You’re probably somewhat familiar with the term “timeshare.” You may have heard it at least once before, or maybe you’ve even received offers by mail. You might even be tempted to buy into a timeshare.
But what is timeshare? And is it really worth it? We’ll tell you everything you need to know so that you can make up your own mind.
How do timeshares work?
A timeshare is a property arrangement that allows you to share the expenses of a property in return for a guaranteed time at said property. Usually, timeshares are offered as condos in vacation resorts.
Most importantly, what you are actually buying is time at the property. A timeshare allows you, the owner, to spend a designated amount of time at the location.
You share the property with other “owners,” but you are guaranteed use of the facilities one (or two) weeks of the year, depending on the contract
If you want use of the unit for a longer period of time, you might have to purchase multiple timeshares in order to guarantee that.
It all depends on the company you are buying the timeshare from, but they do not usually offer timeshares for longer than two-week increments.
What is a timeshare presentation?
Have you ever received an offer for an amazing vacation deal? You can get steal deals at several vacation resorts, and the only thing you have to do is attend a 90-minute meeting about timeshares.
Sounds too good to be true, right? That’s because it is.
The timeshare meeting is mandatory. They usually last about 90 minutes, and some even include a visit to the timeshare resort.
Not everyone is eligible for these kind of offers, but if you are and you choose to take advantage of a cheap vacation deal, you should know that failure to attend the presentation or comply with the conditions for getting the deal will incur penalties, which are usually paying the normal price for your stay.
Some other problems with these presentations can be a meeting that lasts the whole day instead of the promised 90 minutes, aggressive sales tactics, and misinformation about your cancellation opportunities, to name a few.
You should be aware of these issues and read the conditions of your vacation package carefully in order to avoid unwanted problems.
What are the different kinds of timeshares?
So, what does being the owner of a timeshare mean? Do you hold the deed of the property? Do you hold part of it? What are your rights?
There are mainly two kinds of timeshares: the timeshare deed and the timeshare lease.
With this kind of ownership, each buyer is getting a small portion of the deed itself. What this means is that you co-own the property with a lot of other people.
So, your deed will be for the percentage of the property established by how much time you buy, and the deed itself will specify when you will spend your allotted time.
The advantage is that you actually own part of the property. However, you need to agree with all the owners if you want to make any change to the unit.
With this kind of agreement, you are signing a contract for the use of the property. It is a lease agreement, so you don’t actually own any part of the property itself. You don’t have any real estate, and you can’t make any changes to the unit.
One of the advantages of this kind of timeshare is that the agreement has an expiration date. So, it is not forever. However, contracts are typically signed for a great number of years, so you could be tied to it for 20 years, for example.
What are fixed vs. floating weeks in timeshares?
Aside from the previous two kinds of purchase agreements, there are also different modalities.
You choose one week of the year, and you can use the property during that same week every single year.
There are some opportunities to change that allotted week, but there are usually hefty fees involved.
This options lets you choose your week each year. However, there are some limits. You probably won’t be able to choose weeks during certain peak season times, for example.
Also, you usually have to make your reservation before a certain date, or you’ll be assigned a week during the off season.
How long does a timeshare last?
How long a timeshare lasts depends on the type of agreement you sign. As we discussed previously, you can either get a timeshare deed or a timeshare lease.
If you buy a deeded timeshare, you own a percentage of the property. Therefore, there is no limitation on how long you own the timeshare. Your timeshare ownership with a deeded contract ends when you sell or give away that property, as is the case with all real estate.
However, this is not the same on a leased timeshare. In that case, you don’t own any property. Instead, you sign an agreement for a certain amount of time.
Bear in mind that most timeshare leases are signed for a long time. This is not a two-year lease agreement; you can sign up for 20 years or more.
What is the average cost of a timeshare?
The cost of a timeshare is determined by taking into consideration many variables, like with all real estate. The cost will depend on location, size, the age of the property, and the dates of your stay.
However, no matter the cost or which kind of timeshare you are looking to buy, you will have two fixed costs: your initial cost and your yearly maintenance fees.
When you buy a timeshare, you will pay a fee up front (the cost of the property) and maintenance fees every year. The cost of the property varies, but the average initial cost is about $20,000. Maintenance fees can go up to $900 a year.
Besides maintenance fees, there are usually additional fees such as property assessments or additional repair if the property is damaged by the weather or if the resort decides that it needs to do an overhaul.
Remember that owners must pay all fees regardless of whether they use the unit or not.
What does it mean to be a timeshare owner?
Being a timeshare owner is not the same as being a vacation home owner. Having a vacation home is an investment because you actually own property.
With timeshares, the unit is not your own. You cannot make big decisions over it and dispose of the whole property as you will.
A timeshare is not an investment in real estate. In fact, its value decreases quickly. You are actually committing to spending all of your holidays in the same place, and it does not come cheap.
Timeshares are, in reality, quite inflexible. Depending on your agreement, you cannot use it at any time of the year, and if you decide you don’t really want to go there one year, you are actually losing money.
How do I get out of timeshares?
If you feel like you are done with your timeshare, you have a few options available.
Sell or give away your timeshare
The best way is to sell it or give it away. However, selling is not always easy, and some deeds will not let you give the property away.
Give your timeshare back to the resort
If you can’t sell or give it away, you can try giving it back to the resort. Resorts are not duty-bound to buy back your property, but there is a chance of buying back the property.
Work with a timeshare exit company
If everything else fails, you can try working with a timeshare exit company. They do not come free, and they are not cheap. But getting out of a timeshare deal could turn out to be the cheapest option in the long run.
How do I find out what my timeshare is worth?
You’ve decided to sell. How much is your timeshare worth?
Knowing the timeshare’s market value depends on a few variables. Just as it works with real estate, the market value of a property depends on its size, location, and the type of timeshare ownership.
Other factors include the location within the resort, which amenities the resort offers, and what time of the year your stay is set in.
So, are timeshares easily worth it? Hint: No, they aren’t.
Although they might seem like a great deal at first glance, timeshares end up being more expensive than you might think.
There is a big initial fee to cover the cost of the property and hefty maintenance fees.
You are also committing to vacationing in the same place every year for a long time, and you are not even buying a vacation home. You are only buying one week of the year.
It is not an investment, and a timeshare’s value decreases quickly over time.