Huge Difference Between Purchase and Resale

Hello, I am new to timesharing and new to this site/forum. With no previous TS experience, my wife and I succumbed to the pitch when vacationing in Mexico in January (Peublo Bonito Sunset Beach). We did all the math and it seemed to make sense and be a good deal. We bought a floating EOY.

Now that I am back and doing more research on exchanges (and seeing what if anything my 4 bonus RCI weeks are worth), I am totally steamed when looking at the resale values. I basically could have bought the same thing on this site for 40% of the cost.

I have seen several posts that state the fact that the resale value is much lower, but a 60% drop seems outrageous to me. I know that every time I sleep in that bed I am going to be thinking about how much less that it should have cost me (for 30 years!!!!)

Even a new car does not depreciate that much when driving it off the lot. Does anyone have any understanding of how this secondary market became this way?

Second question, can I also assume that the RCI bonus week certificates that I recieved have very little trading power and are not linked to my home location?

Thanks, Todd

toddm87 wrote:

Hello, I am new to timesharing and new to this site/forum. With no previous TS experience, my wife and I succumbed to the pitch when vacationing in Mexico in January (Peublo Bonito Sunset Beach). We did all the math and it seemed to make sense and be a good deal. We bought a floating EOY.

Now that I am back and doing more research on exchanges (and seeing what if anything my 4 bonus RCI weeks are worth), I am totally steamed when looking at the resale values. I basically could have bought the same thing on this site for 40% of the cost.

I have seen several posts that state the fact that the resale value is much lower, but a 60% drop seems outrageous to me. I know that every time I sleep in that bed I am going to be thinking about how much less that it should have cost me (for 30 years!!!!)

Even a new car does not depreciate that much when driving it off the lot. Does anyone have any understanding of how this secondary market became this way?

Second question, can I also assume that the RCI bonus week certificates that I recieved have very little trading power and are not linked to my home location?

Thanks, Todd

---------- Todd, I think we're all guilty of buying an overpriced unit from the resort (including me). Yes, you can assume the bonus weeks have little trading power. If they are anything like Interval International's bonus weeks, they are good for travel within the next 45 days (and you have to pay $200 exchange fee as well). What can one do? Well, accept what happened and enjoy your resort. If it is in a popular spot and a prime time you can probably get a decent exchange or rent it through redweek and, at a minimum, cover your maintenance fees. If the resort is a Points Resort, then you'll have a bit more flexibility with your unit. Good Luck, Mike

Developer overhead is the reason for inflated developer prices; profit for developer, salespeople (paid well), street hawkers/kiosks, closers, attorneys, food/drink for presentations, accountants, office staff, sales managers, perks for prospective buyers, etc. (the list goes on and on).

As someone above said, don't beat yourself up over paying developer price for your timeshare. Many people made that mistake when buying their first timeshare (we did).

Learn to enjoy your timeshare, use it to your advantage and whatever you do don't let it ruin your future vacations to your resort.

toddm87 wrote:

Hello, I am new to timesharing and new to this site/forum. With no previous TS experience, my wife and I succumbed to the pitch when vacationing in Mexico in January (Peublo Bonito Sunset Beach). We did all the math and it seemed to make sense and be a good deal. We bought a floating EOY.

Now that I am back and doing more research on exchanges (and seeing what if anything my 4 bonus RCI weeks are worth), I am totally steamed when looking at the resale values. I basically could have bought the same thing on this site for 40% of the cost.

I have seen several posts that state the fact that the resale value is much lower, but a 60% drop seems outrageous to me. I know that every time I sleep in that bed I am going to be thinking about how much less that it should have cost me (for 30 years!!!!)

Even a new car does not depreciate that much when driving it off the lot. Does anyone have any understanding of how this secondary market became this way?

Second question, can I also assume that the RCI bonus week certificates that I recieved have very little trading power and are not linked to my home location?

Thanks, Todd

RCI is the worsy company to do business with, do not take out the membership .

Todd has asked, in pertinent part.....

>> Does anyone have any understanding of how this secondary market became this way? <<

I think it's actually that resale prices ultimately reflect true market value, whereas the developers extract whatever prices they can get away with to maximize their profits --- without regard for true, actual market "value". In other words, in my opinion it's the developer prices that are completely out of whack in the first place --- NOT the more realistic (and more value accurate) figures reflected in the resale market. In your shoes, that may not be at all what you want to hear, but don't shoot the messenger.

In real estate circles, it is said that a fair price is "what a willing buyer will pay to an agreeable seller". That may be so, but it still doesn't mean that the "willing buyer" won't pay the "agreeable seller" much more money than the product is actually and truly worth...

