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This article is good about buying and selling TS via resale. The most interesting part of the article to me is about Westgate and its sales contract giving it the exclusive right to sell your TS you buy from it. Even if you don't use Westgate to sell your TS it is entitled to a commission if you do sell.
Reselling a timeshare can be costly challenge
By Lee Davidson
Deseret Morning News
Susan Foss of Salt Lake City says she bought a timeshare at Snowbird nine years ago for about $15,000. She is trying to sell it now for $6,000 — a 60 percent reduction in value.
Jeffrey D. Allred, Deseret Morning News
Skiers return to Marriott's MountainSide development in this Park City file photo.
Worse, "I've been trying to sell it for three years. I haven't had any takers. I hear that people are selling them for even less: $4,000 and $5,000."
She adds, "There are so many timeshares out there on the market that prices are just rock bottom. They (timeshares) are great, but you can find them from people like me for 50 percent or more off what resorts are selling them for. I wish we would have known that when we first bought."
Many timeshare owners find unpleasant surprises or abuses when they try to sell (just as they do when they buy and own, as previously explored in this series). Among major findings by the Deseret Morning News about problems selling are:
• It is rare for owners to avoid selling for a loss from what they paid developers, unless they have owned the property for a long time.
• While many developers promise customers that they will help resell their timeshare in the future, owners say few actually do — and invoke many contract catches to avoid it, or charge exorbitant commissions for any services they do offer. One even forces owners to pay it a full commission on sales whether it helps to sell units or not.
• Many resort companies have a first right of refusal on any offer on resales. They say that helps keep the value of all units at their resorts high by preventing too-low sales on the open market. But it also allows resorts themselves to buy back units at low cost and sell high. It also delays sales by owners trying to sell their timeshares.
Resales at a loss
As explored in the first part of this series, the value of a timeshare bought from a developer often drops by up to 40 percent or more immediately after buyers walk out of a sales office.
That is, in part, because developer prices include sales commissions and freebies, such as free trips and dinners, to lure potential owners to sales pitches. Most people who buy from resorts are unaware that they could have bought the same unit for pennies on the dollar on the resale market.
Bill Rogers, founder of the Timeshare Users Group, tells timeshare owners online why they often find their units are not worth as much as they hoped.
"Why is selling a timeshare so tough? The main reason is supply and demand. The supply of timeshare resales greatly exceeds the demand for resales. Remember how you got involved in timeshares? It was probably in response to a promotional offering with some type of free gifts or vacations," he writes.
"The developer spends between $2,000 to $5,000 just to sell each unit at a new resort. Then, because of their over-inflated prices and high-pressure tactics, many people buy without really knowing what they are getting involved in. ... No wonder so many timeshare owners get discouraged and want out — creating the glut of supply."
The Deseret Morning News e-mailed or otherwise interviewed scores of owners who were advertising their timeshares for resale. The only ones who said they expected a profit (or had achieved profits on past sales) were those who bought the timeshares they were listing originally as low-cost resales.
Most who bought from developers expected to sell eventually at discounts of 50 percent or more. A few who were trying to sell for what they had paid or more acknowledged they had found no interest and were ready to drop prices.
LaRee Miller, a Westgate resort owner, was one who tried to sell her developer-bought unit at a profit, but said she found she likely would not regain the $33,000 she originally spent.
"When we purchased ours, they were pushing them as an investment. After learning the hard way, I now think that Utah should have a law that timeshares cannot be sold as investments (as do Florida, South Carolina and others). It certainly is not a good investment if you can't sell it," she said.
Sonja Clarke is a recent widow who is trying to sell a timeshare at Marriott's MountainSide in Park City for $7,800. Marriott itself is offering identical units for $10,900.
"My daughter put this timeshare on the Internet last January, and we have yet to receive any inquiries from prospective buyers. ... This is a huge disappointment," she says. "If I could find a buyer for this timeshare, yes, I would have to discount it significantly from the original price to sell it."
Byron Wiegand, a former timeshare developer who is now president of the California-based Timeshare Resale Alliance, said timeshares can increase in value if they are properly priced originally and held for sufficient time.
For example, he said owners of a project he helped develop 35 years ago on the beach near a racing track in Del Mar, Calif., who own weeks during the racing season, could now sell at a profit of more than $30,000 from what they paid originally.
