SELLING TIMESHARE PROPERTY

A Common Transaction
The necessity for resale options.
With almost five million timeshares owned in the United States alone, methods for selling timeshares must be present in the secondary market. Timeshare transactions are becoming a more common type of transaction in the real estate industry. Though the process of selling a timeshare property is similar to selling residential property, varying differences also exist which make the timeshare resale process unique.

Why Timeshare Owners Sell
Determining factors in decisions to sell
There are many reasons related to why owners decide to sell their timeshare properties. Sometimes the desire to sell a timeshare is based on the need to attain a property that can better suit the requirements of the owner. Other times, personal conditions may require an owner to sell their timeshare property which may include change of lifestyle, children becoming of age and leaving home, divorce and other similar situations.) Sometimes owners simply no longer use their timeshare property. It is not an uncommon trend in timeshare resale to come across this scenario. Sometimes the owned property is not used for one or more years and the owner decides to sell the property. This is an important factor when the owner decides to sell because the value of a timeshare property exists only in the utilization of the property.

Another common reason that owners decide to sell their timeshare property is due to degradation of the property owned. The decrease in value of a timeshare property is sometimes referred to as value erosion. The value of a timeshare resort property is highly dependant on the age of the resort. Sometimes resorts renovate or update their properties to prevent value erosion, but this does not always have the desired outcome. Value erosion can also be directly related to the resort area when a destination loses popularity with vacationers because of factors such as high travel costs, crime rate or loss of interest in the area. Sometimes, the popularity of a resort destination decreases because of factors like competition, outdated design or failure to provide increasing demands of vacationers

Not all owners sell their timeshare property for the above reasons. Sometimes a change in financial status or family status becomes the driving force behind the sale of a timeshare. Some families grow, and need to sell their timeshares to make way for larger more accommodating timeshare properties. The opposite is also a common reason to sell. Sometimes a family vacation is no longer in order once the only people left in the household are parents. Sometimes singles or couples, or even parents of a large family find that as they near retirement, their idea of a vacation begins to differ from what it used to be years prior. All of these are common factors on which people sell timeshares.

When owners begin to think about selling their timeshare, there are many things in which they consider before making a decision. Sometimes owners find that they are in a position in which it is no longer feasible to continue owning a timeshare due to the maintenance costs that must be paid each year. Another common trend in timeshare resale is the desire of a timeshare owner to seek a less expensive vacation destination. It is not rare to find timeshare owners who do not utilize their timeshares but continue to keep their maintenance fees paid. Sometimes financial reasons prevent owners from taking a vacation and being able to use their timeshare property and the owner has to deal with finding someone to rent their week of use so that some of their value can be recovered.

If a timeshare owner determines that it will be in their best interest to sell, there are a few things that are usually considered. Sometimes there is an option to sell the timeshare property back to the resort. If the resort gives the owner this option, it may not be in the best interest of the owner considering the price at which the resort will make an offer. Some resorts also utilize a right called right of first refusal which states that the resort has the first option to buy the property if the owner decides to sell. It is not uncommon for resorts to offer as little as 25% of the developer price or even lower. Sometimes, if a resort is willing to buy the property back from the owner, they may pay more than 25% of the developer price but the average buyback price is generally rarely more than 50% of the developer price.

Another factor an owner may consider when selling their timeshare property is whether they want to pay their maintenance fees the year of the sale. Sometimes the owner will allow proceeds from the sale at closing to cover the maintenance fees when their property is put on the market to sell. It may be more appealing to pay the maintenance fees at the sale closing. Depending on the resort, a property may foreclose due to unpaid maintenance fees, and the amount of arrears unpaid varies as well from one resort to the next. It is not uncommon for some owners to find that they are hard pressed to sell their property with arrears before a foreclosure occurs. A property can be sold when fees arrear, however, all delinquent fees must be brought current before the property can be transferred. Any outstanding balances must be paid from the proceeds of the sale by the closing company.

There are alternatives to an outright sale of a timeshare as well. The options available may vary from one resort to another. These can include transactions such as a trading timeshares for other incentives offered by the resort or transfer the property under the ownership of another person. Some resorts have destinations in multiple areas and sometimes are willing to allow an owner to trade their property at one destination for a property located somewhere else. Another option is to trade the weeks owned if an owner finds that they would rather utilize their timeshare at a different time of the year. Another option is available if an owner is an RCI group member that utilizes the RCI points system. In this case points can be used for the ability to use a property at a different resort. Another trade option that has emerged on the scene allows timeshare owners the ability to trade their property for cruises.

