No matter how much you like or dislike the timeshare industry, you have to admit that when it comes to retaining their customers, they are ready to fight to keep you locked in your contract. In fact, the whole business model is based on selling you a long-term lease, with few options (no matter how life or personal needs change).
When it comes to stonewalling timeshare owners who are eager to be released from their contract, many developers have policies in place, that make it more difficult to sell, or transfer ownership. Here are five common ways that timeshares retain their customers (whether the customer wants to stay in the program, or not).
They Can Make It Difficult to Sell by Offering Ample Rental Inventory
This is a scenario that we are seeing more often, particularly with new resorts that are trying to fill their occupancy with contract secured, timeshare owners. If you have buyers regret, and want to attempt to sell your timeshare, you already face an uphill battle. Did you know that most timeshares sell for 0-15% of the value of the original purchase price? That may offend some owners because it is hard to believe, but it true.
Another problem arises when a resort starts to accept public rentals. First, this can impact the enjoyment and exclusivity of the resort, which was initially sold for member access only. But new timeshare resorts must generate revenue, and if timeshare sales are slow, they can turn to rentals. Now ask yourself, if someone could rent a timeshare easily and at a great rate in your resort, how eager would they be to sign a restricting contract?
Timeshares Offer Lending Services for Buyers
Off the cuff, this seems very reasonable and convenient for prospective timeshare buyers. If you are interested in buying a timeshare in a new resort, chances are that the developer will require an upfront down payment, that can range anywhere from $5,000.00 to more than $20,000.00
Of course, you can anticipate a higher than average interest rate on the lending service, directly through the developer. Why? Because they know that individuals who are looking for more affordable vacation options, often have a tight household budget. They may even have a lower credit rating and since the purchase of a timeshare is not a standard asset (one with a high resale value or liquidity), many banks will not leverage a loan to purchase one, even if you have fair to average credit.
Did you know that selling your timeshare is not possible (in almost every case) if you still owe the developer money for the initial purchase? Pause and consider that one of the reasons they are willing to extend lending services (aside from interest revenues), is that it functions almost like an insurance policy. You can’t transfer a timeshare that you still owe money on, and that helps to keep frustrated timeshare owners locked-in to the contract, by removing the option to sell. Sneaky right?
They May Offer Bonus Points or Incentives
If a timeshare owner has experienced problems trading their weeks at reciprocating resorts, or if the facilities were unusable for a period of time, the developer may extend an offer for a perk, or incentive to help satisfy and retain existing timeshare owners.
Watch out of for special offers, where additional vacation points or credits are offered. Sometimes these bonus incentives come at the expense of the timeshare owner, who may not be aware that additional points can result in more than one legally enforced timeshare contract. It’s a shock and surprise for some of our clients to learn, that after accepting additional vacation points, they were saddled with a second timeshare contract. They sign, assuming it is to validate the terms and conditions of the new exchange points, without realizing that they’ve created a second financial obligation.
They Can Avoid Communication with The Owner
In previous articles we have discussed that most timeshares do not respond to public complaints regarding service. We know from our personal experience, that they closely monitor online complaints as part of quality control and reputation management, but from the outside, it certainly appears that complaints are not a priority for most timeshare companies.
When a timeshare owner first contacts the resort or development company, to ask about options to cancel their contract, they are generally put on an alert list. That is not to warrant the concerns of the timeshare owner or try to resolve them; it’s simply a red-flag for billing to anticipate issues, and possible legal intervention required, should the timeshare owner stop paying their membership, maintenance or outstanding assessment fees.
If your fees are concurrent, and you are simply inquiring about your options, you can expect a friendly response that points you back to the terms of your legal contract with the resort. They may listen, but when it comes to compassion and understanding for unique circumstances (including illness or the death of a spouse or wage earner), most timeshares stick to the contract that was outlined at the time of purchase.
It’s legal, it’s binding and as long as you keep paying the fees on time, some timeshare companies will lock-down with a zero-communication rule. In fact, some of our clients jeopardize their personal credit ratings, and slow or stop payments (we don’t advise this) to get the attention of the developer. Months can go by without so much as a returned email or phone call from the resort, which is a tactic used to intimidate and make the timeshare owner give-up. Their number one objective is to retain every timeshare owner in their contract, regardless of circumstance.
They Can Threaten You Will Legal Action
Life happens, and for a variety of reasons, timeshares receive hundreds if not thousands of requests to opt-out of the membership and terms of the purchase contract. If negotiations reach a stand-still and the timeshare owner stops complying with the payment schedule, you can anticipate that the resort will file for collections. It is virtually guaranteed. The worst part of that process (aside from the damage it does to your personal credit) is that once you have brought your account back up to paid status, you are STILL not relieved of your contract obligation.
In these oppositional situations when a timeshare is unwilling to release the contract and timeshare owner, legal guidance is required. The onus is on the timeshare owner to file a legal complaint and provide evidence that the timeshare was sold under fraudulent pretenses, or that the resort has breached the terms of the contract.
In some cases where the timeshare owner indicates that they are willing to go to court, the developer may opt to release them, to save on administrative costs. But timeshares are also a business, and they are accountable for profitability to share holders. As such, they are ready to fight to keep you locked into your timeshare contract indefinitely, no matter how dissatisfied you are with your resort, the contract, or increased fees.
It is unfortunate that the present-day timeshare industry is riddled with unscrupulous companies, who exploit, threaten and harass owners for payment, rather than negotiate on a case by case basis, with offers to buy-back a timeshare contract.
If the timeshare is maintaining that your property is a ‘good deal’ and in high-demand, then why wouldn’t they release you from the contract, and re-sell it at a higher price point? They know they are hard to sell, and they aren’t compelled to take on more vacant units, if they are already struggling to fill them with qualified buyers.
When it comes to consulting timeshare owners about their legal options, detecting fraudulent timeshare sales or contract breach, Aconsumercredit™ has over twelve years of experience helping consumers like you, find a solution. Call us for a free consultation, at 1-800-587-EXIT to learn about our resources, and how we can help.