But, also as explored in the first part of the series, many owners who want to escape annual fees are selling their timeshares for as little as $1 on eBay auctions. Many others are donating them to charity for the tax write-off. And some pay fees to companies to take those timeshares off their hands.
Little help
A Morning News reporter attending a sales presentation at the Westgate Park City Resort and Spa was told by a salesman that if he bought a timeshare there, "We will always resell it for you if you want."
Owners at many resorts said they were given similar promises, but not such help — unless they wanted to pay high commissions for it, or are willing to wait until the developer first sells all of the units he is offering.
Miller, a Westgate owner, said, "When I purchased it they said they would sell it for me. ... What a joke!"
She explained, "We went back to the developer, while they were doing their (sales) spiel at the resort in Park City. The clients were lined up out the door. The units are selling like hotcakes. When we visited with the manager about buying our unit back (he said), 'Sorry folks, we just don't have a market for your property. We can't buy the properties back if we are selling new ones. Maybe in a few years."'
Paul Larsen, another Westgate owner, said he also tried to see if it would buy back a unit he had tried to sell there. "My wife has pursued this through Westgate in the past, but she could get nobody to return her calls."
Clarke said, similarly, "I have talked to Marriott about buying back my timeshare, but until they sell all the remaining timeshares at MountainSide in Park City, they will not purchase back my timeshare."
Ron West, who owns timeshares at numerous resorts, said he has never found one willing to help when he resells because, he says, "Any week you own that you decide to sell is competition for the developers and management companies."
Tim Dawson, a Marriott Summit Watch owner, said he found Marriott would help sell his timeshare, but was told the firm would charge 40 percent to cover sales expenses and commissions.
Thomas Wood, a Marriott MountainSide owner, said Marriott offered to buy back for $28,000 what he had paid $33,000 for — while selling essentially the same unit to others for $48,000. He said he decided to be patient and keep trying to sell for a bit more.
Commission trap
Westgate resorts have wording in the company's sales contract that may force owners to pay it a commission when they resell their timeshare, regardless whether that company helps sell it or not.
A copy of a contract says the owners give Westgate "the exclusive right, but not the obligation to act as the owner's exclusive sales agent" for resales.
It adds that as long as Westgate has not waived that right in writing, it "shall be entitled to the then prevailing rate for broker's commissions for timeshare resales."
An owner who provided a copy of that contract said, "The problem is they don't relinquish that right" officially in writing. So when owners go to other real estate agents for help in sales, they are still on the hook for commissions to Westgate.
"Brokers all over the country, not just in Park City, are having this problem with Westgate," said Alanna L. Hatz, a Realtor with Mountain Timeshare Resale in Park City.
"People who bought at Westgate often didn't know that it had an exclusive right as sales agent," she said. So if the owner hires another agent to do such work, "They essentially owe double commissions."
Because of such problems, many Realtors will not handle Westgate resales. "We do, but we have to charge a little higher commission because of what they take," Hatz said.
Miller, a Westgate owner, was not happy to first hear about that contract clause from the Morning News, especially because "they told me a few months ago they would not help me sell my timeshare."
Miller happens to be the executive director of the Utah Citizens Alliance, which advocates for consumer rights. Despite that background, she said, "The more I read about Westgate the more I realize I have been sucked in by them. It appears they will tell the customer anything to make a buck."
Fees without service
Many owners trying to sell timeshares say the only interest they seem to attract is from companies offering to help sell it — for an up-front fee.
"Most of them don't really do much once they collect that fee. They are not in the business of reselling timeshares. They are in the business of collecting up-front fees," Wiegand said.
Len Anderson, a Trendwest owner, said, "I am constantly being contacted. I would never list with any of them. I find their approach and attitude to be worse than a boiler-room bill collector. Ugh!"
"Companies have come out of the woodwork," Miller said, adding she believes her resort sold her name to them because she was contacted before listing her property publicly.
She said they are "big on promises, small on delivery. We paid one Internet company a fee of $495 to list our property. After that, they never called us again. Not a smart move. We have now listed with a local Park City agency, and they are doing well representing it."
Wood said one such company called him seeking an up-front $1,500 fee, which he said he told it he could not afford. "They called back and knocked their price down to $199. That's a hustle." He declined such offers saying he figured he could list it just as easily and much more cheaply himself on Web sites such as tug2.com, redweek.com and mytimeshare.com.
Collier said, "We did bite twice on the crooks who take your money up front and promise to sell it for you. I think it was $500 the first time, and $600 the second time. ... Never got a nibble."
