That is why it is important to do the homework you are doing right now. Before walking into a situation where you know there will be a pitch, educate yourself on timeshare and go into it with an understanding of the pros and cons and what makes financial sense for your family's lifestyle. Research the resort and management company to be aware of any outstanding complaints. If you end up changing your mind after the purchase, most states have "rescission period" laws that allow you to cancel the sale within two or three days.
Although there are timeshare plans that afford more flexibility than others, some people feel nothing is quite as flexible as being able to decide when and where you go each year, in the more traditional methods of travel planning. If you want a holiday week, you may not be able to trade your timeshare for it, because there are many timeshare owners hoping for the same week. You also may not be able to decide last minute that you want to use your timeshare in a certain location. If you buy a floating week timeshare , you will have more flexibility in when you use the timeshare, but availability is given on a first-come, first-served basis.
So, planning farther in advance serves you better. Though exchange is an attractive reason for purchasing a timeshare, your "trading power" and the trade opportunities available to you, will depend on what you buy.
There is also a cost consideration here - if you're buying a timeshare for exchange ability, you'll want to pay close attention to these as well. There might also be fees for allowing someone else to use your unit. When you pay an upfront fee for something that is most valuable in the long-run, your money is tied up.
You are not able to invest that money in other areas, and you are contractually obligated to pay maintenance fees for as long as you own it, so there is no quick way to get your money if you need it. Additionally, if you use financing, you will be paying interest, which needs to be worked in to your calculations when figuring your purchase price and cost versus benefit.
While most timeshares can be considered deeded real estate, it is important to remember that a timeshare should not be considered a money-making investment. If you bought a timeshare directly from a resort developer, about 50 percent of the price you paid went to their marketing costs in selling it to you - costs such as the salesperson's commission, the mailers, phone calls, prizes, sales booths, and other activities that went into getting you to buy.
Remember, they spent this money on people who did not buy, too. Rather than thinking of a timeshare as a real estate investment, it is better to think of it as a purchase such as a car that may likely depreciate in value.
As we have said, the value in timesharing is in the long term. Once you've paid the upfront fee, if you can afford the yearly maintenance and actually use your timeshare, you are better off holding on to it. In addition, some developers include clauses into timeshare purchase contracts that may restrict your ability to sell on you own - requiring they get right of first refusal, commissions on your sales price even if they do not sell it for you, and so on.
Before purchasing a timeshare from a developer, be sure to ask about their resale policies. Maintenance fees cover the grounds and housekeeping services, utilities, insurance, on-site management, keeping facilities and appliances up and running, applicable real estate taxes, replacing broken items, and reserves for major improvement projects such as remodeling, new roofs, and so on.
They vary greatly based on resort location, unit size, and amenities. They are assessed and paid annually, so therefore are an important part of the value equation when considering a timeshare purchase. Unfortunately, it is often difficult to factor them in, since they are not a constant.
Because the cost of goods and services goes up every year, and resorts may change management companies, maintenance fees have been known to increase up to 4 percent in a single year. A well-managed resort needs to spend money to retain the value of your purchase. The maintenance fee is very likely to be lower than what you spend on a hotel room.
However, if you are worried about the fee, consider taking simple precautions before you buy. Ask to see what the maintenance fees have been in past years so you can make an educated guess about what the increases might be, based on historical data.
Consider the payment of the timeshare in the calculation. You do get a full house equipped with all the necessities for everyday living like kitchens and utility rooms, but high class hotel rooms have those as well. While food does not come free at hotel, in a timeshare your only options are to cook for yourself or go out for a meal. Ultimately, you are just paying for the concept of owning a vacation house.
However, if you cannot, you must make sure that you are willing to purchase it even if it becomes a financial liability on your end. You can save hundreds or thousands of dollars when you shop for vacation ownership on the resale market.
The brand of the timeshare is one of the biggest factors! Even within those brands, resort location and popularity will affect the price tag. In addition, timeshares at a single resort will cost more or less depending on the size and location of the villa. Amenities at the resort and the time of year of a timeshare week will also change the price.
Keep in mind, every sale of a timeshare is different and there may be other factors involved not listed here. One of the most apparent costs that come with owning a timeshare is the maintenance fees. Some vacation owners have to pay their maintenance fees to an HOA, much like owning a residential home. Most timeshare maintenance fees are due annually. In some cases, however, these fees may be either more or less frequently depending on the contract you buy.
These fees go towards resort upkeep and renovations, along with employee wages. The costs of annual maintenance fees vary by resort and unit. This payment is mandatory and if you stop paying it, you could really negatively affect your credit. If you think that an annual payment will be difficult to keep up with, maybe continue searching for vacation ownership that is more suited to your budget. It is extremely important to note that timeshares are not investments.
In fact, they are most likely going to depreciate in value over the years. Vacation ownerships are considered luxury items, so like a car or a boat, they do not always retain their value.
A great option to make the cost of vacation ownership work for you is by financing your purchase. Instead of paying a large sum upfront, you can divide the cost into more affordable yearly payments. Our mission is to provide readers with accurate and unbiased information, and we have editorial standards in place to ensure that happens. We maintain a firewall between our advertisers and our editorial team. Our editorial team does not receive direct compensation from our advertisers.
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You have money questions. Bankrate has answers. Our experts have been helping you master your money for over four decades. Bankrate follows a strict editorial policy, so you can trust that our content is honest and accurate. The content created by our editorial staff is objective, factual, and not influenced by our advertisers. We are compensated in exchange for placement of sponsored products and, services, or by you clicking on certain links posted on our site.
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While we strive to provide a wide range offers, Bankrate does not include information about every financial or credit product or service. The thought of owning a vacation home you can relax at every year can be enticing, but there are a host of considerations that come with buying and maintaining a property.
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