What is a Timeshare? 9 Things to Know Before You Buy One
What is a timeshare, are timeshares worth it, and is one right for you?
These questions and more have probably crossed your mind if you’re thinking about a timeshare as a vacation option. It can seem overwhelming at times. You want to make the right choice and not get locked into something expensive that you don’t really want.
What you need to clear up your doubts is a handy guide to timeshare basics – and that’s what we’re here for. We’ll walk you through all the things you should know before you buy a timeshare, so you won’t make a decision you’ll later regret.
Keep reading to learn more!
What is a Timeshare?
A timeshare is a type of property that has divided use rights or ownership. Basically, a timeshare allows you to use the property for a vacation during a set period of time in the year. During the rest of the year, other people are using it for their allotted periods of time.
However, the way your timeshare works depends on the type of timeshare you get – let’s take a closer look at what those are.
1. Fixed Week
With a fixed week timeshare, you’ll own vacation rights to the same week every year. This allows for a predictable annual vacation, but can quickly get boring, since there’s no variety. You also won’t have any flexibility if something comes up during your vacation week.
However, one good thing about a fixed week timeshare is that you can trade or rent out your week if you want to. This works especially well if you have a property somewhere that’s really desirable, and your week is during a peak time of the year.
With a floating timeshare, you have a set period of time in the year, and you can reserve the week you choose out of that period. This gives you more flexibility as to when you use your timeshare. However, this system can also be competitive – a lot of people will be vying for the prime weeks.
In a right-to-use timeshare arrangement, you’re leasing the property for a set period of time each year, until your contract is up. However, the developer continues to own the property the whole time.
4. Points Club
The points club system is kind of like a floating timeshare. However, this kind of timeshare lets you vacation at a number of different locations, using points that you get when you buy into a property or buy points directly. The points are the “currency” you can use to buy timeshare time.
Again, there is some competition with this system – other people will be trying to get the most popular properties with their points, too. But this way, you do have some flexibility in terms of where you go each year.
What to Know Before You Buy a Timeshare
Is a timeshare right for you? Many people think the answer is yes, but change their mind later. Let’s take a look at what you should know before you make the investment in a timeshare.
1. Timeshares Use Serious Salespeople
The people who sell timeshares are there to make the sale, and they can make it hard for you to say no.
Timeshare presentations usually lure you in with a gift like a free restaurant trip of spa treatment for attending. Many people go into these presentations without actually intending to buy a timeshare – but they might walk away with a timeshare contract they didn’t really want.
Even people who do plan to buy a timeshare often get pressured into signing the contract before they’ve really weighed their options. Sometimes, these purchases can be canceled – contact a timeshare lawyer to find out if that’s the case for you. However, you have to move fast to get these contracts canceled.
2. You Have to Pay More Than the Mortgage
One reason many people regret timeshare purchases is that they didn’t realize how expensive the investment would be.
If you can’t pay the total cost of the timeshare up front, you’ll need a mortgage. But the mortgage isn’t the only thing you’ll have to pay. In the fine print of your contract, you’ll see that you might be paying property taxes, assessment fees, maintenance fees, and utilities. If you fail to make these payments, the developer might foreclose on your timeshare.
3. Timeshares Don’t Make Good Investments
If you’re hoping to invest in property, a timeshare isn’t a good way to do it. Not many people want to buy secondhand timeshares, so you’ll have a really hard time selling yours.
People who sell timeshares almost always end up selling for much less than they paid. They go down in value, rather than up.
4. You’ll Have to Avoid Resale Scams
It’s hard to sell timeshares once you buy them, but many people want to sell theirs. This has created the perfect environment for resale scams – if you do decide to sell, you’ll have to avoid the scammers.
These timeshare resale brokers will tell you that they have buyers lined up, and just need a fee to move forward. After you pay their large up-front fees, you’ll find out there was no buyer and your timeshare never got sold.
There are some genuine timeshare resellers who aren’t scammers. But they won’t charge big fees up front and won’t make absurd promises about the sale price you can get.
5. You Can’t Deduct Timeshare Resale Losses on Your Taxes
When you sell a timeshare, you’re almost sure to take a loss. However, the vast majority of the time, you can’t deduct those losses on your tax return, making the financial pain even worse.
Are Timeshares Worth It?
If you’re deciding whether or not to buy a timeshare, it’s a good idea to step back and seriously consider the value you’re getting. Knowing what is a timeshare isn’t enough; you also need to know all the pros and cons of having one.
Buying a timeshare is easy – selling one is hard. Read the fine print and think about whether other vacation options would suit your lifestyle better. Some people love their timeshares, but there are a lot of cons to consider, too.
Do you have a timeshare contract that you’re struggling to get out of? Then you need a timeshare attorney. Contact us – we can help.