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So you’ve just gotten home from a timeshare presentation where you were dazzled by the prospect of a wonderful lifetime of adventures and so you bought your timeshare from the developer. And right now some sneaking suspicions are starting to develop that you’ve made a mistake and you’re starting to feel a bit ill about it all.
Fortunately, if you’ve only just made your purchase, it probably isn’t too late to get out of your timeshare contract. If you bought a US timeshare, you will generally have between 5 days and 15 days to rescind (cancel) your contract and if you bought a timeshare in Mexico you will have 5 days to cancel. If you bought a timeshare in a different country, you likely also have a rescission period too.
The important thing to do is act now without delay!
How long is your rescission period?
First things first, read your timeshare contract. Somewhere in your contract, probably in its smallest typeface, will be buried information on your right to rescind, the procedure and the number of days you have in which to act. Be sure to read this section thoroughly and follow the procedure as listed in your contract to the letter if you want to have a valid rescission.
If you have a Mexican contract, even if it does not list this information — you have FIVE DAYS. And that’s five calendar days, not five business days, so the sooner you act, the better. If the Mexican resort had you sign a waiver to waive your right to rescission, please note that it is NOT VALID. Mexican law does not allow the rescind period to be waived. This will be true in most US states as well. For example, Florida does not recognize a waiver. So you can rescind even if you sign one, though you may have a bit of a battle ahead of you.
Important Note: I am not a lawyer. I’m just a timeshare owner who has been through the rescind process myself. For legal advice, consult an actual lawyer!
First things first, follow the procedure listed in your contract exactly. If it says send a certified letter, do not send your letter by FedEx, etc. Do not send an email or make a phone call. Those are not valid ways of rescinding.
Here are some tips to make the process less painful.
- Just do it! If you bought from a developer while you were someplace on vacation, you likely didn’t do a lot of research first. Chances are, you paid too much. Assume you did and don’t get into research mode now. Rescind, and then research. If you really like that timeshare and decide that timesharing is right for your lifestyle, chances are you can find a much better price on a resale purchase of the exact same place.
- Don’t explain. You don’t need to get into a long-winded explanation of why you are rescinding in your letter. The developers get these letters every single day. Just keep it short and sweet.
- Some contracts will allow you to rescind by hand-delivery. I think you should avoid returning to the scene of the crime, as it were, as that will simply give them an opportunity to talk you out of your decision by making you other persuasive offers. Handle the whole thing by mail.
- If you need to call the timeshare company about the rescission, do not contact the sales site and do not talk to the sales rep. He or she is out of the picture at this point and can not help you. The only thing the sales rep will do is try and talk you out of it. Contact the head office and talk only to them. Be brief. Do not get into explanations about your change of heart. Simply tell them you’ve reconsidered and are cancelling the contract. Get the info you need and get off the phone. And remember, you cannot validly rescind during a phone call. You must do it in writing.
- Act immediately and make multiple copies of every piece of paper. Don’t wait until the end of your rescission period to act. Do it today.
- Certified Mail with Return Signature and Receipt – even if you are not required to send your rescission request via certified mail, I would do so anyway. It’s more paperwork to back-up your legal standing in case anything goes wrong.
I’ve also include a short video slideshow that explains how to cancel a timeshare. So if you’ve been dying to know what I sound like, here’s your chance
3 Steps to Cancel Your Timeshare Contract
Before Asking a Question
Before you leave me a comment with a question about the rescind process, just keep in mind that I am not an attorney and I’m not familar with all the nuances about timeshare laws and what happens if you don’t follow the rescind procedures exactly.
Every state and country has their own laws, so I can only answer very general questions. If you need legal assistance, your best bet is to contact a real estate attorney who knows the timeshare industry
Timeshare sales pitches rely on dazzling you with the glamour of owning a place to stay at a vacation destination. When the excitement wears off, you may realize that purchasing a timeshare wasn’t such a good decision after all. Unfortunately, once you sign the contract, it can be tricky to cancel it. If you know the law or are prepared to get assistance, you may still be able to cancel your timeshare contract.
Virtually every state has laws that allow you to cancel a timeshare contract within a certain number of days. According to Timeshare Trap, the states with the shortest period are Connecticut, Massachusetts, Indiana and Ohio, which only give you three days. Alaska offers the longest period (15 days). The timeshare seller is not likely to point out this information, but it should be in your contract. If it’s not, contact the state regulatory agency. If you decide to cancel within the specified time frame, call the company to let them know, and follow up immediately with a certified letter. Get a return receipt so you can prove that you sent it within the allotted time and that it was received.