Some owners find that they have no desire to reclaim value from their timeshare and simply want to relinquish their responsibility and no longer pay maintenance fees on their property. In this case owners may simply transfer ownership to someone else. If the owner wants to give up the responsibility of ownership, but still have an option to continue utilizing their vacation property, an option would be to transfer ownership to a friend or family member.

Setting the Sales Price
Evaluating your property and identifying value.
If an owner considers their options and decides that selling their timeshare is the appropriate course of action, one of the primary factors to be determined is sales price. Statistics show that the average resale of a timeshare property falls within 25% to 50% below the developer pricing.

Though the value of a timeshare property can be generalized with this average, there are many factors that influence the set sales price. At one resort, the value of a timeshare property can vary drastically depending on the week the property is owned. These are referred to as week numbers which are indicative of the weeks that fall within a year. The most desired weeks are often those at which vacationing to the destination is most popular. For Caribbean destinations, the most desired weeks fall within the spring and fall season. Snow ski resorts most popular weeks fall within the winter months and have an off season during summer. Aside from popular weeks at specific destinations, there are also customary weeks at which families are able to take vacation. Some examples include spring break, summer break, Christmas break, etc.

Another factor to consider when setting the price is the popularity of the destination. Though timeshares exist throughout the United States and abroad, some destinations see more travelers, tourists and vacationers. If the destination exists in an area that is in high demand for vacationing spots, or if the destination is less known for tourism or traveling, the price may be adjusted accordingly.

Consideration of the resort rating is also a factor in determining price. Many of the resorts utilize the star rating system, however, star ratings may mean different things depending on which country or area is being considered. Generally, a four or five star resort may indicate a higher value than a two or three star resort, but basing a price on this information alone can be conflicting. Some great resorts exist with more amenities, and larger rooms than a competing resort, however, may be classified as a three star resort depending on criteria such as age of the resort, amount of staff employed or location.

Amenities are generally factored in when an owner works at setting a sales price. Some resorts provide in-room laundry facilities; some may provide an onsite laundry area to be shared by all patrons. A resort may provide an in-room spa or Jacuzzi while others only provide access to a pool. There are numerous amenities to be considered when setting sales price. A few to consider are full kitchen, partial kitchen, fireplace, handicap facilities, pets allowed. The list of amenities can be extensive and also varies based on the type of resort. Resorts that cater to hunting, fishing and the outdoors type vacationer will differ from a resort that caters to snow skiing.

When an owner considers amenities available when setting a price for their timeshare property, there is usually a distinguishable difference between amenities offered by the resort and amenities offered by the property that is owned at the resort. Amenities specific to the resort may differ based on the type of resort it is, the classification of the resort as well as the location in which the resort exists. Some resort specific amenities may include shuttle service, limo service, onsite restaurants, gift shops, guide services, fitness center, conference room or onsite childcare. Examples of property or unit amenities may include essential items such as microwave, coffee maker, internet access, cocktail bar or anything that is available for use that accompanies ownership of the specific unit or property.

Some resorts are referred to as all inclusive and this amenity will generally be reflected in the price of the property. The most common inclusive resorts typically cover food and drinks during the week the owner utilizes the property owned.

One very important amenity to consider is view. The view alone can drastically change the value of timeshare property. For example, if a resort is located on a beach in a coastal area, the properties that have an ocean view or a beach front view are generally more popular and in higher demand than those without. Though beach front and ocean view may seem like a synonym, they differ drastically and the value of each will reflect the difference. A room with a view is not limited to areas near the beach or ocean. Some resorts may have rooms on one wing that is obstructed by another building while an adjoining wing may have a view of the downtown area. A resort may also have multiple views where one area of the resort gives owners a view of a mountain landscape, while another view overlooks a lake or the heart of the city.


Means for Selling
Once an owner has decided to sell and has an idea of a selling price, there are many options available for putting their timeshare property up for sale. The means of selling a timeshare property are similar to selling real estate property in some aspects, yet the process may differ drastically in other aspects. Because of this dynamic, an array of options exist to best suit the needs of the owner who is ready to sell their property.