Re: >> Second question, can I also assume that the RCI bonus week certificates that I recieved have very little trading power and are not linked to my home location? <<

It depends entirely upon where you want to go, when you want to go there, and what the demand (i.e., space availability) is within those two specific crtiteria. Equally true either at your home resort and/or anywhere else.

Ease your mind knowing that in ten years your maintenance fee will seem like peanuts compared to what other people are paying in less equipt smaller hotels. My family paid $270 per night in a teeny hotel room in Waikiki and could not find a better room. It was junk!! (compared to a timeshare that is) This weekend we are going to a business thing in Vegas and are spending $200 per night with our AAA discount at a hotel room. Don't beat your self up, now that you know what you didn'y know, you'll save thousands on your next one. They say that most owners buy more T/S's and even more likely the longer they own.

Also, people that own timeshares have just recently found a way to let them go (probably pentup desire for years) And people who bought are just recently finding a new means to acquire. Don't think that this gap will never close or at least come closer together. Timesharing has always been for the people with "means" as those with less means discover their new abilities, I think there will be more demand and less inventory.

I bought a week in Palm springs for a total of less than $1000. $440 maint. = 52 weeks at $1000 is $52,000 for all year and would cost $1760 per month which includes all services, utilities, taxes, insurance, repairs and even maid service!! Believe me when I say that secondary prices have to go up!!

This is just a whiplash time we're going through and as more and more people get interested in vacationing and not wanting a full time second residence it will come around.

Orville has stated, in pertinent part:

>> This is just a whiplash time we're going through and as more and more people get interested in vacationing and not wanting a full time second residence it will come around. <<

I'm not seeking to argue with you, but I AM genuinely curious to hear you explain how / why / on what basis you believe this to be "just a whiplash time we're going through".

People have ALWAYs been interested in vacationing. Interest in "second homes" may be static (I don't claim to know if that's true), but it still seems to me that while the timeshare industry MAY finally be slowly overcoming the stink and stigma of slick, high pressure salesmen peddling half-truths, as well as larcenous developer pricing, the (continually growing) obstacles to increased interest in timeshare ownership are steadily skyrocketing maintenance fees and the dreaded, always unwelcome "special assessments". In many instances, these annual costs can approach or even exceed the cost of just renting a week somewhere--- without owning a thing.

I'd love to be persuaded to agree with your position and I certainly hope that you're absolutely right --- but I honestly can see no particular factual basis, pattern or any other evidence to support your optimism. Convince me, please!

There's one important issue to remember when buying any timeshare whether from the devloper or from the secondary market (resales) is if there were no developer sales then there would be no resales

Of course, this fact is hard to swallow once you've bought developer and then you see resales listed at 1/3 to 1/4 of what you paid. I know it was hard for us to swallow, but we moved on to buy many more resales afterwords.

At least the developer bought timeshare got us into timesharing. That's how we looked at it.

Of course developer prices are out of whack, but the developer is there to make a profit minus all his overhead (we live in a capitalist society).

Even on the resale market, the only true value of any timeshare is what the market (buyer) will pay. That's why you may see the same timeshare in the same resort with many different prices. It's value is what the seller has in it or what they want out of it, but the asking price does not reflect what they will get for it.

This is the reason banks and loan institutions will not loan money for timeshares (resorts have their own loan service). There is no true scale to calculate what a timeshare is worth, unlike a house or real estate.

ken1193 wrote:

In other words, in my opinion it's the developer prices that are completely out of whack in the first place --- NOT the more realistic (and more value accurate) figures reflected in the resale market. In your shoes, that may not be at all what you want to hear, but don't shoot the messenger.

All, Thanks for the feeback. I have been in and around sales for some time, and the concept of "sell it for what they will pay for it" is something I have long understood. The problem is that I always try to be on the sell side of it, rather than the buy side of it. I guess I normally consider myself a very informed buyer, and in this case, I was not. Shame on me.

It's not like we didn't do the math. If you add timeshare costs, closing fees, interest on financing the timeshare, maintenance fees and include the "bonus weeks on RCI" I will be spending $1,335/week of vacation. If I assume that the bonus weeks hold no value, then I am up to $1438/week. While I consider that a resonably good deal at my home resort, I'm not optimistic that it woud be should I trade to another location. And while they claim that my resort holds high trading power (and they mentioned 2 for 1 trades), I am skeptical based upon the posts that I have read that I should count on getting full value out of trades.

Now that I am on this site, I see other timeshares that I think are very reasonably priced, that I would love to purchase, but I already have $25K tied up in my first timeshare. The feeling of being terribly upside-down on a transaction of that size is not fun. I guess I just have to remember the stock market saying, "you can't lose money until you sell."