If you feel that the salesperson made gross misrepresentations to you during the sales presentation, you may have groups to cancel your timeshare contract. Most contracts contain a clause that says verbal promises will not be honored. However, you can still attempt to cancel your contract if you feel that there were blatant lies. Send a certified letter to the timeshare company outlining the misrepresentations, and send a copy to the state’s regulatory agency.
If you are unable to cancel your timeshare contract on your own, try a consumer advocacy group. You can contact a general consumer group such as the Better Business Bureau to file a complaint. You can also work with an advocacy group that deals exclusively with timeshares, such as The Owner’s Advocate or Timeshare Advocacy International. Their timeshare-specific knowledge can be very valuable.
It often pays to consult a lawyer when your other options have failed. A legal professional may be able to find a loophole in your timeshare contract that allows you to cancel it without penalty. This could be anything from an incorrect date to a missing signature to paying the wrong down payment amount.
Timeshare companies are used to dealing with customers who feel buyer’s remorse a few days after signing their contract. These companies tend to cover themselves legally as much as they possibly can. Even if you seek the assistance of an advocate or a lawyer, you may discover that you are locked into your timeshare contract.
The accountant from Cherry Hill, N.J., jumped on it, and became one of 6 millionAmericans who own a time share, shared vacation property that owners get to stay in for a week or so each year for life.
Four years later, the thrill of ownership is gone. Her family has yet to use the one week at Atlantis Harborside Resort she bought, and the contract has become a nagging financial burden at a time when a lousy economy is squeezing her home finances.
Udell is back on Craigslist, this time as a seller wanting to be free from the mandatory annual fees that sustain her ownership. Her bill for 2010 totals $1,650, up 20% from last year plus a $250 charge to make up for “the deadbeats who have abandoned their time shares,” according to Udell. “I can’t deal with the hassle anymore.”
Udell is joining a rising chorus of time-share owners who are fed up with mortgages and burdensome payments that they think render little or no return. With ironclad contract terms, high annual fees and aggressive salespeople, time shares have always been controversial. But this economic downturn has been particularly nasty for the industry. It’s killed the easy credit that was the lifeblood of developers and forced would-be customers to think twice about signing a life-long financial commitment for something they’d use only a few days a year.
Sales are down. Resort development has come to a standstill. Mortgage defaults are rising. Thousands of salespeople and maintenance staffers have been laid off. Customers are flooding the resale market, where some are trying to unload contracts for as little as $1.
Meanwhile, scams that target desperate owners are skyrocketing, triggering enforcement actions from state attorneys general throughout the country. The number of consumer complaints about time shares received by the state of Florida, which is home to a quarter of the industry, doubled in 2009 to more than 2,500, according to the state’s Department of Agriculture and Consumer Services.
“We were always ‘the engine that could’ for the (tourism) industry, but now we’re the red-headed stepchild,” says Howard Nusbaum, CEO of American Resort Development Association, or ARDA, an industry trade group. “We’re going through a tough period.”
There were 1,630 time-share resorts in the USA as of 2008, with 40% of them concentrated in Florida, California and South Carolina, according to ARDA. About 7 million time-share contracts are currently held by owners in the USA. The average price in 2008 was $20,150.
Sales drop, defaults rise
Since they were created in the 1960s, time shares didn’t have a down year until 2008, when sales dipped 8% to $9.7 billion, according to ARDA. They plunged 40% more in 2009 to about $6 billion and will likely remain flat in 2010, Nusbaum estimates.
Time-share mortgage defaults rose each quarter in 2009 compared with 2008, ARDA says. In the third quarter of last year, 2.9% of time-share mortgages went into default vs. 2.2% in 2008. About 8% of time-share mortgages were in default as of 2008. Maintenance fees have grown an average of 12% a year since 2005.
Large hospitality companies, already hurting from empty hotel rooms, are retreating. Wyndham Worldwide, the largest time-share operator in the USA, saw sales fall 51% in the first nine months of 2009 to $756 million. It has closed some sales offices and cut 4,000 jobs since late 2008.
Marriott International‘s time-share sales fell 38% in the first nine months of 2009 to $445 million. It also wrote down $752 million of its time-share resorts’ value, and it said it would discontinue construction of new properties and would convert some to other types of properties.
Nancy Lehenky, a Marriott customer, wishes she could walk away from the $60,000 mortgage she took on last year for a two-week interval at a resort in Palm Desert, Calif.
