to read that while on vacation? Nobody would or does. Most people initialed each page and signed the documents without even reading them, at best a cursory glance. This process could take as little as two minutes. They were unaware of a rescission period, and they unwittingly agreed not to make any negative comments about the resort online, or their contract will be canceled, and they will lose their investment.
You must know where the contract is legally enforceable. Foreign developers, especially travel clubs, are known for setting up corporations in Panama or other offshore regions. If you have a legal issue with them, this is the only place you can legally resolve it.
The Rescission and Cancellation Period After Your Purchase a Timeshare
Anywhere in the world, except Aruba, when you purchase a timeshare, there is a rescission period or period of cancellation. This is the time when you should be able to get out of your contract with a full refund.
According to a Redweek article, Dr. Amy Gregory, assistant professor at the University of Florida who has been studying the impact of buyer regret, remorse, and rescission decisions, many timeshare buyers regret their decisions.
A whopping 85 percent of all buyers regret their purchase (for money, fear, confusion, intimidation, distrust and other reasons).” (Weir & Redweek, 2017)
The article mentions that 15 percent of timeshare buyers rescind, which is the norm for the industry, according to Jeff Weir and Dr. Gregory. Although Dr. Gregory’s research includes “interfering information” that causes purchasers to cancel during this period, the article doesn’t mention the internal tricks resorts use to deter people from canceling.
When guests desire to cancel, the manager or closer involved in the sale will attempt to talk them out of it. This attempt could involve lowering the purchase price, offering more gifts, reminding them of the dominant reasons why they purchased or lying to prevent them from canceling during the rescission period. For many, this conversation can be intimidating and embarrassing, especially for purchasers who befriended the salesperson.
Once the rescission period is over, the purchaser has often lost their original deposit and will be liable for full payment. The salesperson is usually not concerned about the customer once the sale is complete.
The Resort Will Always Try to Prevent you From Cancelling
Most of the time, the salesperson or the VLO (verification loan officer) will explain the contract in a way that will prevent canceling. They may attempt to embarrass you. They may even advise you, at that moment, not to sign the contract if you are thinking about canceling. This persuasive tactic is called a “take away,” as it lowers the guest’s guard. People usually move forward and sign.
You have the right to cancel the contract within a certain period—usually five to seven business days, depending on the state, province, or country. Whether you are in the U.S., Canada, the Caribbean Islands, or Mexico, you can obtain a full refund if you exercise your right of rescission in time.
What is often overlooked in the paperwork is the clause stating that you must pay for all the extra gifts they have given you should you cancel. The resort may charge you the retail price for any extra gifts, free rooms, excursions, or anything else they used to bribe you. So, if they offered you a free stay at their resort and you cancel, you might have to fork out rack rates on that hotel stay, and this could accumulate into hundreds or thousands of dollars.
Remember, you signed the contract, and they have your credit card information. What’s more, you have given them permission to do this in case you cancel. Read all the paperwork.
Read the Contract to Legally Cancel
I suggest you always read the entire contract before signing anything or take advantage of the rescission period provided by the local government. This is a way out. Don’t allow the resort or the salesperson to make you feel guilty for canceling. You’re the one who is going to be stuck with this for possibly a lifetime, not them. They’ve already made their commission the moment you signed the contract, and they make good money.
Remember to cancel your auto-pay on your bank or credit card if you decide to cancel within the rescission period. Some cancel their checking account and open a new one, as stopping the payments is not always easy.
The Exit Person (Developer’s Representative)
If you decide not to purchase that day, then you leave and get your gifts? No. There is one more hoop you must get through before you get your gifts, the developer representative (exit person). This is the person responsible for getting you your gifts, or so you were told. This is simply another sales pitch to earn your business.
They will greet you warmly and ask you some questions about your experience, particularly why you didn’t buy that day. Once you have answered the questions, they will offer you a less expensive program.
This “trial program” can range anywhere from $500 to well over $3,000. It is usually a week at their resort with access to the exchange company. But, when you use it, you must return to one of their resorts for another sales presentation. You can take it and opt to get your original gifts for attending this “ordeal,” and you are done. Remember, some states, like Nevada and Missouri, offer no rescission period because the trial product is not defined as a timeshare. Buyers should still attempt to cancel, especially if they were sold by deceit.
Do your due diligence, take your time, and get exactly what YOU want on YOUR terms. Know what you are buying.