Timeshare Advertising: Upfront Fees Versus Commission-Based Sales
Thursday, January 19, 2006
Either payment plan boasts advantages, but there’s zero advantages to paying BOTH an upfront fee and a timeshare sales commission.
We’re all different. Therefore, what works for one person might not be the best idea for another in a similar situation. I think that this statement definitely applies when advertising a timeshare property for sale or rent.
In response to customer inquiries, I’d like to devote today’s post to talking about different payment plans for timeshare resale/rental advertising.
Upfront Fee (one-time)
Many people would rather pay an upfront fee, as long as this fee is only charged once and doesn’t come bundled with a dubious and unnecessary “appraisal fee” or “CMA fee” (CMA stands for “comparative market analysis”).
Advantages: A lot of online timeshare companies charge an upfront fee because it is a cost-effective alternative to paying a broker’s commission. The idea of saving money appeals to consumers, so it’s a natural way for online resellers to increase their volume of sales.
Disadvantages: A lot of timeshare scammers operate by collecting upfront fees, then disappearing. The entire burden of marketing a timeshare rests with the timeshare advertising company, so it’s vital to hook up with a good company from the start. Also, unethical resellers often continue charging “one-time” fees as time goes by… these and other problems have cast a negative light on good companies that choose to operate using this business model.
Commission-Based Timeshare Sales
People are drawn to online timeshare brokers because they don’t have to pay for services immediately. The broker receives a commission, on average at least 10% of the proceeds of the timeshare sale.
Advantages: Brokers are typically able to network with other brokers in order to find properties to exchange, buy, or sell. Brokers must be skilled negotiators in order to sell timeshare successfully. In some cases brokers can help sellers realize a decent return on their original purchase so that the back-end commission takes less of a bite from the total sale proceeds.
Disadvantages: From what we’ve seen, a broker is often unable to sell a timeshare faster than a well-optimized timeshare-by-owner web site, though timeframes are often similar, and no-one can ever predict when a timeshare will sell (see our post on phony timelines for more information). We’ve heard reports of brokers who tack on other fees in addition to the commission, and sometimes charge for appraisals. Appraisals are unnecessary except in some cases when donating timeshare; then they may be required for tax purposes. For selling timeshare, an appraisal is not needed: timeshares are never appraised before they are first sold, so why should an appraisal be necessary on the resale market?
Choosing a broker is entering into an important business partnership, a partnership founded on trust. Therefore, due diligence is especially imperative here. Your broker is your most trusted advisor when it comes to navigating the sometimes capricious world of vacation real estate. Naturally, if you choose to go this route, you’ll want to work with the most effective brokers available. My colleagues and I work with a wide network of brokers and timeshare sales professionals. If you’re looking for a broker, we can refer you to the best in the business. Just give us a call!
Here’s some tips to keep in mind when dealing with a timeshare-by-owner site OR a licensed timeshare broker:
1. Does this company have a record with the Better Business Bureau? Don’t take their word for it, but do perform your own investigation into a company’s reputation. If they do have a record with the Bureau, is it a record in good standing or is it marred by a history of complaints?
2. When asked to pay an upfront fee to advertise your timeshare, demand proof of the company’s ability to sell it. What will they do to make sure your property sells? If they can’t convince you that they can get the job done, don’t pay the fee!
3. Whether you choose a broker or a timeshare-by-owner site, I would advise strongly against enlisting the services of a company which charges both an upfront fee and a commission on the back end of the sale, on the basis that charging the customer twice for one service is unnecessary. If you choose a company which charges both an upfront fee (sometimes called “listing fee”) and a commission, I advise you to use extreme caution when dealing with a company of this nature. Several of our customers describe bad experiences with companies like this.