Lehenky and husband David, who run Flathead Distillers, a vodka distillery in Montana, pay $1,100 a month for the mortgage and $2,000 a year in taxes and fees. While they were able to afford the payment when they bought it, her husband has since been laid off and their decision to open the distillery has forced them to tighten spending. Lehenky particularly regrets having paid full retail price rather than shopping for a resale. “Had I known what was coming in the future, I’d have held off,” she says.
Lehenky asked Marriott to take the contract back last year. The company refused.
ARDA’s Nusbaum says industry woes can be traced largely to developers no longer being able to package mortgage debt as asset-backed securities sold to Wall Street.
Developers have historically lent directly to customers. Cash back from investors on the sale of bundled mortgages was used to build more resorts. The mortgage-backed security market all but vanished in the 2008 financial crisis, and the industry has had to halt most new construction and cut back on free cruises, air tickets and hotel rooms given as incentives for customers listening to a sales pitch.
Westgate Resorts, one of the largest operators in the industry, had a record year in 2009 with about 2,200 new rooms/suites, says Mark Waltrip, COO of Westgate. This year, it’ll open none. The company halted construction on “10 to 12″ properties that have already had groundbreaking, he says.
The industry contends that customer satisfaction remains high and that demand hasn’t waned. ARDA says 50% of buyers already own another time share. And the percentage of people who buy a unit after sitting through a sales pitch remains unchanged at about 10% to 15%, Waltrip says.
Unlike other hospitality or real estate industries, time-share operators dictate much of consumer demand by providing incentives for people to come directly to resorts or to sales-pitch sessions, ARDA’s Nusbaum says. “No one wakes up in the morning and says they’re going to buy a time share. They come in and get compelled by the product. It’s an emotional buy,” he says.
Summers Doonan, an American Airlines flight attendant in Orlando, knows all too well about the allure of a sales pitch conducted next to a resort pool glistening in the Florida sun. She and her former husband, Brian, were invited in 2007 to a free weekend at Ron Jon Cape Caribe Resort in Cape Canaveral and sat through a sales pitch. They walked out with a one-week contract that cost them $18,000. “We were suckered in, and we fell in love with it,” she says.
Having divorced last year and now on unpaid leave from her employer, Doonan wants to sell it. She never got to use her week, because it fell in October when her kids are in school.
Trying to exchange it for other weeks or for time at other resorts, which was her original intent, proved to be a lot more competitive, difficult and expensive than she was led to believe, she says. On top of $1,150 in taxes and fees every year, she pays $90 a year to belong to an exchange club and faces another $200 fee each time she wants to trade. She and her husband have agreed to split paying for the fees until it’s sold.
“Both of us are tight. I have three kids I’m trying to raise as a flight attendant,” she says. “It was a rash decision. You’re surrounded by beauty and the excitement of it all. (Salespeople) are definitely charismatic.”
Brian Rogers, who runs the Timeshare Users Group, or TUG, an online forum for owners, says the growing number of disgruntled, but more informed, customers combined with the financial crisis that has forced developers to cut spending will result in changes in how the industry is run.
The number of ads by owners looking to sell on Rogers’ website is 25% higher than a year ago. About half of the people on his website want to sell their time share, he says. “More people are trying to get out. Some find it difficult even when listing their time share for a single dollar.”
That is not comforting news to Udell. She’s listed her week in the Bahamas for $4,300 on Craigslist, TUG and other sites, but hasn’t gotten any offers. Her husband, Craig, is changing his career to be a teacher and earns a fraction of what he made before, and her family can’t afford annual vacations without going further into debt. “Going on a vacation like that would be living beyond our means,” she says.
‘Scams’ in resale market
Sensing desperation, fly-by-night hucksters are cold-calling and mailing owners with promises of a quick sale for an upfront fee as high as $5,000.
Udell says she’s been bombarded by such solicitations. “They make it very tempting,” she says. “One company guaranteed (it) can sell for $20,000. I hung up on him.”
Doonan, the flight attendant, paid $600 upfront with a reseller, which has listed her unit for $18,000 on its website and printed fliers that she’s never seen.
TUG’s Rogers says he knows of no resale company that can guarantee an owner a sale. Customers, he says, should never pay resellers any upfront fee. “They’re so masterful at their pitch,” he says of resellers. “It’s a scam on top of a scam on top of a scam.”
