Time Shares Without the Hard Sell - For half-price deals, skip the developer and think resale - Brief Article

Kiplinger's Personal Finance Magazine, Nov, 1999 by Elizabeth Razzi

For half-price deals, skip the developer and think resale.

It's perplexing. You can buy a time share on the resale market for half the price of buying it from a developer--and you'll get to use the same lodging and amenities year after year as the people who paid full price. Yet time-share buyers still sit through three-hour sales presentations and pay top dollar, while resellers often go begging.

Allen and Patricia Wolff of Honolulu took advantage of these peculiar economics and snared a better-than-half-price deal on a ski-season time share in Park City, Utah.

Through a resale broker based in Los Angeles, TRI West Real Estate, Allen found a two-bedroom time share during peak season (the actual week can vary) at the Park Plaza for $6,000. (Original sales prices had soared as high as $13,900.) Now the Wolff family from the Hawaiian Islands has a standing date with Old Man Winter in Utah. And the Wolffs may have coveted lodgings for the Olympics, too, because Park City is one of the venues for the 2002 Winter Games.

A few documents exchanged by fax and certified mail wrapped up the transaction. "It was a pretty lickety-split deal," says Allen, who is a lawyer. And the Wolffs will owe a $550 annual fee for maintenance and tax on the time share. The deal was not so sweet from the seller's perspective. Not only did the seller get less than 50 cents on the dollar, but he also had to pay a $1,000 sales commission.

SHOPPING THE RESALES, Similar resale deals are ripe for the picking on all but the most coveted time shares--those developed by Marriott and Disney, which hold their value better than others do. Marriott in particular manages to keep most resales in-house: Only those who buy directly from Marriott are eligible for its Marriott Rewards program, which allows time-share owners to trade in their unused weeks for 90,000 to 110,000 points. These points can be banked and spent on stays at other Marriott time-share resorts, or to pay for hotel rooms, cruises, airline tickets and car rentals.

The Internet is essential to gathering intelligence on time-share resorts and resale prices. "The Web is one of the best things that could have happened to time sharing," says Bill Rogers, founder of the Time-share Users Group, or TUG (www.tug2.net). This volunteer group of time-share owners posts reviews of far-flung resorts they've been to, hosts chats and discussion boards, and posts classified ads for time-share rentals and resales. Much of TUG's information is available free to anyone who visits the Web site, but reviews are accessible only to those who have paid a $15 membership fee. Members can also post one free ad to rent or sell a time share. Ads cost $10 each for nonmembers.

Rogers advises buyers to use a licensed time-share broker as a neutral third party who will make sure your money is held in escrow until all the sales documents are final. Because time-share resales are a buyer's market, you can expect the seller to pay the commission (typically 15% or more) and much or all of the typical $350 to $750 in closing costs.

EBay, the Web auction site, recently had 72 rentals and resales up for bid in the time-share category. Asking prices started at about $200 for one-week rentals and went as high as $6,000 for resales. But most of the offerings had not drawn any bids.