Another huge problem that most owners thinking about donating their unit is that charities will only accept units that actually have good value. This makes a lot of sense from their perspective. Charities don’t want to get stuck paying all the fees that come with ownership which is probably one of the reasons you want to get rid of yours in the first place. For this reason, if it’s not going to be easy to sell, they won’t be interested in taking it off your hands.

It all becomes a Catch 22. Those units in vacation resorts that have value are easy to sell on the secondary market, thus there’s no real need to donate them to charity. Those that want to donate usually have ones that have little to no value which is something the charities don’t want. Having been burned in the past taking units they couldn’t sell, charities only cherry-pick the best of the best to accept these days.

It’s also important to note that to donate a unit, it has to be fully paid off for a charity to consider taking it. No charity will take one that hasn’t been fully paid off. Since many people looking to get out of their units are doing so because they can no longer make payments on their loan, donating it to charity is not an option for them.

Another point that all owners should know is that more and more “charities” are appearing that say they want your timeshare, but then require a large upfront fee to take it — often over $1000. As with everything in this industry, if you ever hear the words “upfront fee” (or anything that means that you must pay to get rid of it upfront because they will never call it that directly), red flags should start waving and you should already be walking the other way.

Here is our article on donating to charity and a list of charities that may accept your donation.

The truth is that timeshares are depreciating assets. They lose a huge amount of their value the moment that they are purchased. The best way to think about it is that it’s similar to how a car depreciates the second that you drive it off the car dealer lot, but it devalues at a much higher rate. Even worse, it continues to lose value as each year passes. Depreciating assets are never a good investment since anyone who invests in them are practically guaranteed to lose money.

Since the vacation resort salespeople aren’t supposed to promote them as an investment (this still doesn’t stop a lot of them from doing so sometimes), many of them try to make it appear to be an investment by calling it a “great life quality investment.” In this case, the word investment has nothing to do with finances although they don’t mind if you happen to accidentally equate it as such. They hope that with all the information that they are spouting out to you that the only the “great investment” part sticks in your mind.

While there are a few advantages to owning a unit, them being a good investment is definitely not one of these advantages. It’s important that you always do your homework and know exactly what you are getting yourself into before you consider purchasing a timeshare.

This doesn’t even take into account the cost if you happen not to have all the money handy when purchasing the timeshare and need to finance it. When this happens, the cost of owning a timeshare skyrockets because the interest rates for timeshare mortgages are so astronomically high. The results are that the cost of owning a timeshare is often double what it would cost to take a traditional vacation as the following infograph shows (click to enlarge)

It’s all these extra costs that make owning a timeshare so much more expensive than most buyers anticipate and with the glut of timeshares out there on the secondary market, it makes it fairly easy to rent a place in the exact resort during the same time period for much less than the actual cost of owning a timeshare.

This strategy is pretty basic and straightforward. When the reseller first contacts you, they quote a ridiculously high price that you will need to pay to get rid of your unit. This price could be tens of thousands of dollars, and something that the average owner would never consider paying simply to get rid of their unit. The key part of this strategy is that this first number is merely a “set up” number. When the people who are trying to scam give you this huge number to begin with, when they later offer you a greatly discounted price of may be a couple of thousand dollars, it seems to be reasonable when compared to the first number that they gave you.

This is a very basic sales strategy that works very well. Retail stores do this all the time. They will have an item that is priced extremely high next to items that are priced lower. The higher-priced item makes the other items seem to be more reasonable, and a person is more likely to buy it. The scam artists simply use this same balloon strategy to their benefit to try to convince you that the deal that they are offering is a good one.

It’s important to be familiar with the strategy as a can help you avoid being a victim of fraud with timeshare resales and in a host of other areas where people try to scam you out of your money. If somebody offers you something at an extremely high price, and then in the same conversation offers to greatly discount that item, you aren’t getting a deal. You are being played. Honest people who have quality products and services don’t radically reduce their price during a conversation unless the first price that they put out there wasn’t based in any type of reality.

While you should never consider paying an upfront fee of any type to sell your resort unit so the balloon strategy shouldn’t even come into play, it’s still good to know that it exists and what they’re trying to do. If you have friends or family members who aren’t as financially savvy as most, sitting down and explaining the strategy to them may help them avoid being a victim of fraud in the future.