Florida is a hotbed of time-share scams. The state’s attorney general, Bill McCollum, sued two related companies in November, that have allegedly collected more than $4 million monthly in fees from owners who were solicited via Internet advertising and telemarketing calls.
The lawsuit alleges that the defendants — including Universal Marketing Solutions, Creative Vacation Solutions, owner Jennifer Kirk, and Kirk’s brother, Scott Kirk — collected “advertising and/or marketing fee(s) for time-share resale services via a series of false and fraudulent misrepresentations.”
The defendants required “hundreds of consumers” to pay $1,500 each and said they “would market and/or advertise their time share in an attempt to resell it, when in actuality the time share was merely placed on a website, to which no Web traffic was directed.” The defendants also “made blatant misrepresentations … (that) they could definitely sell their time share within a certain time period.” Calls to the companies weren’t returned.
“The secondary market doesn’t have the protections (that are in the primary market),” says Nusbaum of ARDA, which issued a statement applauding Florida’s lawsuit.
Despite their flaws, time shares still have legions of loyal fans. Linda Moore, a property manager in Thorofare, N.J., uses her weeks in Florida as her winter home. She bought her first week at Fort Lauderdale Beach Resort several years ago, and has steadily added to her portfolio by looking for deals in the resale market.
She bought another week in early January for $575 and now owns more than 10 weeks there. “I had people come in and say, “This is a tremendous view,” and I’m saying, ‘Yeah, and it’s all mine.’ “
Think again.. We Have a customer of our who has set up a very interesting blog He has a very interesting story and we would like you all to read more about his experience with his timeshare. Click on the link——-> You Think You Can Sell Your Timeshare? Learn The Facts
Below is another timeshare article from TUGGS.
by Tugger Dave M
Paying Up-front Fees
Most important rule: Never pay an up-front fee in an effort to sell your Timeshare! Whether the fee is called an appraisal fee, a market analysis fee, a marketing fee, an advertising fee or some other type of fee, the result, historically, has been the same for all who have reported here about their experiences.
There have been only two reports at TUG of successful sale transactions as a result of paying such an up-front fee. Neither has been verified. There have been hundreds of reports and complaints at TUG from those who have paid such fees without success.
Yes, I know you want to believe that the company “has a buyer (or several buyers) waiting to make a deposit on your week. All [the company] needs is a $495 deposit from you. It’s refundable.” Or the company has a money-back guarantee.
I know how desperately you want to believe that sales pitch. Don’t believe it! There is no purchaser waiting in the wings. Once the company has your money, they have no significant incentive to work for you. And despite guarantees and other promises, you won’t get your money back when you complain!
There are narrow exceptions to this advice against paying up-front fees – for selected nominal fees ($15-$30), such as to place an ad in a specific publication or at TUG where you can place as many ads as you want for free with your membership!
What Is Your Timeshare Worth?
Advertise your week at a realistic price. With few exceptions, owners of timeshares purchased from a developer can expect to take a beating on resale. Although it’s not what you want to hear, most timeshares sell on the resale market for only 30% to 50% of the price you likely initially paid to the developer when you purchased. Shocked? Please believe it!
The key is to bury forever any thoughts that because you paid (let’s say) $12,000 for your week, someone else will be willing to pay the same amount. They might, if you were putting on the same glitzy sales presentation that some high-pressure salesperson did when you bought, including giving free incentives for attending the presentation. But you don’t have that luxury. So do your homework and set the price at the right level. It will sell.
To help establish an asking price for your timeshare, try to find out what other weeks like yours are selling for. Ask your resort about recent sale prices, check the TUG sales database (to which you have access if you are a TUG member), look at current and completed eBay auctions, check real estate records in the county where the resort is, etc.
For more help in establishing value, look at all of the places listed below for advertising your week. To find other current listings, do a Google.com search using the name of your resort (in quotes, if more than one word) and the word timeshare as search terms.
When you have done all of that work, you might be even more confused as to what asking price you should set. As an example, you might find 15 listings for your timeshare here on TUG in the Timeshare Marketplace or on Redweek (see next section) at asking prices ranging from $2,000 to $12,000. First, keep in mind that most timeshare owners have no concept of what resale values are. They may incorrectly think of their timeshare as a traditional piece of real estate that should appreciate in value. Thus, they way overprice their timeshare, looking to recoup – at a minimum – most or all of what they paid for it. Second, make sure you compare the details of your week (week or season of the year, # of bedrooms, view, etc.) with the other for-sale listings for your resort to determine which listings are reasonably comparable to yours. Lastly, keep in mind that if there are multiple listings for the same or similar timeshares, buyers will seek to buy only the one listed at the lowest price. Thus, you should almost always list your week at or below the low end of the range of asking prices you see. Otherwise, you will own your timeshare for a long time!
