7 ON YOUR SIDE uncovers the smart way to break away from your timeshare
Owning a timeshare can take you around the world. But disowning your timeshare can get you a giant runaround.
“Frustration. Goose egg. Attitude,” said Orlando Brooks of D.C.
“Bills in the mail,” said his wife Deborah.
The Brooks have enjoyed their four timeshares over the years. Yes, four!
The Mihms of Ashburn have one timeshare in Virginia Beach, but now that they are in their late 80s, they don’t want to travel much anymore.
“In the old days, we fell for everything,” said Jan Mihm, a petite woman with a sweet giggle.
The Brooks are afraid, they still do.
On their last trip, yet another timeshare salesman lured them away from the resort where they were staying, and wowed them with his stunning retreat. The salesman wined and dined them, drove them around, seemed to befriend them, and then offered a deal they couldn’t refuse.
If the Brooks would pay $25,000 up front, and $21,000 later, the salesman would take their four timeshares off their hands, reimburse their investment, and give them the incredible Costa Rican property that impressed them so much.
“Sounds too good to be true, right?” admitted Deborah.
“Apparently it was,” said Orlando. If he had a tail, it would be tucked between his legs.
The Brooks wrote the checks, even signed over the papers to transfer the timeshares to the salesman, but months later, they still own those four timeshares, and don’t have the rights to use the Costa Rican one.
While the Brooks say they are bombarded by timeshare salespeople on every vacation they take, the Mihms receive dozens of offers to relinquish their timeshare for a hefty fee.
They even attended a seminar on how to unload their timeshare. The salesman wanted $4,600 and offered no guarantee it would sell.
“What weighs on us,” said Mrs. Mihm, “I don't think it's fair to leave it to the kids.”
Their contract stipulates that their condo would “confer upon their beneficiaries.”
With millions of Americans looking to end their timeshare contracts, a middle market of illegitimate brokers has exploded, so much that the Federal Trade Commission put out a warning to consumers about the timeshare re-sale scam.
“Now that I'm searching on Google, I get hit every day. ‘Want to unload your timeshare?’” 7 ON YOUR SIDE Consumer Investigator Kimberly Suiters told Howard Nusbaum, CEO of ARDA, the American Resort Development Association. “Who are those people?”
“I don't want to say unkind things, but the vast majority are scams,” said Nusbaum. “And that makes me sad. Because this is a great product about vacationing.”
It’s also difficult to tell the difference between a legit middleman and a fraud. 7 ON YOUR SIDE is aware of consumers who have paid as much as $3,500 to transfer their timeshares out of their names. The ones who paid a licensed broker, who put the money in an escrow account until the deed was truly transferred, got their wish. Others who wrote checks got nothing in return.
ARDA maintains a list of licensed brokers and vouches for its members who are supposed to follow a professional code of ethics.
“Why is it so hard to get rid of your timeshare?” Suiters asked.
“I'm not sure that's a fair question,” Nusbaum answered.
Not fair because, he says, the newer, big name resorts in major tourist hot spots have a robust, active timeshare market. It’s the mom and pop drive-inn on the Jersey Shore that have little to no value. No offense to Jersey.
However, Bethesda attorney Alan Schlaifer argues, even the popular resorts can be a poor investment. This is a case in point for one of his current clients.
"The purchase price was about $23,000 for a (well-known resort) timeshare in the Caribbean. With 10-year financing, the principal, interest and annual fees would amount to about $55,000 - $60,000, before even adding in any costs to travel there. For a one-week stay, that totals $5,500 - $6,000, or about $800+ per night. You can stay at many luxury hotels for much less, and without being locked in. Yet, the average "resale price", if one can call it that,is only about $2,000. That alone would be a potentially serious enough problem, given the millions of timeshare owners, changes in life situations that make resale or halting payments desirable or necessary, and the absence of a viable secondary market. But what exacerbates the situation even more is that a consumer's credit rating - FICO scores - can suffer serious blows, even if cutting losses is otherwise desirable. Credit downgrades can push up interest rates generally and raise consumer costs in that manner," said Schlaifer.
Wyndham became the first resort company in the country to create a take-back program called Ovation. They have assisted thousands of former timeshare owners. Diamond Resorts also launched a relinquishment program. It costs $250 to participate.
“But the rub is, they only take back intervals they want and think they can resell," said Jeff Weir, chief correspondent at RedWeek.com where timeshare owners can sell and rent their spaces. Meaning, not every Wyndham or Diamond owner ‘qualifies’ for the give-back programs.”
Irene Parker, a member of the National Timeshare Owners Association, sais "Diamond has no secondary market. Not one member of the Licensed Timeshare Resale Broker Association will list Diamond points due to the restrictions Diamond has placed on the use of points purchased on the secondary market,” said Parker. She interprets Diamond’s rental policy to read that you can’t use a third party commercial site like RedWeek.
The NTOA assists timeshare owners “who feel they are victims of deceit, concealment, violation of trust or bait and switch, described by the FBI as white collar crime,” said Parker. Her chief concern is the reason for re-sale scams: “deception on the front end, the sales presentation.” Parker has submitted complaints on behalf of dozens of Diamond members families and claims to have gotten hundreds of thousands of dollars in loan cancellations and refunds.
Back to Nusbaum for a moment. Here’s what Nusbaum promises the consumer:
“You should be able to go to your resort and there should be an exit,” said Nusbaum.
“Can consumers call you if their exit is blocked?” asked 7 On Your Side’s Suiters.
“They can call ARDA. We can guide them.”