Thanks again for all the feedback and comments.

ken1193 Orville has stated, in pertinent part:

In Reference to Ken (above)

I cannot convince you of what hasn't yet occured, as I'm neither a fortune teller nor an expert. However, let me first start by saying that their are at least a couple ways to value real estate. One is "replacement" and the other is "income" I own a vacation home and it is not on a beach, or anywhere like the many timeshares are. It is very close to home (1 hour away). It also has none of the amenities of a time share. The cost basis is about $200,000. The upkeep (utilities/taxes/insurance/annual maintenance) runs around $300 per month. We spend a total combined amount of time there of maybe 3 weeks per year. Mostly on weekends and usually to clean gutters, mow grass, etc. Having said that, know that I am not alone in my second home experiences. Also know (inquire with your local real estate service) That there has been a steady rise in the sales of second homes. The better location, of course the more it will cost in taxes, cost base etc. In essence, I paid $200,000 and spend $1200 per week for my "vacation time" I have to purchase my own furniture, fix anything that is broke, wash my own sheets, and if I had a pool, I'd have to take care of that too.

Here's my second point, timeshares secondhand via the internet is relatively new. People will not pay $25,000 for a timeshare if they can purchase a like property for $5,000. It's a case of supply and demand. If there is an increase in demand for timeshares (which my vacation ownership exaple above shows there should be) and people are hearing more and more not to buy directly from the builder, which is gradually becomming known. And timeshare ownership (secondhand) is now within reach of the average Joe. Well the demand obviously will push prices higher.

And as far as maintenance fees go. I just spent $239 a night at the Marriott with no bells and whistles. I pay about $1200 per week "that I use" on my second home. I spend about $600 per week just to live in the house in which I reside. I have no beach and perfect wheather, no maid service, no pool boy.

I hope this may have gotten the wheels turning. I have rental properties. At first, I paid to have renters and headaches. Now they pay, but I still have headaches. In a few years the renters will pay not only for their "space" but will also pay enough for someone else to handle the headaches.

I believe this is a great time to purchase timeshares secondhand. I believe the prices will rise and I believe people will begin competing to rent from owners. Everything takes time, but knowledge and the internet makes for some very fast progression.

I would never look at timeshares as an investment, however, looking back, I can say that the best time to get the best buys in anything is when they are out of favor.

Having said that, from some of the suggestions above "don't buy if you can rent from an owner" and "why have the initial outlay, maint. fees and special assessments" I feel safe to say that to many people timeshares may be out of favor. How long do you think it will be before owners can place their time for minimum fees on a first in first out basis and pehaps even profit from these competing renters. Or do you feel that people will prefer staying at hotels, or that there will be too many vacation properties to fill, maybe less people will want to vacation?

My thought is.. If the price is right and the location is desireable and you plan to vacation anyhow, buy now when you're not competing with everyone else. At least you'll know that when you want to go you'll have a place to go to. That must be worth something?

Orvillef2 has stated, in pertinent part:

>>I believe this is a great time to purchase timeshares secondhand. <<

Agreed. The number (literally thousands) of timeshares for sale for peanuts money is absolutely astounding to me. Some folks are begging (some even PAYING) to GIVE their timeshares away, just to be rid of them. <<

Re: >> I believe the prices will rise and I believe people will begin competing to rent from owners. Everything takes time, but knowledge and the internet makes for some very fast progression. <<

You may very well be right, I don't begin to claim to know. I just don't yet see any sign or evidence of this turnaround being anywhere in sight on the visible horizon.

Re: >> I would never look at timeshares as an investment, however, looking back, I can say that the best time to get the best buys in anything is when they are out of favor.<<

Sure, no disagreement there.

Re: >> Or do you feel that people will prefer staying at hotels, or that there will be too many vacation properties to fill, maybe less people will want to vacation? <<

People will ALWAYS want to vacation. I clearly and openly stated that (perhaps obvious) fact in my initial response to your post. I only questioned the basis of your contention that this is just a "whiplash" period for timeshare. Believe me when I tell you that I sincerely hope that you are absolutely correct; my only point was (and remains) that I just don't yet see any actual evidence to support that view.

Re: >> My thought is.. If the price is right and the location is desireable and you plan to vacation anyhow, buy now when you're not competing with everyone else. At least you'll know that when you want to go you'll have a place to go to. That must be worth something?<<

Absolutely! That's not a point with which I would disagree, now or at any time previously.

I don't necessarily agree with the statement below. Resales will generate only what the market (buyer) will pay. I don't agree that resale prices will rise in the future except perhaps for very popular areas, resorts and seasons (supply and demand).

I see what is happening currently for the future in less desirable and/or overbuilt areas and off seasons, especially since so many new resorts are being built as we speak (re: Las Vegas, Orlando, Branson).

There will always be millions of people buying from the developer then, for whatever reason, turning around and selling for a huge loss on the resale market.