Where Do You Advertise?
Ask your resort for ideas of how others sell their week. Advertise on a bulletin board or in a newsletter at your home resort, at the various on-line free timeshare resale services (see listing below) and at timeshare related locations where you can advertise for a nominal cost (e.g., here at TUG and in the on-line and print editions of Timesharing Today).
Also consider trying to sell your week on e-Bay, setting a reserve as low as you are willing to sell for or, perhaps even better, no reserve at all. There are conflicting reports here at TUG as to whether setting a reserve inhibits prospective bidders from submitting a bid or whether it helps by setting a minimum price.
To get started, review other eBay timeshare ads for deciding on a format for your ad. Then go to eBay’sTimeshare Seller’s Guide. At e-Bay, even if your week doesn’t sell, the bids you get will give you another strong indication of the true value of your week.
Another auction site to consider, although it seems to have considerably less activity and often lower selling prices than eBay, is www.bidshares.com
Advertise at some of the online free (or free except for a $10-$35 registration or listing charge) resale sites that get considerable action. Examples include the TUG Timeshare Marketplace, Redweek.com,MyResortNetwork.com and Transaction Realty. For other resale sites frequently mentioned favorably here at TUG, see this listing.
Consider advertising in newspapers. Place a classified ad in the Sunday “Real Estate – Timeshares” section of major newspapers in locations where concentrations of visitors to your resort live, etc. Craigslist.org is also a free place to get great exposure for your Timeshare rental or resale!
How about the local newspaper where the resort is located? Visitors to the area will likely want to come back and may want to buy a piece of the resort area, just as you did. They are prime targets. There may also be some timeshare resale realtors in your resort area (such as there are in Hilton Head) that will try to sell your week for a commission. They typically advertise in the Timeshares classification of the Sunday real estate section of the resort area’s local newspaper.
What if Your Timeshare Loan Exceeds the Likely Selling Price?
Be prepared to pay off the loan or put money into the transaction (paid to the closing company) in order to sell it. Very few potential buyers will be interested in taking over your loan payments.
You might decide you can’t afford to sell at the price your research indicates is reasonable, because you still owe an astronomical amount on your timeshare loan. Consider refinancing your loan to get a lower interest rate and make the payments more palatable for you and, perhaps, partially deductible. The best way to do that may be to refinance your home mortgage for an additional amount or open a home equity loan so that you can pay off that high-interest timeshare loan. By doing that and paying off the timeshare loan, you will have made your timeshare much more marketable.
It’s also possible, perhaps likely, that your timeshare loan is a personal consumer loan rather than a mortgage-type loan where the lender takes a security interest in your timeshare. If so, you can probably sell your timeshare just as though you didn’t owe any money. But keep in mind that you’ll still have to repay that loan eventually!
If the high unpaid balance on your timeshare loan prevents you from selling, consider trying to rent your week each year to minimize your losses until you can get the debt paid down somewhat. Much of what is written in this article (paying no up-front fees, setting a reasonable price, etc.) applies equally to rentals. (See the “How to Rent” article in a separate “Sticky” thread.)
Cold Calls from Resellers
Once you start listing your week for sale, expect calls and e-mail messages from entities promising a quick sale at your asking price (or even higher). All you have to do is pay an up-front fee of $99 to $799. When that happens, go back to the Up-Front Fees section at the beginning of this article!
Scams to Avoid
Beware! There are a variety of scam artists waiting to prey on you when you place an on-line ad.
One current scam involves an offer to pay you more than your asking price. You are told to wait until their check (usually a foreign ” bank check” or “certified check”) clears and then refund the difference, still netting you a very attractive sales price. The problem is that well after their check cleared your bank and you sent them money, their check will bounce and you’ll be stuck!
Another gimmick is to invite you to a meeting at a second tier hotel/motel near where you live and offer you several thousand dollars for your timeshare. At the same time they “invite” you to purchase a great (not!) vacation package for (usually) $6,995. The problem is that the real value of the vacation package (“free” cruise, discounted vacation rentals, discounted air fares, etc.) is several hundred bucks at most. All of the package offerings can be found on eBay and other Internet sources for nominal prices. Further, the “free” cruise and other benefits require significant additional payments.
