Now that the holidays are upon us, many people dream of taking a tropical vacation or spending time near a popular attraction. If you’re shopping for a getaway, you may have considered a timeshare, an arrangement that generally gives you the right to stay at a certain property for a specified amount of time each year. There are over 1,500 timeshare resorts in the United States, according to the American Resort Development Association, and the average sales price for a unit is just over $20,000. If you’re thinking of spending your free time at one of them, the Virginia Society of Certified Public Accountants (VSCPA) offers this advice.
Know What You’re Buying
First, it’s important to understand that a timeshare is not an investment that is comparable to a real estate purchase and that they do carry financial risks. Consider all your expenses in making your decision, including any related financing costs, broker fees, annual fees or related charges. In addition to buying from a developer, you might also consider buying on the resale market, where current owners sell their timeshares. When taking into consideration the sale of your timeshare, be aware that your timeshare can lose value if you sell it down the road. Experts note that it is unlikely to increase in value over time. Also, if you’re uncertain you will want to return to the same resort each year, look for arrangements in which you can swap your rights or use points to stay at different locations.
Get the Background
A glossy brochure may make the resort seem appealing, but don’t buy before you visit the location to be sure you will enjoy spending your vacations there and that you’re satisfied with the quality of the units and other amenities. A visit will also give you a chance to talk to other timeshare owners and find out about their experiences. It’s a good idea, too, to check if complaints about the seller, developer or management company have been filed with the state attorney general’s office or the local Better Business Bureau or other consumer protection agency.
Take Your Time Before Signing
Study the contract carefully before you agree to buy, and be wary of sellers who pressure you into signing. Make sure the contract specifies the price you’ve agreed to pay, the annual maintenance fee and any other obligations you’re taking on. Check, as well, to be sure that anything you’ve been promised — certain time periods when you can use your unit and amenities available to you, for example — are noted in the contract. The agreement should also detail how long you have to cancel the deal if you change your mind, a period that may be set by state law. In addition, according to the Federal Trade Commission, timeshares outside the United States aren’t subject to U.S. laws, so it may be advisable to determine the seller, developer and management company’s legal requirements in the country where the timeshare is located.
Be Wary of Fraud When You Sell
The FTC cautions owners to be skeptical when using a timeshare reseller. Find out if the reseller has a real estate license and, once again, check for any consumer complaints against them. Don’t work with a reseller that requires a fee upfront. Get the reseller’s promises in writing, including the expected time necessary to complete the sale and the total fees you’ll pay.
Consult Your Local CPA
Is a timeshare purchase a good decision for you? Your local CPA can help you determine the answer to all your financial questions. Turn to him or her for advice on any financial concerns.