(Photo courtesy of Jerry Downs)

Annual Fee

In addition to maintenance fees, many resorts also make you pay an annual ownership fee. Even if you don’t plan on using your unit for the year or you have rented it out to someone else, you still have to pay the fee. This can vary in price and can range anywhere from $50 to $500. It’s important to know whether or not you have to pay an annual fee and how much it costs before making a purchase.

Transportation

While having a specific place to escape to each year might seem like a good plan, you also need to factor in the cost of transportation to and from the resort each year. This is often the costs that owners forget to include when they do their financial calculations. Your accommodations may be taken care of each year, but you still have to pay for airplane flights and taxis or public transport to the resort. If your resort is far away from your home, you’ll be paying a lot each year just to visit.

Trading Fees

Some timeshares are part of networks which allow you to trade your unit with another owner for a week so you can visit a different location. While this is a great way to make use of your property, especially if you’re looking to go somewhere different on vacation, you should be aware that in many cases you’ll also have to pay a fee for trading accommodations to visit different resorts. This he is becoming very common and can add as much as $100 to your reservation.

Recording Fee

Depending on the resort you buy your unit from or the real estate company you use, you may have to pay a recording fee when you buy or sell your property. A recording fee is charged after a real estate purchase or sale happens and becomes part of the public record of the respective city or state the unit is located in. While this isn’t an ongoing fee since it only needs to be paid upon the purchase and sale of the property, it’s still a cost that many people never anticipated which will have to be paid.

Special Assessment Fee

One of the most unanticipated costs that timeshare owners receive are the special assessment fees. These are costs that the resort has had to pay that do not fall under any of the normal fees that the owners already pay. Since special assessment costs are not a regular cost, and they often come unexpectedly to the owners and can be for huge amounts, these are especially costly for owners. If some type of major damage has been done, or a major upgrade must be implemented, owners can be hit with a bill for it thousands of dollars which needs to be paid in a relatively short period of time. The worst part of the special assessment fees is that owners have little to no rights when it comes to implementing them. The resort management gets to make the decision, and if they decide that you need to pay, you have to pay.

The Survival Shelter & Resort in Kansas is only open to RV owners who pay $1000 per foot for their membership. Yes, that’s right. That 40 foot RV is going to cost you $40,000 for the privilege to park underground. There is also a $1,500 per person food charge which will give that person food which will last the first year, as well, not to mention all those other fees that come with timeshare ownership.

A visit to the Vivos website shows that they are targeting the paranoid doomsdayer with this resort. With sections devoted to “prophecy” and “scenarios” the entire marketing of the site is to sell out of fear of what is supposedly coming. In fact, the entire Vicino concept was launched in 1980, when the owner claims that through a spiritual message he received information that an “extinction event” needed to be prepared for by building a survival shelter for 1000 people. As the website notes:

The accepted solution to most of the threat scenarios is to find underground shelter. The soil of the Earth itself can provide the best shelter for most catastrophes, including a pole shift, super volcano eruptions, solar flares, earthquakes, asteroids, tsunamis, nuclear attack, bio terrorism, chemical warfare and even widespread social anarchy. The governments of the world have been busy building vast underground shelter complexes for the elite. What do they know? The rest of us are on our own, without a long-term survival solution.

And if you don’t think they are trying to scare people into purchasing at this property, just take a look at their video and the ominous background music that accompanies it.

As with all timeshares, you really need to do your homework before committing to something like this, especially to make sure it makes financial sense. While they are trying to sell these units through fear, you never want fear to be the deciding factor when making a substantial financial decision. One of the simple questions you need to ask is that if there really is a doomsday scenario, what is the likelihood that you will actually be able to make it to Kansas and reach the shelter? If you aren’t within a few hours drive (at the most), the likelihood is slim.