Larsen said, "We did fall for one who promised us free airline tickets to anywhere in the world if they did not sell the timeshare within six months. They failed. ... Their scam in this instance? Give us airline tickets that expire in a matter of months and that are contingent upon us making hotel reservations through their company at outrageous prices."
The Utah Department of Commerce has taken action against only one such company in recent years.
It fined Timeshare Marketing & Finance Corp. of Cedar City $2,500 in 2004 saying it "committed a deceptive act or practice by failing to refund a deposit" to a woman who was told she would receive it if her timeshare did not sell within a specified time. It was also ordered to "cease and desist from any act in violation of the Utah Consumer Sales Practices Act."
The Federal Trade Commission also advises, "It is preferable to do business with a reseller that takes its fee after the timeshare is sold. If you must pay a fee in advance, ask about refunds. Get refund policies and promises in writing."
First right of refusal
Many resorts also include a first right of refusal to buy any resold timeshares, which can alternatively be a blessing or curse.
On the bright side, that can help keep the value of all timeshares at a resort higher by not allowing too-low resales on the open market.
Marylyn Carlyle, a timeshare consultant who owns properties at many resorts, said she found, for example, that Disney Vacation Club's practice of exercising that right and buying up any really low-priced resales of its units has indeed helped all units hold value.
"It's the only one (among her developer-bought timeshares) where the value actually went up ... and I actually made money on it," she said.
But the downside of that practice is that resorts can make a lot of money by exercising that right to snap up bargains. They may not buy back units at high prices initially sought by their timeshare owners, but when those same owners are about to sell at a lower price to someone else, they can snap it up for that bargain cost.
R. Eugene Neal of Washington, Washington County, who owns timeshares at numerous resorts (purchased mainly through resales), says that in his experience developers often buy for about "35 percent of the original price, and then the weeks are resold at a profit" to new clients often buying at 100 percent of "new" prices.
Waiting for clearance of that first right of refusal can also slow sales for owners eager to sell, or buyers eager to obtain and use a timeshare.
They can also be a tool for resort owners to obtain concessions from owners.
For example, remember the sales commission provisions in Westgate contracts? To ensure that owners do not balk at them, Hatz said she has found that Westgate will refuse to sign away its first right of refusal unless those commissions are paid first.
Reselling a timeshare can be costly challenge
By Lee Davidson
Deseret Morning News
Susan Foss of Salt Lake City says she bought a timeshare at Snowbird nine years ago for about $15,000. She is trying to sell it now for $6,000 — a 60 percent reduction in value.
Jeffrey D. Allred, Deseret Morning NewsSkiers return to Marriott's MountainSide development in this Park City file photo.
Worse, "I've been trying to sell it for three years. I haven't had any takers. I hear that people are selling them for even less: $4,000 and $5,000."
She adds, "There are so many timeshares out there on the market that prices are just rock bottom. They (timeshares) are great, but you can find them from people like me for 50 percent or more off what resorts are selling them for. I wish we would have known that when we first bought."
Many timeshare owners find unpleasant surprises or abuses when they try to sell (just as they do when they buy and own, as previously explored in this series). Among major findings by the Deseret Morning News about problems selling are:
• It is rare for owners to avoid selling for a loss from what they paid developers, unless they have owned the property for a long time.
• While many developers promise customers that they will help resell their timeshare in the future, owners say few actually do — and invoke many contract catches to avoid it, or charge exorbitant commissions for any services they do offer. One even forces owners to pay it a full commission on sales whether it helps to sell units or not.
• Many resort companies have a first right of refusal on any offer on resales. They say that helps keep the value of all units at their resorts high by preventing too-low sales on the open market. But it also allows resorts themselves to buy back units at low cost and sell high. It also delays sales by owners trying to sell their timeshares.
Resales at a loss
As explored in the first part of this series, the value of a timeshare bought from a developer often drops by up to 40 percent or more immediately after buyers walk out of a sales office.
That is, in part, because developer prices include sales commissions and freebies, such as free trips and dinners, to lure potential owners to sales pitches. Most people who buy from resorts are unaware that they could have bought the same unit for pennies on the dollar on the resale market.
Bill Rogers, founder of the Timeshare Users Group, tells timeshare owners online why they often find their units are not worth as much as they hoped.