Resale prices are all over the place at the same resort, same accomodations and in the same time period and it will always be that way. It depends on what the seller is asking and what the market (buyer) is willing to pay.

You always have to remember that just because a seller is asking a certain price does not mean he will get it or perhaps anywhere near his asking price or if he will sell it at all (re: the many timeshares selling for $1.00 on Ebay).

I agree there are some great timeshare deals on the internet, and it is a good time to take advantage of those deals if you buy for the right reason and you will use that timeshare each year in some capacity, whether using it yourself or exchanging. So many people actually buy timeshares, even from the developer, and never use, rent or exchange it. This is tragic.

I don't agree that timeshare owners will start competing with each other in the rental market except for high demand locations and seasons (again, supply and demand).

orvillef2 wrote:

I believe this is a great time to purchase timeshares secondhand. I believe the prices will rise and I believe people will begin competing to rent from owners. Everything takes time, but knowledge and the internet makes for some very fast progression.

I would never look at timeshares as an investment, however, looking back, I can say that the best time to get the best buys in anything is when they are out of favor.?

Ken;

If you could see a turn in sight or on the horizon, do you believe timeshares would be selling for nothing right now?

Like I said, I'm no fortune teller. Sometimes all you can do is look at the fundamentals and have faith.

This seems to be a sudden stop time for timeshares, for no really good fundamental other than alot of people wanting out, not buying or whatever. I think this appearance is due a great extent to the sudden ability to easily get rid of a timeshare via the internet. (Therefore, a sudden surge in supply) However, there is no shortage of people wanting to use these resorts.

When resorts lose profits, owners, or people become more particular, it would make sense that banks and investors will no longer spend the money to develop these properties. If there is less demand for a product the supply will naturally slow. Obviously, I would agree with location, location, location and to a slightly lesser extent "season"

Therefore, I would conclude a "Whiplash" in the current market. Again, I don't know. My experience just leads me to "believe".

Also: If and when there seems to be a turn around in sight or on the horizon, people will be much less likely to give away their timeshares and some people will look at it as an investment and start buying those that are cheap. Wouldn't you agree?

Perhaps some people purchased entirely on the premise of renting out in the first place. If so, they are the most likely people trying to sell now for nothing or rent out for only their maintenance fee. What will happen when timeshares are owned by people planning to use them? If there are less units for rent, wouldn't there be more competition?

I think that for every person that bought and decided to stop going on vacation there are at least five more people deciding to start going on vacation. No facts, just a feeling.

The best way to buy time share units is in the secondary market. There is no question that a TC is great for those who travel. How else can you stay in England, Italy, Spain etc for about $600 (including RCI fees and maintnence fees.)? We have gone on occasions to listen to those pitches only for the gifts and the cash. Never buy at the resort, ever!

Boy, I sure wish I would of read this before we bought our timeshare. Now I'm really really depressed.

kathrynw41 wrote:

Boy, I sure wish I would of read this before we bought our timeshare. Now I'm really really depressed.

kathryn, please don't be depressed. Millions of people bought their first timeshare from the developer (including us) and afterwards finding internet forums discussing resales (after our rescission period had expired).

We chalked it up to an expensive lesson learned and went on about our lives enjoying that developer bought timeshare. We also went on to buy many resale timeshares at good prices at places we liked to go (beach and mountains).

We have always said that if it weren't for the developer bought timeshare that we would have probably never bought any resale timeshares and we would have missed out on some wonderful vacations in very nice accomodations.

After the developer bought timeshare, we researched via the internet all aspects of timesharing which made us a much more knowledgable consumer.

Please use and enjoy your timeshare without regret.

toddm87 wrote:

Hello, I am new to timesharing and new to this site/forum. With no previous TS experience, my wife and I succumbed to the pitch when vacationing in Mexico in January (Peublo Bonito Sunset Beach). We did all the math and it seemed to make sense and be a good deal. We bought a floating EOY.

Now that I am back and doing more research on exchanges (and seeing what if anything my 4 bonus RCI weeks are worth), I am totally steamed when looking at the resale values. I basically could have bought the same thing on this site for 40% of the cost.

I have seen several posts that state the fact that the resale value is much lower, but a 60% drop seems outrageous to me. I know that every time I sleep in that bed I am going to be thinking about how much less that it should have cost me (for 30 years!!!!)

Even a new car does not depreciate that much when driving it off the lot. Does anyone have any understanding of how this secondary market became this way?

Second question, can I also assume that the RCI bonus week certificates that I recieved have very little trading power and are not linked to my home location?

Thanks, Todd

Todd, We deal with depreaciation by subtracting our maintenance fee from what a week at the resort would rent for, and feel better. Eventually it may even out. CAROLYNT