Timeshares seem to have become a popular discussion topic in the past few years, so you might have already heard a lot of information and details about them from a variety of sources. Some of the information may be good and some may be bad depending on which faction in the debate you have been listening to. However, it’s rare that people provide an objective view on timeshares since they usually have a vested interest one way or another. One group that really doesn’t have a vested interest are consumer advocates. Here are some of the things that consumer and financial experts across the internet have said about timeshares:

Timeshares Aren’t an Investment

Buying a timeshare isn’t something you should do unless you have carefully considered it and have enough finances to support the purchase. They are depreciating assets and so you should not “invest” in them. Timeshares can be fairly expensive and it’s not a purchase you should make lightly. If you don’t have the finances to support your purchase, you shouldn’t even be considering buying a timeshare.

Know What Buying a Timeshare Entails

Buying a timeshare can be frustrating since sometimes it seems as if there’s a lot of conflicting information. Before you decide to even look at timeshares, you should do research so you know what buying one entails. Owning a timeshare isn’t only about having a place to go for vacation every year. There are associated fees and rules that come along with it, and these are items you should be aware of before you even sign any contracts.

Do Your Research

Do you do research before buying any big purchase like a new appliance, a car or a new computer? If so, doing research before purchasing a timeshare is no different. You want to make sure you know what you’re getting yourself into, where your timeshare is located, and what costs and amenities are associated with the purchase. It’s always a smart idea to do a lot of research before you agree to purchase any of the timeshares you’re thinking of owning.

Keep An Open Mind

Most consumer and financial experts encourage timeshare buyers to keep an open mind. When you have one set idea in your head about what you want to buy, you’re always going to end up disappointed in some way. As you start researching timeshares, it’s important to keep an open mind about location and price and consider all available options, including options that don’t entail purchasing a unit.

Don’t Feel Pressured Into Buying a Timeshare

A lot of real estate agents or sales reps will try and use high pressure sales tactics in order to force you into buying a timeshare before you have had a chance to do research on your own. Financial experts advise that you should not let yourself feel pressured, especially when sales reps use such tactics as promising grand gifts or telling you that the price is only good for today. Anyone who pressures you into buying something is not someone you want to work with as you consider purchasing a timeshare.

Maintenance Fees

Many timeshares have maintenance fees that can amount to around a couple hundred dollars a year. Maintenance fees can cover any variety of things such as upkeep of the building or any remodeling the resort may want to do. Make sure you know how much your annual maintenance fees are and what exactly they cover.

Insurance Fees

Depending where your timeshare is located, you may have to pay costly insurance fees to cover any potential damage from weather or other unexpected events. For instance, if you have a timeshare at a resort in a tropical destination, the resort may change you insurance fees to cover any damage that may occur during a hurricane or tropical storm.

Real Estate Taxes

Buying a timeshare can be very similar to buying a house or condo. Since it’s a property, you might have to pay real estate taxes depending on the location of the timeshare. A lot of people don’t realize that they’ll have to pay real estate taxes on their timeshare, especially if they own a timeshare they only use for one week out of the year. So before you sign the lease for your new timeshare, make sure you know how much you’ll potentially have to pay in real estate taxes.

Taxes

Additionally, the resort itself might impose a timeshare tax for each night you spend at your new place. This may vary on a location by location basis, but it’s not unheard of to have a timeshare resort charge you a fee to stay on their property. You may have signed a lease for the timeshare, but they still own the land it’s housed on. Even if the tax is only $20 a night, that’s still $140 in taxes for a one week vacation.

Utilities

Most timeshare resorts require that you pay the bill for all utilities at your timeshare. Some places may charge you a flat fee, but many resorts will calculate how much electricity, gas, internet, or cable TV you use during your stay and bill you the amount at the end of your trip. A lot of people mistakenly believe that utility bills are covered once they purchase their timeshare and are shocked to find that they owe the resort money for electricity or internet usage. Before you buy your timeshare, make sure you know whether or not you’re planning to buy one at a resort that makes you pay for your own utilities.