"Why is selling a timeshare so tough? The main reason is supply and demand. The supply of timeshare resales greatly exceeds the demand for resales. Remember how you got involved in timeshares? It was probably in response to a promotional offering with some type of free gifts or vacations," he writes.
"The developer spends between $2,000 to $5,000 just to sell each unit at a new resort. Then, because of their over-inflated prices and high-pressure tactics, many people buy without really knowing what they are getting involved in. ... No wonder so many timeshare owners get discouraged and want out — creating the glut of supply."
The Deseret Morning News e-mailed or otherwise interviewed scores of owners who were advertising their timeshares for resale. The only ones who said they expected a profit (or had achieved profits on past sales) were those who bought the timeshares they were listing originally as low-cost resales.
Most who bought from developers expected to sell eventually at discounts of 50 percent or more. A few who were trying to sell for what they had paid or more acknowledged they had found no interest and were ready to drop prices.
LaRee Miller, a Westgate resort owner, was one who tried to sell her developer-bought unit at a profit, but said she found she likely would not regain the $33,000 she originally spent.
"When we purchased ours, they were pushing them as an investment. After learning the hard way, I now think that Utah should have a law that timeshares cannot be sold as investments (as do Florida, South Carolina and others). It certainly is not a good investment if you can't sell it," she said.
Sonja Clarke is a recent widow who is trying to sell a timeshare at Marriott's MountainSide in Park City for $7,800. Marriott itself is offering identical units for $10,900.
"My daughter put this timeshare on the Internet last January, and we have yet to receive any inquiries from prospective buyers. ... This is a huge disappointment," she says. "If I could find a buyer for this timeshare, yes, I would have to discount it significantly from the original price to sell it."
Byron Wiegand, a former timeshare developer who is now president of the California-based Timeshare Resale Alliance, said timeshares can increase in value if they are properly priced originally and held for sufficient time.
For example, he said owners of a project he helped develop 35 years ago on the beach near a racing track in Del Mar, Calif., who own weeks during the racing season, could now sell at a profit of more than $30,000 from what they paid originally.
But, also as explored in the first part of the series, many owners who want to escape annual fees are selling their timeshares for as little as $1 on eBay auctions. Many others are donating them to charity for the tax write-off. And some pay fees to companies to take those timeshares off their hands.
Little help
A Morning News reporter attending a sales presentation at the Westgate Park City Resort and Spa was told by a salesman that if he bought a timeshare there, "We will always resell it for you if you want."
Owners at many resorts said they were given similar promises, but not such help — unless they wanted to pay high commissions for it, or are willing to wait until the developer first sells all of the units he is offering.
Miller, a Westgate owner, said, "When I purchased it they said they would sell it for me. ... What a joke!"
She explained, "We went back to the developer, while they were doing their (sales) spiel at the resort in Park City. The clients were lined up out the door. The units are selling like hotcakes. When we visited with the manager about buying our unit back (he said), 'Sorry folks, we just don't have a market for your property. We can't buy the properties back if we are selling new ones. Maybe in a few years."'
Paul Larsen, another Westgate owner, said he also tried to see if it would buy back a unit he had tried to sell there. "My wife has pursued this through Westgate in the past, but she could get nobody to return her calls."
Clarke said, similarly, "I have talked to Marriott about buying back my timeshare, but until they sell all the remaining timeshares at MountainSide in Park City, they will not purchase back my timeshare."
Ron West, who owns timeshares at numerous resorts, said he has never found one willing to help when he resells because, he says, "Any week you own that you decide to sell is competition for the developers and management companies."
Tim Dawson, a Marriott Summit Watch owner, said he found Marriott would help sell his timeshare, but was told the firm would charge 40 percent to cover sales expenses and commissions.
Thomas Wood, a Marriott MountainSide owner, said Marriott offered to buy back for $28,000 what he had paid $33,000 for — while selling essentially the same unit to others for $48,000. He said he decided to be patient and keep trying to sell for a bit more.
Commission trap
Westgate resorts have wording in the company's sales contract that may force owners to pay it a commission when they resell their timeshare, regardless whether that company helps sell it or not.
A copy of a contract says the owners give Westgate "the exclusive right, but not the obligation to act as the owner's exclusive sales agent" for resales.
It adds that as long as Westgate has not waived that right in writing, it "shall be entitled to the then prevailing rate for broker's commissions for timeshare resales."