A similar gimmick is the meeting at that same second tier hotel/motel where you’re told you can unload that terrible no-value timeshare that you have simply by paying $3,995 (or some similar high amount). You might also be told (incorrectly) that the loss you incur upon sale is deductible on your tax return. Before considering such an expensive and unnecessary transaction, follow the various sale options discussed in this article!
Perhaps the best advice is that if you get an offer or solicitation related to your ad that seems too good to be true or seems unusual, ask about it on the TUG Buying, Selling, Renting Timeshares forum.
Timely and Accurate Information to Prospective Buyers
Treat prospective buyers the way you would expect to be treated if you were considering a purchase. Respond quickly to e-mail messages or phone calls from prospective buyers. Consider making reasonable counter offers when someone offers less than your asking price.
Make sure that information in your ad and in responses is accurate. If you tell a fib or accidentally provide the wrong info about the annual maintenance fee, the view from your unit, whether it’s a fixed or a floating week, whether maintenance fees for this year have been paid, whether this year’s use is available and whether the week has been reserved or other important information, you’ll likely lose your sale when the prospective buyer checks your info with the resort. No one likes to deal with someone who can’t be trusted. Worse, you might have legal difficulties after a sale, based on your having provided inaccurate information.
Once You Have a Buyer
It’s best to have a contract with your buyer that specifies what the buyer gets in addition to ownership (e.g., use of this year’s week?) and what you get (payment amount and terms) and when. Although you should consider the possibility of engaging an attorney to assist you, the cost to do so might be prohibitive, depending on the price of your transaction.
Timesharing Today has a Resale Document Kit, which you can purchase for about $30, or even less if you choose to download the kit. Instructions, fill-in-the-blank forms, sample letters, loan documents, etc. Easy to follow. A kit from My Resort Network sells for under $10, but might not include legal language required if the timeshare or one of the two parties is in Florida.
If you want to be somewhat secure in the closing process after you have negotiated a written deal, consider using one of the low-cost timeshare closing services such as Timeshare Transfer or JRA Services so that neither the money nor the deed is disbursed until both are in the hands of the closing company. Your buyer might insist on using such a service. Fees are typically $300-$350 depending on what services you utilize.TimeTravel Traders will handle the closing for about $100, but the fee does not include escrow handling of purchase price funds. Or for $119 and a lot of paperwork, if you are comfortable with the details, you can be guided through a self-closing at TurboClose.
Whether you or the buyer pay such closing fees is a matter of negotiation between you and the buyer. Using such a service is not a substitute for having a contract with the buyer. Another reason for using a closing company: Keep in mind that you are responsible for the timeshare maintenance fees until the resort is properly notified of the title change, along with payment of the resort’s transfer fee, if applicable.
Donate Rather than Sell?
If you believe it would be too much trouble to sell your week, consider donating your week and claiming a tax deduction for it. See this TUG Advice article for information on donating and the “Donating” part of this TUG Advice article for information on the tax aspects of your donation. Also see this link for a good description of the actual process of donating a timeshare, unfortunately its not as great an option as most would imagine!
Selling a timeshare week takes effort, patience and diligence (to avoid a scam). But the effort, if you are realistic in your expectations, will pay off.
Paid up-front listing fees with agents or brokers only to find out they never sold your timeshare?
Paid another “special assessment” and just want out?
Not or rarely used your timeshare?
Fed up with rising maintenance costs?
Stuck in a legally binding contract that you can not get out of?
Sick of listing companies taking your money with nothing to show for it
Looking to get out of your timeshare immediately?
Contact Us Today!
What we do.
Resort Bailout is a company that helps free timeshare owners from the burden of their timeshare. We are individuals who are veterans of the industry and want to use our knowledge and skills to help other timeshare owners rid themselves of that financial strain.
How it works
Call us TODAY and an agent will be in contact with you as soon as possible.
Once qualified, we will guide you through and prepare any and all necessary documentation to transfer the timeshare out of your name and into ours.
Here’s how the scam works.
Whether you attend a group meeting at a local hotel conference room, or a web-based seminar (webinar), or get a phone pitch with a so-called Timeshare Counselor, you are in fact dealing with a team of highly trained and highly paid sales people. After spending about an hour reminding you why you no longer want your timeshare and how impossible they are to sell, they finally reveal the plan to rid you of your timeshare. You may hear a lot of mumbo-jumbo, but it all boils down to this:
You pay them a fee of up to $5,000 or even more and they will arrange to transfer ownership of your timeshare to a ‘charity’ that they work with. In turn, they will provide you with an ‘appraisal’ of your timeshare in the amount of 80% of its original value, which you are told you can use to claim as a charitable deduction on your federal tax return. They will explain the math to you, showing you that your tax deduction will overcome the $4,000+ fee you pay them to rid yourself of your timeshare.