“Timeshares are one of the biggest scams on the market today. Once you are stuck in one, you are stuck in a black hole.” — Dave Ramsey

“The first word that should come to your head when you hear the word timeshares should be RUN! Run far, far away!” — Dave Ramsey

“If you’ve already taken the plunge and [purchased a timeshare, you’ve] paid your Stupid Tax.” — Dave Ramsey

As you can see from the quotes above, Ramsey has far from a positive view of consumers spending their hard-earned money buying what he considers to be one of the biggest scams in the travel industry today. There are a number of reasons that he believes this:

You Can’t Afford It

One of the biggest problems that Ramsey has with timeshares is that they are marketed to consumers who can’t really afford them. When a salesperson tells you that you can afford it, the truth is that in all likelihood, you really can’t.

If You Can Afford It, It Still Doesn’t Make Sense

While the chances are that you can’t afford to own one, even if you really could, it’s still not something you should do. With the average price of a resort unit costing $15,000, you would be far better off investing that money than giving it to a resort for a unit (or even worse, financing it so you’re paying high interest on it). In fact, in 40 years you could have well over a million dollars if you decided to invest the money rather than purchase a timeshare according to Ramsey.

It’s a Lousy Investment

Ramsey makes clear that a timeshare isn’t an investment even if you think it is because investments are supposed to generate money, and buying one will never do this for you. As he notes, all you are really doing is prepaying your hotel expenses for the next 20 years regardless of whether you use it or not. Compound this with the fact that it’s a depreciating asset that will lose more value than a car being driven off the dealer’s lot, and the result is that if you do purchase one, you’re going to end up losing a lot of money.

Difficult to Sell

Finally, Ramsey notes how difficult timeshares are to sell. This is something that we note here time and again. There are simply far more people trying to get out of their resorts than there are buyers, and this is why you will end up losing so much money when you do decide to sell. In fact, it has probably become even more difficult to get rid of them in the past few years making the loses when they need to be sold even bigger, especially since in many cases the resorts don’t actually want to take them back (what Ramsey suggests you try) since they have a financial incentive to keep you paying the yearly maintenance fees. In the end, it’s going to be difficult to sell and if/when you do sell, you will have to take a huge loss.

So if it ever crosses your mind that purchasing a timeshare could be something that might be positive, remember that financial expert Dave Ramsey views them as one of the largest travel scams out there that you should stay as far away from as possible…

Source

This situation wasn’t the fault of those who owned units, but they are ending up paying the financial price. Apparently, the resort had not kept up on maintenance and the resort has leaky pipes throughout the buildings that need to be replaced. This is an example on why maintenance fees are likely to increase as time goes on at any resort and repairs need to be made.

As would be expected, many of the owners of units at the Fairmont are not pleased with the pay to stay, pay to go option that has been forced upon them. Some are seeking remedies through the legal system. Some owners are challenging if the Fairmont resort has the legal authority to charge them $3,000 to cancel their contract. other owners are challenging whether the resort has the right to charge the special assessment fee for the renovations. Others are challenging whether the resort has the right to make owners choose between the two options.

If you happen to be one of these timeshare owners (or you find yourself in a similar situation for another resort), the one thing that you want to make sure to do is to write a letter to the court stating that you are waiting for the court to determine legal rights before making a decision on what to do. Currently the resort in this case has stated that owners who haven’t made a decision are in default even before the courts haven’t ruled on any of the lawsuits (although the resort hasn’t begun collections up to this point), so sending in a letter to the court may be your only line of defense if they should proceed with default litigation. The following information is available to those current owners at the Fairmont Resort in BC:

The British Columbia Court Address:

Supreme Court of British Columbia
800 Smithe Street, Vancouver BC V6Z 2E1
Phone Number: (604) 660-2847
Court Case Number: S132760

In addition, several British Columbia and Alberta lawyers are representing owners who were given this choice in the court system:

Docken Klym: (403) 269-3612
Kellie Hamilton: (604) 685-7111
Lindsay LeBlanc: (250) 388-4457

This should actually be an interesting case. If the courts hold up the “pay to stay, pay to go” model for major repairs to resorts, more and more owners will likely see the stay or go option offered to them. The resort’s reasoning in making the offer is pretty self-interested. They know that large unexpected fees like this that owner’s must pay in a short period of time will mean that many will default if they don’t give them an escape option. While they probably don’t really want the units back (because then they lose the yearly maintenance fees the owners were paying), it’s better for the owner to pay to get out than for the resort to have all the expenses that go along with a foreclosure.

Source