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ARDA is having an industry think tank on the resale market this week. I got a report of the sessions and here is my 2nd hand takeaway:
ARDA has felt that it has neglected the resale market for many years and therefore agreed to host this session. Brokers from all over the industry and listing companies like Redweek are participating. And, they had the head of (I think) the Arkansas Real Estate Commission attend the meeting to provide a perspective.
They had moderated sessions and came up with a Mission Statement. Hopefully, we will see that mission statement published soon. They brainstormed things that they see as problems and things they want to see changed.
The described and discussed various business models from upfront fee brokers, to pay to take your timeshare outfits, to normal timeshare brokerage firms.
Some of the issues discussed included honesty in the industry, education of timeshare owners, high closing costs, cooperation with resort developers, more uniform standards of work, more transparancy in the purchasing process and a true MLS system. I'm sure I missed some stuff. This is just what I recall from what I heard last night.
After listening to the input, I have concluded that this effort will with 75-90% probability go nowhere. But, I derived a couple of ideas that, if implemented, would go a long way to help the industry. I doubt the ideas I am going to promote here get adopted. But, if they did, they probably would help immensely.
First of all, the grand ideas that were discussed at the conference were great in that dialog occurred and greater awareness has been spotlighted on this subject. And, it gets people pumped up for a while which means for a short time, they are willing to act. However, we need to acknowledge that true industry reform will require time and will only occur as a result of consumers demanding changes and therefore the industry changing to accommodate their needs. There will be no reform until pure self interest of all parties push them into the direction of reform. The internet and eBay and message boards such as this one have helped more than just about anything else to force the reforms that have been achieved to date. More information and knowlege = more reform willl occur.
Before I proceed, we need to recognize and acknowledge where we are at today as an industry before providing potential solutions so that we can test logically the viability of those solutions.
Today, timesharing is still a small, but growing market where the only viable model for sales and marketing of Resort Developer timeshare units is to spend a ton on sales and marketing to lure tour guests into the resort and then close them hard while they are there. It is true that for the most part, there has been no other model that has worked on a large scale. And resort developers have tried. There are small successes such as those reported for resorts like One Napili Way. But those are the outliers, and not the general rule. So, in essence, resort developers need to spend a lot on sales and marketing or no new resorts get developed.
It is this single thing that creates many of the problems we experience in the industry. By using this model, Resort Developers are actually disincented to provide transparency of process and facts about the resale market. If they did, they would be shooting themselves in the foot. If anything, most resort developers make it appear difficult to buy on the resale market so that they can justify spending double or triple for a timeshare. At the end of the day, timesharing cannot be reformed until resort developers can make money by selling for only a small premium over the resale market. We are many years away from that happening.
Okay, so resort developers really aren't the enemy. They really can only be successful using the model they do today.
In addition, ARDA is the trade association for the resort developers. After all, they are the American Resort Development Association. I wonder just how much money and what percentage of funding comes from our voluntary $5/ownership contributions we make without knowing they are voluntary? In any event, ARDA isn't going to do anything that hurts the developers. That would be suicide. But, knowing that their key constituent is the resort developers, we can use that fact to leverage a potential helpful solution.
Moreover, timeshares are real estate products. As a result, State Real Estate Commissions make the rules and regulations governing timeshares. That exacerbates the problem because it creates non-uniform processes for closing, buying and selling timeshares. And, timesharing is just too small for these Real Estate Commissions to spend a lot of time and energy on it.
With that backdrop, here is my 3 point plan for ARDA.
1) ARDA should create an ARDA Approved Broker certification program. They should create a standard of behavior that is supported by both the Resort Developers AND the Resale Broker industry. It should be jointly created with participants on both sides.
There was once created a Resale Broker Alliance. It was adopted and supported by a small number of brokers, but it really didn't take off. It was sponsored by a timeshare brokerage firm. I don't want to try that again. That has no incentives and no teeth.
What ARDA should do after it creates this certification program is to distribute logos for placement on websites and business cards just like the BBB Online, TrustE, SquareTrade, etc. We are talking about an endorsement by ARDA which is supported by the Resort Developers.
The carrot is that ARDA should negotiate with the resort developers a STANDARD for resort transfers that they will adopt and offer to all ARDA certified brokers. Everyone NOT certified would by a higher transfer fee. And, when the resort developers get calls from owners on what they need to do to sell their timeshare, they recommend that they go to an ARDA certified broker.
Now, this will require cooperation between the Developers and the Brokers to not steal resort developer sales. If this issue cannot be addressed, this concept will never work. But, the Certified Broker status will require those brokers to restrain how they operate. Is it possible for a resale company to have such restraint? Is there a set of rules that can be defined and enforced as restraint? I don't know for sure, but it does merit further investigation.
2) ARDA should work with State Real Estate Commissions to create a system for tracking and report actual sales prices of timeshares. Part of the problem in the resale market is that it is very difficult to do a "Comparable Market Analysis" which is what ever Realtor does for a taking a potential listing for real estate. That can't be done because the data isn't available. It is critical for valid information to be available on the resale market of timeshares in order for accurate information to be available for CMAs. If that were the standard, it would be far less of a problem for timeshare resale customers. They contact 3 or 4 brokers, they do a real CMA vs. a fake one as some of the upfront listers and pay to get rid of companies provide or suggest.
3) Lastly, ARDA needs to be for protecting firms with Education services to consumers. I can envision many money making enterprises for educating consumers on the benefits of timesharing. But, I would fear reprisal from resort developers if I were too successful.
At the end of the day, the resort developers should want educated consumers because that will reduce the need for education at the presentation. That will take a long time to achieve. But, at the end of the day, its the key thing to unleash the potential of timesharing.