Here’s a standard example of the math:
Let’s say you originally paid $25,000 for your timeshare. And let’s say you agree to pay them their $5,000 fee. They will transfer ownership of your timeshare to a ‘charity’ and provide you with a bogus document (the appraisal) that says that the current market value of your timeshare is $20,000 (80% of your original purchase price of $25,000). Let’s say that you are in the 25% tax bracket, which means that your deduction of $20,000 will net you a $5,000 refund from the IRS. This is where the main fraud is perpetrated, and the worst part is that you are a knowing and willing participant in lying to the United States Internal Revenue Service. You know that this timeshare isn’t worth $20,000 when you donated it. The company that took your money and provided you with the so-called appraisal also knows that it wasn’t worth $20,000. By the time the IRS gets wind of it (and they will), the scam company will have picked up and left town with your money. You, on the other hand, are easy to find, and the IRS will challenge your deduction because they are NOT stupid. They know very well that resale timeshares have very little or no market value today and they don’t appreciate scams like this one. You can yell foul at the top of your lungs, claiming that you were the victim of a scam, but the fact is that you knew that the appraisal was a fraud yet you still claimed it on your taxes. The scam company didn’t do that. You did. And now you’re in trouble.
How this scam triggers an IRS audit.
You may ask, ‘what triggers the IRS audit?’ It’s a good question, with a simple answer that the scam company will conveniently neglect to tell you. You see, when your timeshare is transferred to the charity, the charity doesn’t want to keep it for the same reasons you don’t want it; it comes with an annual liability (maintenance fees). When the transfer is done, the charity will immediately ‘sell’ it to a third party, usually to a holding company owned by (you guessed it) the scam company. For their part in the scheme the charity receives $100 for the ‘sale’ of the timeshare. Of course this is all part of the scam. Here’s the trigger. By law, the charity is required to file a report with the IRS on the actual amount they receive when they sell your timeshare. When the IRS automated systems see that you claimed a $20,000 deduction on a timeshare that the charity sold for only $100..…bingo….can you say AUDIT?
Folks, this scam may be new to timeshares but it is not new to the IRS. This same scam started many years ago with cars, and then boats, and the scam continues to this day. We’ve all heard those radio commercials suggesting that you donate your beat-up, worthless car to a charity so that you can take a deduction far higher than the car is really worth (you don’t hear that part until you call and get the details). As we’ve said, the IRS is not stupid. They’ve been dealing with this scam for many years. That’s why they now require the charities to disclose the actual amount they receive when they sell the car or boat. If you took a deduction that was substantially higher than the amount the charity sold it for, a red flag goes up and is likely to trigger the audit. This timeshare version is just the latest in a long line of similar scams. While the IRS may appreciate that you wouldn’t have committed this fraud had it not been suggested to you by the scam company, the fact is that you did indeed knowingly file a false deduction and unlawfully profited from the United States Government. You knew that your timeshare was virtually worthless. You knew that the ‘appraisal’ was not a real appraisal. You knew that claiming $20,000 was wrong. The IRS calls it fraud.
Timeshare Prices Plummet to $1
Unable to sell his parents’ ocean-front timeshare for the past year, David Suder became so fed up he offered to give it away. They paid $8,000 for the Orange County, Calif. unit a decade ago, but since there are no willing buyers, and his 81-year-old mother, now a widow, can no longer afford the monthly maintenance fees, Suder says he doesn’t have a choice. The San Diego-based real estate investor is offering the unit for free in the hopes that someone will take it before his mother dies. “I don’t want to inherit it,” he says. “I want it to go away.”
While real estate – and even vacation real estate – is starting to show signs of recovery, timeshares remain in free-fall. During the first quarter, the number of for-sale-by-owner postings doubled compared to the same period a year ago on RedWeek.com, a popular resale site. Another site, ResortBailout.com, says owner sales are down 90% during that period.
Experts say even in better times, most sellers never saw a return on their investment. “Very few timeshares increase in value,” says Alisa Stephens, executive producer at RedWeek.com. As values sink and desperation grows, the number of owners giving their timeshares away for $1 – or less – has doubled in the past year, says Brian Rogers, of Timeshare Users Group, an owner advocacy group. “There’s never been a worst time to try to sell a timeshare,” he says.
