Why are timeshares scams? If you’ve been to a timeshare sales presentation or talked to a disgruntled timeshare owner, you know that the world of vacation ownership (aka timeshares) has a controversial reputation.
There’s a glitzy side to the industry that makes you think that owning a timeshare is a money-saving investment that allows you and your family to travel to luxurious destinations with a guaranteed place to stay. On the other hand, there’s the dark side of timeshare ownership that gets people stuck in expensive lifelong contracts that they can’t escape. So, what side should you trust?
While there are some timeshare companies out there with flexible and accommodating policies, there are a whole lot more fraudsters who trap innocent customers into expensive and deceptive contracts. To answer why timeshares are scams, let’s dive into the major aspects of timeshare contracts that should warn you against investing in vacation ownership.
Sure, there are plenty of consumers who have greatly benefited from their timeshare purchase. They probably purchased their timeshare 15 or more years ago when viable timeshares still existed. Those customers swooped in at the right time, got their property for a good deal, and purchased it from a reputable timeshare developer. But those people are lucky because anything purchased in the last 10 years has probably been tainted by an industry that’s turned to the dark side of business ethics.
Most timeshare owners find they’ve been caught in a scam that is expensive to keep up and almost impossible to reverse. Let’s reveal the truth about vacation ownership and explain why timeshares are scams.
A lot of people purchase timeshares because they were tricked into the process with perks like a free night in a lavish hotel room or a complimentary breakfast. All they have to do in exchange is attend a seemingly brief timeshare sales pitch. That’s the first trap.
Time and time again, timeshare companies and vacation clubs lie to prospective customers about the duration of their timeshare sales presentations. They’ll say it’s only going to take an hour and a half when it really turns into five or six hours of manipulation.
Salespeople are trained to befriend you in order to make you feel comfortable about divulging personal and financial information. This not only establishes a false sense of trust, but it also gives these scammers insight into what type of timeshare benefits you are looking for and what price point they can sell you on.
Next, the salesperson will try to convince you that timeshares will improve the lives of both you and your family. They’ll ask about dream vacations and try to convince you that your dream can become a reality if you “invest” in a timeshare. They’ll usually show pictures of luxurious timeshare units at their most lavish resorts, making it seem like this is the kind of unit you will receive if you invest in a timeshare. In reality, this is far from what you’ll actually receive.
Timeshare industry sales professionals are trained to show you the absolute best of what their company has to offer. They’ll show you the nicest, newest, most extravagant units at the resorts. Most of the time, you’ll see six-figure penthouse-level units that are probably way out of your budget and nowhere near what you will actually receive. However, like the vast majority of customers, you probably won’t find out what your timeshare unit looks like until you’ve actually purchased it and are able to make a reservation.
Why are timeshares scams? Because developers are notorious for having hidden fees and not disclosing all the financial details of a sale. A lot of times they’ll use a start-high strategy for pitching timeshare prices. They’ll start at a price that is likely too high for the customer, then start talking them down to lower price points.
This is a red flag that you need to watch out for because it’s setting you up to think you’re getting an exclusive deal. The salesperson will then use high-pressure tactics to get you to act on the purchase right away. They’ll say that the price they’re offering is for today only and that if you don’t purchase, the deal will be gone forever. Once they’ve gotten you to agree to a price, you’ll likely be required to pay a specific down payment on the property.
But what many salespeople are reluctant to discuss are the other fees that come with owning a timeshare. Every year, you’ll have to pay annual maintenance fees on the property that you’ve purchased. These fees account for the upkeep of the unit and the resort where it’s located. They’re intended to pay for upgrades like new hardwood floors or the addition of a pool on the resort property.
A secret that most timeshare developers won’t tell you is that maintenance fees almost always increase each year. And if your vacation club or timeshare provider has many locations, these maintenance fees aren’t necessarily going to your resort.
For example, if you bought your timeshare at a new resort near Disney in Orlando, Florida, the timeshare developer may actually be using your maintenance fees to pay for upgrades at a resort in Hilton Head. When you sign your timeshare contract, there’s no guarantee that your money will be going toward the right place.
In fact, it could even be going toward management fees, which are basically costs paid to whatever developer that has voted themselves into a lucrative contract to manage the HOA for your resort. In short, your fees are unlikely to go toward improving your actual unit.
Why are timeshares scams? Because ultimately, they’re a bad investment. Some salespeople will tell you that similar to real estate properties, the price of your timeshare will go up in value. This is rarely true because new timeshare units are always being built.
So if you do plan to sell your timeshare eventually, consider this: There is no market for timeshare resales. People don’t just wake up and decide they want to go timeshare shopping. Timeshares are a product that must be sold in a luxurious setting that puts shoppers in the mood to buy. Otherwise people are uninterested in spending thousands a year on your used timeshare.
Another common misconception is that selling a timeshare is realistic. In reality, the timeshare resale market is extremely hard to navigate and almost never successful. Looking at websites like eBay and Craigslist will show you that timeshare resellers are a dime a dozen. Many of the listings even might look like timeshare resale scams because they are priced as low as $0 with owners simply requesting purchasers to pay the closing costs and annual maintenance fees on the property. In actuality, these resellers aren’t scammers, but timeshare owners who are desperate to get out.
Investing in a timeshare isn’t really investing because you could be sharing your unit with up to 51 other owners over the span of a year. You’ll never actually have equity because you’re just paying for your very small piece of the property. And the property never actually makes you any money.
Consider this example. Let’s say you buy a timeshare for $20,940 and pay annual maintenance fees of $880. After 10 years, you would have spent $29,740. If you had invested that money instead, even with a conservative 5% annual return, you would have about $45,000 in your pocket after 10 years. If you “invested” that money in a timeshare, you have nothing and no way of getting out.
Why are timeshares scams? Because timeshare salespeople trap customers into manipulative sales presentations and hide major timeshare costs from customers. They are also a bad investment that will not pay off, especially if you try to sell your timeshare.
There should be a disclaimer at the bottom of timeshare contracts that explain how much of a financial burden owning a timeshare can be. But since that’s not the case, if you are stuck in an unwanted timeshare, how do you get out?
If your credit card is piled up with maintenance fees for a timeshare you no longer want, it’s time to contact Centerstone Group. With a 4.67-out-of-5-star reviews on Better Business Bureau and an “A” BBB rating, we are one of the fastest and most affordable exit companies in the timeshare industry. If you have been a victim of fraud, high-pressure sales tactics, or misrepresentation during the timeshare sales process, you may be eligible for our services. Contact us for a free first consultation.