But it may cost you.
HOW TO DUMP YOUR TIMESHARE:
- First, beg. Call your resort and make your case. Ask for their exit program. More resorts are offering them; and there is growing public pressure to give consumers a fair way out. You may have to pay for the year’s maintenance fee. If you are a senior or a veteran, you may get more sympathy.
- Second, sell. You can list your timeshare for less than $100 on a site like RedWeek.com. Two million, three-hundred thousand consumers have. One consumer let us post his Park City timeshare to RedWeek.com/posting to see if it will actually sell. But competition is stiff. There are plenty of timeshares listed for $1, so his hopes are not high. Even though his just got more publicity than most.
- Third, third party. Turn to a licensed broker. Check the ARDA website to make sure. And get ready to pay up to $3,500 for the pleasure of taking your timeshare off your hands.
- Last, last resort. Hire an attorney. But be careful here too. Make sure you choose one with a proven track record, and cap the fee at $3,000.
“If there's a will, there's a way,” said Natalie Koss, a D.C. lawyer with the Potomac Legal Group. “As a lawyer, I don't stop. If they say no, I go back. There's no way I'm going to stop being an advocate for my client. The same should be true for a consumer.”
But Koss admits it is a crazy time-consuming project, and most consumers don’t have the time, patience and persistence it takes to cut a deal.
Attorneys general across the country are investigating timeshare practices, especially on the secondary market.
7 ON YOUR SIDE helped the Mihms contact their timeshare company, Diamond Resorts, and request an exit. The company said it would respond by June.
“We have succumbed,” confessed Mr. Mihm. “And we're not interested in succumbing anymore.”
We also asked the Costa Rican timeshare company to return the Brooks’ $25,000.
“We've decided we're not going to be extra suckers,” said Mr. Brooks. “We've had enough of that.”
But in May, 7 ON YOUR SIDE received an undeniable bummer of a response:
At the moment we do not have any information to release.
Playas de las Palmas Group
WHAT IF I’M REALLY, REALLY STUCK WITH IT?
Q&A with Howard Nusbaum, CEO of ARDA.
7OYS Q1. Why do you disagree that it’s hard to unload your timeshare?
Nusbaum: Depending on what you own, the ease of reselling will vary. The branded hotel company resort products, like Marriott, Disney, Hilton, Wyndham, Vistana, to name a few, have a well understood brand promise which helps your ability to resell. In addition, resorts (both branded and independent) still in active sales have a sales arm that can help recycle timeshare inventory, whereas older legacy resorts not affiliated with a sales organization may be more difficult to re-sell.
7OYS Q2. What’s the maximum amount a consumer should expect to pay to get rid of a timeshare?
Nusbaum: First of all, timeshare is a “use” product. Its value comes from use and the savings you can enjoy on vacations – it is not a financial investment. There is no set amount you should expect as every situation is unique. However, one piece of advice that I would give is DO NOT pay someone up front money without a written document stating what services you are receiving in exchange. Before you even consider utilizing a third party YOU SHOULD CALL your resort, home owners association or management company. Explain your situation to your resort and find out if there are any available takeback programs. Ask if the resort has a relationship with a specific licensed resale broker specializing in your resort or destination. You may also want to find out if there is a way to advertise to other timeshare owners looking for more time at your resort or consider gifting it to a family member, donating it to a charity or putting it into a rental program to generate revenue (to cover your maintenance fees). It might take some creativity but you should be able to find a solution. In the end, you should be able to exit your ownership without having to spend thousands of dollars with an exit company.
7OYS Q3. You say that every timeshare should offer its owners an exit. Some companies are suggesting that owners list their timeshare on Redweek; but there are millions of listings, some for just $1, so it doesn’t appear to be a guaranteed exit. What should consumers do if their timeshare company doesn’t offer that exit?
Nusbaum: Again, remember, timeshare is a use product not an investment and its value does not come from buying and selling but rather from enjoying vacations. If your resort, HOA or management company does not offer a program there are many other options which are listed above. It might take some time and creativity but the vast majority of owners find a solution. The last word of advice I’d like to leave you with is if someone contacts you without your solicitation and offers to help you sell or claims they have a “buyer on the line” use extreme caution or hang up. Unfortunately, this is a common scam defrauding timeshare owners without providing the services promised.
TIPS FOR LISTING YOUR TIMESHARE
Advice from Jeff Weir of RedWeek.com the name, by the way, comes from an old color system used to describe a vacation time. Red=summer, prime time Gray=spring & fall White=winter
- If you can’t sell, rent. “We always recommend to owners that they rent their units, if possible, while also trying to sell renting is a good way for owners to earn back their maintenance fees while hoping, long term, to find a buyer.” Redweek does not track how many people successfully sell their units through its website, but Weir knows for certain that the rental market is busier.
- Don’t list for $1. Desperate as you might be, a buyer’s psychology is such that he wants to believe there is value to what he is purchasing. “Be realistic. Don’t sell too high or too low. Price according to what’s in demand for the whole game.”
- Consider walking away. If you’ve paid off the mortgage, take a risk and refuse to pay your maintenance fee. “Small timeshare groups don’t have the money to foreclose on you. And if you are 85, why worry about your credit rating?”
- Push the developer community. “They owe it to customers to provide an easy way out.”
- Don’t accept the gift that keeps on giving in perpetuity. For those worried about the timeshare burden passing on to their kids, Weir simply says, “Heirs can reject the debt.”
This story has been updated, Wednesday, May 10, 2017