Resale Red Flags - questionable tactics in time share real estate sales - Brief Article

Kiplinger's Personal Finance Magazine, Oct, 2000 by Kimberly Lankford

Q&A | When trying to unload a TIME SHARE, be wary of companies that expect you to pay fees up front.

I am trying to resell my time share and have been dealing with two companies that will help only if I pay a fee first. Should I be worried about this?

--K.D, Alexandria, Va.

The Florida Bureau of Timeshare says it has received calls from "hundreds of timeshare owners who have been solicited" by the two companies who contacted you, according to Dan Hogan, supervisor of the bureau's enforcement section. Most callers say that Resort Investment Trust and Swiss American Bank (both based in the Bahamas) contacted them and offered to purchase their time share for a percentage of the appraised value--but first the owners must pay about $400 (usually over the phone by credit card) to have the time share appraised, Hogan says. Swiss American Bank's Web site says it reimburses the fee at closing.

Many of the people who contacted Hogan's office said they had paid the appraisal fee but their time-share week was never purchased, he says. Hogan adds that the companies are under investigation, as are many others with similar practices. Neither company responded to our requests for comment.

In general, be wary when a timeshare reseller asks you to pay an upfront fee, whether it's called an advertising fee, Internet fee, exchange membership fee or appraisal fee. In Florida, it's illegal to collect an advance fee for listing a time share for resale (the two companies cited offer to purchase time-share weeks, so they don't fall under the law). Also be careful if the reseller conveys a sense of urgency. "These are red flags that things may not be what they appear to be," says Hogan.

There are plenty of ways to resell your time share without paying a questionable advance fee:

* Call local real estate companies for referrals to agents who specialize in time shares. Many will work with sellers and charge commission at closing (as they do with other real estate transactions).

* Contact the resort management. It usually hears from prospective buyers first and may help you if the developer isn't still selling new units.

* Advertise in an owner newsletter or on a central bulletin board at the resort, recommends Hogan. People who live there may encourage friends to buy units nearby. Also advertise in travel publications and on Web sites.

If anything seems fishy, ask the Florida Bureau of Timeshare (407-317-7225) if it has investigated or received complaints about the company. Don't call the authorities, though, if a reseller offers to sell your property at a loss. Selling a time share at a profit is the exception, not the rule.

For more advice about time-share resales, visit the Florida Bureau of Timeshare Web site at www.state .fl.us/dbpr/lsc/ts_faq-1.shtml. The American Resort Development Association (www.arda.org/consumer/ resale/resale.htm) also includes helpful resale tips at its Web site.