Well. That's it for now.
ARDA has felt that it has neglected the resale market for many years and therefore agreed to host this session. Brokers from all over the industry and listing companies like Redweek are participating. And, they had the head of (I think) the Arkansas Real Estate Commission attend the meeting to provide a perspective.
They had moderated sessions and came up with a Mission Statement. Hopefully, we will see that mission statement published soon. They brainstormed things that they see as problems and things they want to see changed.
The described and discussed various business models from upfront fee brokers, to pay to take your timeshare outfits, to normal timeshare brokerage firms.
Some of the issues discussed included honesty in the industry, education of timeshare owners, high closing costs, cooperation with resort developers, more uniform standards of work, more transparancy in the purchasing process and a true MLS system. I'm sure I missed some stuff. This is just what I recall from what I heard last night.
After listening to the input, I have concluded that this effort will with 75-90% probability go nowhere. But, I derived a couple of ideas that, if implemented, would go a long way to help the industry. I doubt the ideas I am going to promote here get adopted. But, if they did, they probably would help immensely.
First of all, the grand ideas that were discussed at the conference were great in that dialog occurred and greater awareness has been spotlighted on this subject. And, it gets people pumped up for a while which means for a short time, they are willing to act. However, we need to acknowledge that true industry reform will require time and will only occur as a result of consumers demanding changes and therefore the industry changing to accommodate their needs. There will be no reform until pure self interest of all parties push them into the direction of reform. The internet and eBay and message boards such as this one have helped more than just about anything else to force the reforms that have been achieved to date. More information and knowlege = more reform willl occur.
Before I proceed, we need to recognize and acknowledge where we are at today as an industry before providing potential solutions so that we can test logically the viability of those solutions.
Today, timesharing is still a small, but growing market where the only viable model for sales and marketing of Resort Developer timeshare units is to spend a ton on sales and marketing to lure tour guests into the resort and then close them hard while they are there. It is true that for the most part, there has been no other model that has worked on a large scale. And resort developers have tried. There are small successes such as those reported for resorts like One Napili Way. But those are the outliers, and not the general rule. So, in essence, resort developers need to spend a lot on sales and marketing or no new resorts get developed.
It is this single thing that creates many of the problems we experience in the industry. By using this model, Resort Developers are actually disincented to provide transparency of process and facts about the resale market. If they did, they would be shooting themselves in the foot. If anything, most resort developers make it appear difficult to buy on the resale market so that they can justify spending double or triple for a timeshare. At the end of the day, timesharing cannot be reformed until resort developers can make money by selling for only a small premium over the resale market. We are many years away from that happening.
Okay, so resort developers really aren't the enemy. They really can only be successful using the model they do today.
In addition, ARDA is the trade association for the resort developers. After all, they are the American Resort Development Association. I wonder just how much money and what percentage of funding comes from our voluntary $5/ownership contributions we make without knowing they are voluntary? In any event, ARDA isn't going to do anything that hurts the developers. That would be suicide. But, knowing that their key constituent is the resort developers, we can use that fact to leverage a potential helpful solution.
Moreover, timeshares are real estate products. As a result, State Real Estate Commissions make the rules and regulations governing timeshares. That exacerbates the problem because it creates non-uniform processes for closing, buying and selling timeshares. And, timesharing is just too small for these Real Estate Commissions to spend a lot of time and energy on it.
With that backdrop, here is my 3 point plan for ARDA.
1) ARDA should create an ARDA Approved Broker certification program. They should create a standard of behavior that is supported by both the Resort Developers AND the Resale Broker industry. It should be jointly created with participants on both sides.
There was once created a Resale Broker Alliance. It was adopted and supported by a small number of brokers, but it really didn't take off. It was sponsored by a timeshare brokerage firm. I don't want to try that again. That has no incentives and no teeth.
What ARDA should do after it creates this certification program is to distribute logos for placement on websites and business cards just like the BBB Online, TrustE, SquareTrade, etc. We are talking about an endorsement by ARDA which is supported by the Resort Developers.
The carrot is that ARDA should negotiate with the resort developers a STANDARD for resort transfers that they will adopt and offer to all ARDA certified brokers. Everyone NOT certified would by a higher transfer fee. And, when the resort developers get calls from owners on what they need to do to sell their timeshare, they recommend that they go to an ARDA certified broker.
Now, this will require cooperation between the Developers and the Brokers to not steal resort developer sales. If this issue cannot be addressed, this concept will never work. But, the Certified Broker status will require those brokers to restrain how they operate. Is it possible for a resale company to have such restraint? Is there a set of rules that can be defined and enforced as restraint? I don't know for sure, but it does merit further investigation.
2) ARDA should work with State Real Estate Commissions to create a system for tracking and report actual sales prices of timeshares. Part of the problem in the resale market is that it is very difficult to do a "Comparable Market Analysis" which is what ever Realtor does for a taking a potential listing for real estate. That can't be done because the data isn't available. It is critical for valid information to be available on the resale market of timeshares in order for accurate information to be available for CMAs. If that were the standard, it would be far less of a problem for timeshare resale customers. They contact 3 or 4 brokers, they do a real CMA vs. a fake one as some of the upfront listers and pay to get rid of companies provide or suggest.
3) Lastly, ARDA needs to be for protecting firms with Education services to consumers. I can envision many money making enterprises for educating consumers on the benefits of timesharing. But, I would fear reprisal from resort developers if I were too successful.
At the end of the day, the resort developers should want educated consumers because that will reduce the need for education at the presentation. That will take a long time to achieve. But, at the end of the day, its the key thing to unleash the potential of timesharing.
Well. That's it for now.
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