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Cheaper the Second Time Around

Savvy buyers save in the resale market.

Reprinted by permission from The National Geographic's Traveler, March 2005

Don't ask Dan Margulies how much he paid for his timeshares. The answer may make You sick. With envy. Margulies has bought three timeshares on the so-called secondary market at a fraction of what the original owners paid for them. How much did he save? The Larchmont, NY-based commercial real estate broker picked up a high-season week at a North Carolina golf resort (originally around $7,000) for $667 and a New Year's week at a New Hampshire ski resort for a fifth of the initial price. "The rule of thumb is that the minute you walk out of the developer's office with your deed, it's worth 50 percent less on the resale market", he warns. "Timeshares depreciate faster than new cars."

The timeshare, or interval ownership, industry is booming. Sales grew a healthy 14 percent in each of the three years from 2000 to 2003, the last year for which figures are available, according to Howard Glassroth of the American Resort Development Association, an industry trade group.

But the majority of people buy timeshares directly from a developer. Those prices reflect the enticements such as "free" vacations and other marketing expenses, including advertising and hefty commissions, which can amount to almost half the purchase price of the typical unit. "The one guy who buys has to pay for everyone else's freebies", says Bill Rogers, founder of the Timeshare User's Group (www.tug2.net). "The bargains are in resales, but most people don't realize they even exist."

You, too, can snatch up some bargains on the "used" timeshare market. A one-bedroom, two-bath villa at Marriott's Mountain Valley Lodge in Breckinridge, CO, which originally would have cost $15,900 in 1993, the year the resort opened, was recently sold on eBay for $3,650.

Sharon Schreiber, a sales associate for Seattle-based timeshare reseller Holiday Group (www.holidaygroup.com), cites the example of a two-bedroom, two-bath timeshare during prime holiday weeks at Marriott's Cypress Harbour in Orlando originally bought from the developer for around $10,000. Her asking price? Less than half that. Not only are resale prices much lower, she points out, but "with a developer you're subjected to a high-pressure sales presentation."

Resellers such as Holiday Group often get their inventories from developers and financial institutions (read: foreclosures). Auction sites such as Bidshares (www.bidshares.com) and eBay (www.ebay.com) also offer secondary market timeshares. Bidshares offers a $200 "closing service" to ensure a legal and safe transaction; eBay charges the seller, and lets you search by area, type, week, number of bedrooms, and other criteria. (You can see what others have paid if you sign on as a member and check "completed listings".) But, cautions Dennis Okey, a Denver-based human resources manager who has bought two timeshare resales in Cancun, "sometimes sellers back out." As with any auction site where you're buying from someone you don't know, exercise caution.

Resales can also be bought directly from owners. Check the classifieds or the Timeshare Users Group site, which contains reviews of resorts nationwide, a database showing what others have paid for timeshares, and a primer on buying, selling, and renting.

Even at a tenth of the original price, timeshares aren't for everyone, and your investment probably won't appreciate the way a house might in a hot market. But if you're going to buy one anyway, why pay full price?