January 21, 2014

For any number of reasons, owners of timeshare interests explore selling their contracts. This desire to sell has created a landscape filled with illegitimate offers. Result: For those who trust the cold calling solicitor, lost money; for those who do not trust the cold calling solicitor, confusion over the real value of timeshare contracts.

Over the past two weeks, we have heard from three fellow Aimfair members, one of whom is ourselves. The question raised was "do you know anything about xyz company?". The companies were 3PL Management, Dallas, TX; Link Marketing Solutions, Dallas, TX; and Business Events International, Minneapolis, MN. All three offered to buy contracts from owners of Presidential Villas or Grand Luxxe Villas. All three are suspect because their addresses could not be confirmed and their telephones are listed in different cities than those presented in their websites. In all cases, the offers were to purchase weeks at high prices.

What is the market price? Timeshare contracts are expiring contracts that grant the owner the right to use facilities for a period of time, both of which are outlined in the contract. From day one, contract rights begin to evaporate.

Use becomes the unit of value. High use, high value to the owner. Low use, low value to the owner. Low use prompts a desire to sell. Those owners who cannot use their weeks to the fullest want to recoup some or all of their out of pocket cost.

Sometimes, owners become enamored by the facilities and properties they can access through their contract rights. The great case in point is the Grand Luxxe Residence Club, whose facilities and properties are beautiful and luxurious. In the opinion of many, they are perfect alternatives to outright ownership. Low up front costs and no headaches.

The ultimate value of both timeshare and outright ownership is determined by use. A second home that is used infrequently is a possible financial winner only in times when assets appreciate. A timeshare interest that is used infrequently is not a possible financial winner because of lost opportunity costs. However, the cost of timeshare ownership over time is lower than the cost of an equivalent second home.

That said, the timeshare industry is a field of dreams. We love our experiences, and we feel others would too. Reality hits when the market says it will pay one amount and the owner feels it should be another. This opens the door to being a victim of Advance Fee Fraud.

Don't let that happen! Enjoy the access you have. If you are unable to use the weeks you own, then work with someone to rent them. If you have no desire to keep your contracts, understand the market value of your contract is 35% to 50% of your cost or less. Work with someone who is reputable to find someone to buy the contract from you.

The bottom line is to be realistic. Put yourself in the buyer's shoes. Would you pay what the buyer is offering? If not, then be very careful!