An owner who provided a copy of that contract said, "The problem is they don't relinquish that right" officially in writing. So when owners go to other real estate agents for help in sales, they are still on the hook for commissions to Westgate.
"Brokers all over the country, not just in Park City, are having this problem with Westgate," said Alanna L. Hatz, a Realtor with Mountain Timeshare Resale in Park City.
"People who bought at Westgate often didn't know that it had an exclusive right as sales agent," she said. So if the owner hires another agent to do such work, "They essentially owe double commissions."
Because of such problems, many Realtors will not handle Westgate resales. "We do, but we have to charge a little higher commission because of what they take," Hatz said.
Miller, a Westgate owner, was not happy to first hear about that contract clause from the Morning News, especially because "they told me a few months ago they would not help me sell my timeshare."
Miller happens to be the executive director of the Utah Citizens Alliance, which advocates for consumer rights. Despite that background, she said, "The more I read about Westgate the more I realize I have been sucked in by them. It appears they will tell the customer anything to make a buck."
Fees without service
Many owners trying to sell timeshares say the only interest they seem to attract is from companies offering to help sell it — for an up-front fee.
"Most of them don't really do much once they collect that fee. They are not in the business of reselling timeshares. They are in the business of collecting up-front fees," Wiegand said.
Len Anderson, a Trendwest owner, said, "I am constantly being contacted. I would never list with any of them. I find their approach and attitude to be worse than a boiler-room bill collector. Ugh!"
"Companies have come out of the woodwork," Miller said, adding she believes her resort sold her name to them because she was contacted before listing her property publicly.
She said they are "big on promises, small on delivery. We paid one Internet company a fee of $495 to list our property. After that, they never called us again. Not a smart move. We have now listed with a local Park City agency, and they are doing well representing it."
Wood said one such company called him seeking an up-front $1,500 fee, which he said he told it he could not afford. "They called back and knocked their price down to $199. That's a hustle." He declined such offers saying he figured he could list it just as easily and much more cheaply himself on Web sites such as tug2.com, redweek.com and mytimeshare.com.
Collier said, "We did bite twice on the crooks who take your money up front and promise to sell it for you. I think it was $500 the first time, and $600 the second time. ... Never got a nibble."
Larsen said, "We did fall for one who promised us free airline tickets to anywhere in the world if they did not sell the timeshare within six months. They failed. ... Their scam in this instance? Give us airline tickets that expire in a matter of months and that are contingent upon us making hotel reservations through their company at outrageous prices."
The Utah Department of Commerce has taken action against only one such company in recent years.
It fined Timeshare Marketing & Finance Corp. of Cedar City $2,500 in 2004 saying it "committed a deceptive act or practice by failing to refund a deposit" to a woman who was told she would receive it if her timeshare did not sell within a specified time. It was also ordered to "cease and desist from any act in violation of the Utah Consumer Sales Practices Act."
The Federal Trade Commission also advises, "It is preferable to do business with a reseller that takes its fee after the timeshare is sold. If you must pay a fee in advance, ask about refunds. Get refund policies and promises in writing."
First right of refusal
Many resorts also include a first right of refusal to buy any resold timeshares, which can alternatively be a blessing or curse.
On the bright side, that can help keep the value of all timeshares at a resort higher by not allowing too-low resales on the open market.
Marylyn Carlyle, a timeshare consultant who owns properties at many resorts, said she found, for example, that Disney Vacation Club's practice of exercising that right and buying up any really low-priced resales of its units has indeed helped all units hold value.
"It's the only one (among her developer-bought timeshares) where the value actually went up ... and I actually made money on it," she said.
But the downside of that practice is that resorts can make a lot of money by exercising that right to snap up bargains. They may not buy back units at high prices initially sought by their timeshare owners, but when those same owners are about to sell at a lower price to someone else, they can snap it up for that bargain cost.
R. Eugene Neal of Washington, Washington County, who owns timeshares at numerous resorts (purchased mainly through resales), says that in his experience developers often buy for about "35 percent of the original price, and then the weeks are resold at a profit" to new clients often buying at 100 percent of "new" prices.
Waiting for clearance of that first right of refusal can also slow sales for owners eager to sell, or buyers eager to obtain and use a timeshare.
They can also be a tool for resort owners to obtain concessions from owners.
For example, remember the sales commission provisions in Westgate contracts? To ensure that owners do not balk at them, Hatz said she has found that Westgate will refuse to sign away its first right of refusal unless those commissions are paid first.
