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Do your homework before buying a timeshare

Friday, February 21st, 2014
Issue 08, Volume 18.
Jason Alderman
Special to the Valley News

Full disclosure: Iíve always been somewhat skeptical of timeshares. I understand the appeal of having a guaranteed vacation home in an area you love and being able to swap your unit for a place halfway around the world. But I worry that many buyers donít consider all associated costs and mistakenly think timeshares are sound financial investments that will appreciate in value.

In fact, sellers rarely make a profit ‚Äď some only get pennies on the dollar. Plus, the waters are filled with sharks eager to rip off people desperately trying to unload unwanted timeshares.

Before you buy a timeshare, understand how they work, challenges you may face when trying to resell and scams to avoid.

Timeshares are usually either:

1. "Deeded," where you own a share of the property, usually for a particular unit for a specified time period ‚Äď typically one or two weeks a year. Depending on your contract, you either own it for life, for a specified number of years, or until you sell it.

2. "Right-to-use," where a developer owns the resort and each unit is divided into "intervals" ‚Äď either by the week or for a certain number of points. You purchase the right to use an interval for X number of years but donít own any real property. Many allow you to use your points to stay at an affiliated resort (swapping).

The price for buying a new timeshare can vary widely, depending on the area and amenities offered. A typical one-week share Advertisement
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might cost $10,000 to $25,000 ‚Äď or many times that for a posh unit in Aspen or Kauai.

Plus, youíll be responsible for various other expenses:

* Annual fees for maintenance, utilities and property taxes.

* Assessments for major repairs or improvements.

* Fees to swap your share for someone elseís or sell it.

* Donít forget travel costs to and from the property each year.

The Federal Trade Commission ( offers many helpful tips, including:

* Compare the costs of buying and maintaining a timeshare with renting a similar property. Perhaps rent a unit first to make sure you like the complex.

* Evaluate the resortís location and quality by visiting and talking to current owners about their experience.

* Check for complaints about the seller, developer and management company with the state Attorney Generalís Office ( and the Better Business Bureau (

* Donít act on impulse or be swayed by high-pressure sales tactics.

* Like new cars, new timeshares quickly depreciate, so consider buying one used.

A few cautions when selling a timeshare:

* Watch out for scams.

* If you didnít pay cash, youíll probably have to pay off your loan before being able to sell.

* Beware of offers to accept your timeshare as a tax deduction for a fee ‚Äď often thousands of dollars. The IRS only allows you to deduct "fair market value," which is probably significantly less than you paid for it.

Jason Alderman directs Visaís financial education programs.



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