Typically found in resorts, timeshares allow multiple buyers to purchase rights to use a property, like a hotel room, suite or condominium, for one to two weeks per year over a long period of time. They appealed to buyers who believed the timeshare’s purchase price was lower than the total amount they’d spend for hotel stays on future trips. Timeshare owners could also invite family and friends to stay with them for free.
Those perks never materialized for many timeshare owners who had to cut back on travel since the recession. Others couldn’t afford their timeshares after losing their jobs. Up to 48% of timeshare owners are behind on their annual maintenance payments by at least a year – up from 37% in 2007, according to TimeshareResortCollections.
To make up for these losses, resorts have been increasing the maintenance fees on the individuals who continue to use their timeshares. Average annual maintenance costs hit an all-time high of $731 in 2010, up more than 8% from the year prior, according to the latest data from the American Resort Development Association. Experts say those costs are still rising. And for some owners, they’re a big reason to sell, says Lisa Ann Schreier, director of Timeshare Insights, a consultant to timeshare buyers and sellers.
Faced with rising medical bills, John Chase, 62, and his wife decided to sell their timeshare at a megaresort in Orlando. After the listing lingered on the market for two and a half years, the couple chose to give it away just so they could avoid the maintenance fees. Though they bought it for $4,000 in the late ’90s, they ended up selling it for just $1. Chase says he never expected to sell so low, especially since the sales pitch he received when he purchased the timeshare led him to believe its price might increase.
For their part, resorts are changing their approach to timeshares. Howard Nusbaum, president and CEO of ARDA, says consumers should buy timeshares to use them – not as an investment. Resort developers, he says, are now marketing timeshares to a smaller group of high-income consumers who are more likely to be able to afford timeshares and who don’t need a loan to purchase them. Sales between resorts and buyers totaled $6.4 billion in 2010, according to the latest data, down 40% from their peak in 2007, according to ARDA. Experts say 2011 data isn’t expected to be much better.
The data is in stark contrast to vacation homes, where demand is rising. Roughly half a million vacation homes sold in 2011, up 7% from 2010, according to data released last week by the National Association of Realtors.
To be sure, some timeshares are retaining values better than others. Owners with timeshares at brand-name resorts are likely to recoup the most, especially if those locations are in areas where real estate supply is limited, like Key West or Myrtle Beach, says Jason Tremblay, CEO of SellMyTimeshareNow.com.
Before selling at a huge loss, timeshare owners might want to consider some alternatives. Stephens suggests renting the timeshare to vacationers at a price that covers the annual maintenance fee but is cheaper than what travelers would pay to stay at a hotel. Or consider asking the resort if it will buy the timeshare back; the price it might offer won’t be near what the owner paid the developer originally but could be higher than what other buyers are offering.
Other sellers say they’ll hold out until a buyer comes along. Joe Cantu and his wife paid $15,000 for a two-bedroom suite at a high-end resort in Las Vegas seven years ago. They recently welcomed a new baby, and they’ve been trying to sell the timeshare. His asking price is $3,500, but despite the resort’s amenities, which include a putting green, sand-bottom pool and in-room massage services, he hasn’t received offers close to that in the eight months it’s been on the market. “I’ll just keep it posted as long as I need to,” he says.
It’s almost impossible. If you haven’t already, DO NOT pay an upfront fee to any company that promises or guarantees to sell yourtimeshare. Your money is as good as gone once you sign up. If the pitch is too good to be true, it usually is. The timeshare resale market is not hot. There aren’t buyers waiting to purchase your exact week for more than the original purchase price. If either of the aforementioned scenarios were accurate, these companies that charge upfront listing fees would be paid AFTER the sale, not before it is sold. They require an upfront fee for one reason and one reason only. They know before they take your money that they CANNOT sell your timeshare.
If you have already paid an upfront listing fee to one of these “marketing” companies with a promise to sell, you’re not alone. Each year, hundreds of thousands of timeshare owners desperately seeking to free themselves of the “timeshare trap” pay millions of dollars in upfront fees that yield ZERO results. Not only is the “upfront fee” gone, you are still stuck with the maintenance fee and special assessment billings that are attached to the timeshare contract. Maintenance fees that increase on an annual basis. Special Assessments that come due at the most inopportune times. A contract that is forever your financial responsibility until properly and legally transferred. Do you simply want out? We can help!