The Myth of the $1 Timeshare

Developments ARDA Magazine Jan. 2013
The $1 Timeshare, Developments Magazine Jan. 2013

















The following article, “The Myth of the $1 Timeshare,” was written by Jason Tremblay and originally published in the January issue of Developments magazine. It is reprinted here with permission from ARDA, copyright 2013.

The Myth of the $1 Timeshare

Too often it seems that the media, even major reputable publications, feature articles on timeshare as a badly devalued, if not worthless, “investment.” A favorite claim is that the resale value of timeshare is often only $1. Just when the public thrashing of the product and industry appeared to be waning, a second round began, grabbing headlines with claims of “the 1 penny timeshare.”

With what can only be described as an irresponsible disregard for the real story of the value proposition of timeshare, some consumer and financial reporters continue to perpetuate this myth in a relentless public logging of the entire industry. Even the larger developers and branded hospitality providers have felt the stinging implication that a product they sold for thousands of dollars could have little to no resale value. Perhaps even more worrisome is that many loyal timeshare owners are convinced that their product has suddenly lost all value, not by reasonable use-product market depreciation but by the prevalent message of extreme decline promoted by the negative news articles.

Why is it that no financial pundits are warning their readers that vacations are a waste of money? No one wants owners to feel “burned” when buying a timeshare or for the product to be the punch-line of jokes about bad investments. Every financial analyst who becomes indignant because owners aren’t getting back their so-called investment upon resale totally misses the point of the value proposition of timeshare—taking it even further  by being misinformed about the true resale market. For some companies like ours (SellMyTimeshareNOW LLC, Timeshare Broker Services, and, the reality of the issue became very real when we were contacted in April 2012 by a journalist in search of a story.

The Call and the Answer He Didn’t Expect

The Saturday afternoon phone call came from the financial editor of one of the most prestigious and influential daily newspapers in the world. The conversation with the editor and writer, whose identity we will deferentially withhold, began something like this:

“You have the largest inventory of timeshare resales on the Web, right?”

“Yes, we have a large inventory,” we responded.

“We’re writing a story about the $1 timeshare. You guys have more of them than anyone, right?”

“Well, our inventory is large, but we have very few $1 timeshares.”

An uncomfortable silence followed, as we promised the caller we’d get back to him with specific information.

So, what did we find when we examined the issue of $1 timeshares in our company’s inventory? Our audit showed that in our combined ads and listings of timeshares for sale by owner and timeshares for sale through licensed real estate brokerage, we had some 40,000 active timeshare resale units, intervals, or points-based memberships. Of that total, fewer than 40 timeshares were priced at $50 or less. Unfortunately, the journalist, when confronted with these facts, chose to kill the story and write nothing at all.

What Owners Hear

Although we had succeeded in taking the air out of one inaccurate article, the impact of other similar media stories was made evident in a call we received from an irate customer only a few weeks later.

“Why didn’t you tell me that my timeshare is only worth $1 on the resale market?” he asked.

The caller owned a fully paid, two- bedroom, two-bath timeshare unit at one of Orlando’s newest, nicest, and most popular branded hospitality resorts. At an asking price he had set at $15,000, he had advertised his timeshare resale through a by-owner sales service for two months. During that time, he had received no offers. Based on the misinformation about timeshare resale values that he was reading online and in print, he assumed that the reason there had been no activity on his timeshare ad was in fact, that it was worth only a dollar.

Frustrated and feeling duped, the caller was angry with the resort for selling him the property for thousands of dollars and angry at our company for selling him resale advertising for hundreds of dollars—all for a timeshare the press had convinced him was worth just a single dollar. Although our resale professionals had not been able to dissuade him initially from pricing his timeshare resale at a market high $15,000, we certainly didn’t want to see him feel pressured into a drastic reduction.

Because this timeshare was being advertised on a FSBO (for sale by owner) basis, no commissions were involved. Financially, it made no difference to our bottom line if he dropped his asking price to a dollar. Yet ethically, we had to try to convince him not to take this drastic action. We knew other timeshare owners at his resort were reselling their comparable timeshares through the site at prices from $12,000 to $13,000.

After considerable discussion with him, the owner was eventually convinced to lower his price—to $12,500. Shortly after that, his timeshare sold for $12,000. What an unnecessary loss he would have taken, had he let his timeshare go for $1!

The Reality of $1 Timeshares

The message of the $1 timeshare devaluates timeshare for owners, resellers, and developers. Rock bottom pricing also opens the door for some owners or other entrepreneurial individuals who are aware of the true resale and rental value of proper- ties, to snap up better units with the intent to rent or resell them themselves, essentially becoming competitors of the resort.

Yet the reality is, a small segment of timeshares really do have little to no resale value. Nearly impossible to sell or even give away, these negative-value properties include resorts that have been poorly man- aged, of-season weeks at highly seasonal locations, some motel conversions, and all those other timeshare odd-ducks that the industry tactfully categorizes as legacy resorts, sometimes not based on their quality but simply on a lack of demand. Adding to the challenge is that typically timeshare’s most elderly owner base owns these units. These are the very owners who are often the least comfortable with the resale process or anything that has to do with the internet and are much more likely to respond to a phone solicitation or postcard that shows up in the mail.

Working together, we can build a healthy resale component within the industry, which, when paired with well- managed, well-maintained resorts should put an end to owners who feel compelled to give up their timeshares for $1 or pay someone thousands of dollars to “take it off their hands.” When this happens, vacation ownership will be a better, stronger product—and journalists will have to find a different industry to label with sensational headlines!

Reprinted with permission from ARDA, copyright 2013