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Timeshare Resale Market: The Resort Strikes Back

Timeshare Resale Market

January 18, 2019 – by Primo Management Group

Timeshare Resale Market

The timeshare resale market can mean bad news for resorts and developers. Here’s how they’re fighting back.

Timeshare owners looking to get out of their contracts and buyers are looking for deals. And that’s fueling a robust timeshare resale market. While that might be great for consumers, resorts and developers aren’t as excited. With their profits at risk, they are cracking down. Here’s what you need to know.

What Is a Timeshare Resale

Any timeshare not sold by an owner or through a 3rd party seller instead of by the resort or developer is a resold timeshare. Buyers can find these units on virtual marketplaces like Redweek or the Timeshare Users Group or though resale companies. Prices are typically much lower than buying from a developer and the selection is quite large.

Why Resorts Don’t Like It

The primary issue for developers and resorts is that “used” timeshares on the timeshare resale market cost much, much less. So, smart consumers are tapping into the resale market for amazing deals. And the resort doesn’t see any of that money. The resale market also gives prospective buyers a bargaining chip in negotiations. If the consumer can get the $22,000 unit for $2000, then it becomes easier to talk the developer price down. Finally, rock bottom prices, such as eBay $1 timeshares devalue the industry overall. If you can buy something for a dollar, does it have any real value? All of this is bad news for timeshare companies.

How Resorts Are Fighting Back

Resorts and developers have always been creative about making money. As the timeshare resale market threatens them, they are putting that same creativity into fighting back. Here’s what they’re up to.

Right of First Refusal

Many timeshare contracts give the resort the Right of First Refusal (ROFR) for any resales. This means that if an owner finds a buyer for their unit, they must first offer the unit to the resort at the same price. The resort can then decide to buy the until or refuse to buy the unit. If they refuse, the sale goes through to the original buyer. If the resort decides to buy, they then own the unit and can sell it themselves at whatever price they want.

Limiting Benefits on Resales

Many resorts also limit benefits for owners who purchase timeshares on the resale market. Common limitations include zero or reduced access to exchange programs, zero or reduced access to the full suite of resorts in a group, and other benefits.

For example, Disney Vacation Clubs give fewer benefits to owners who purchase on the resale market. According to their website, “When you purchase a Membership directly from Disney Vacation Club, you’ll enjoy access to more vacation destinations and other Membership benefits than those who purchase from a 3rd-party resale company.” Limitations include no access to member discounts and cruises, and limited access to resorts. And in January 2019, DVC announced that 3rd party buyers would not have access to any future new resorts.

What This Means for Consumers

These tactics directly impact consumers. For example, ROFR complicates and often slows down the sales process. Once a seller finds a buyer, instead of completing the transaction, the seller must contact the resort. In most cases, the resort has time period, often 30 days, within which to exercise their right. In the meantime, the seller continues to pay maintenance fees. And the buyer is in limbo, possibly with any earnest money tied up. If the resort does decide to buy the unit, the buyer is out of luck and must start their search from scratch.

Benefit reductions also hurt consumers. If your timeshare doesn’t come with all the bells and whistles, it will likely be harder to sell. And that makes timeshare ownership riskier. If you can’t resell your timeshare, you are more likely to be stuck. Plus, buyers need to be more savvy when researching bargains. You never know what will or will not be included.

This is just the beginning of the story. Resorts will definitely continue fighting against the resale market and consumers will continue to seek bargains. Follow us on Facebook or Instagram to join the conversation and for updates on this evolving story.

(Image Source: Pixabay)

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