FSBO
The Many Options of For Sale By Owner
One of the methods available to sell a timeshare property is called FSBO. The acronym FSBO stands for For Sale By Owner and as the meaning suggests, the processes of the sale are carried out by the owner. Owners may choose to utilize the FSBO way for multiple reasons; however some of the most common motivations to select the FSBO route are so the owner can avoid commission fees. If a third party is elected to sell an owner’s timeshare on their behalf, commission fees are generally incurred.

The FSBO method of selling property is not a new concept and has become a popular alternative to utilizing a broker when selling property.  Another popular reason people us the FSBO method to sell a timeshare property is based on the owner being in control of the amount of expense put toward advertisement of their property that is for sale as well as controlling all the other processes that lead up to the sale of the property.

By utilizing the internet and database technology, more companies have begun catering to owners interested in FSBO. This has opened up more options for timeshare owners in the recent years that may not have had the tools available previously to sell their property through the FSBO method. Though traditional FSBO methods work for owners who want to sell residential property, the process is not so easy for timeshare owners. Generally when residential property is sold by FSBO, the owner of the property can place For Sale By Owner signs in front of their property and schedule tours of the house they have on the market. Unfortunately these options are not possible for an owner looking to sell their timeshare.

The first process in selling a timeshare property using the FSBO method is taking on the task of marketing and advertising the property for sale. Since the owner is controlling the methods for advertisement, the process and intensity at which they advertise is within their discretion. An owner looking to sell may place an ad in the newspaper that is local to their resort, or possibly place an ad in a publication to a larger audience that circulate to areas all over the united states and abroad. The options are endless and range from a local advertising company to a company that advertises on an international market.

The extensive term FSBO can relate to many facets of for sale by owner and is not limited to real estate property. The method is so popular today with the capabilities offered by the World Wide Web; one can easily find FSBO services online to aid in the sell of property other than real estate. There are FSBO networks or that will advertise timeshare property for sale, but it is within the best interest of the owner to ensure the target audiences are potential timeshare property buyers. Some emerging FSBO companies focus on and specialize in timeshare resale and in doing so, provide additional methods to facilitate the advertisement of timeshare properties for owners looking to sell. Some FSBO companies have the option for the owner to enlist help from licensed REALTORS® to assist in the marketing and sales process, or to simply advertise their property for sale and forgo the option to be aided by a licensed REALTOR®.

If a potential buyer becomes interested in property being sold by the FSBO method, the owner becomes the sales person and answers all questions about the property and must work to keep the potential buyer interested and negotiate with the potential buyer. It is also at the discretion of the owner to cease negotiations or deny any offers made by the potential buyer if the owner is not satisfied with the offer, processes or demands of the buyer. However, if a suitable agreement is reached and an offer is made, the owner will need a sales contract sent to the potential buyer. Some FSBO companies provide owners with comprehensive contractual documents which gives the owner the ability to quickly submit a sales contract to the potential buyer while others may have the option for the buyer to draft their own sales contract, or have it drafted by a third party.

Aside from sales negotiation and appropriation of contractual documents, the owner utilizing the FSBO method must also locate a title company that will transfer title ownership on their behalf as well as an escrow company that will hold funds until the title transfer and sale is completed. The title company ensures that the transfer of ownership is legitimate and appropriately files the deeds with local office such as a court house or within county records, while the escrow company provides safe keeping of the funds involved in the purchase until the sales process is complete. At this point some owners may select to procure the advice of a legal expert or an attorney to ensure that their documents are officially acceptable.

Although the FSBO method is the most time consuming method for selling a real estate property, owners may choose this route to be in control of the entire process of selling their timeshare. Some owners feel reassured in this method while others may not have the wherewithal or time at their disposal to sell their property by the FSBO method. It is also common for some owners to realize how involved they can become in the sale of their timeshare once they are in the middle of negotiations. Some FSBO companies are aware owners may encounter this dynamic at any point and have the option to solicit the assistance of a licensed REALTOR® specializing in timeshare resale to aid them in the remaining processes of selling their timeshare.

LICENSED REALTOR®
Licensed REALTORS® who Specialize in Timeshare Sales
There are many alternatives that an owner may select to sell their timeshare aside from FSBO. Many buyers acknowledge that the most successful method is to enlist the services of a Licensed REALTOR® that specializes in the timeshare resale industry.  Owners find reassurance in having their property marketed and sold by a licensed REALTOR® with expertise in timeshare property resale. The entire process can be put into the hands of a licensed REALTOR® who has the knowledge to complete every aspect of selling the owner’s timeshare including marketing, advertisement, negotiations, contracting, escrow and closing. Another component of utilizing a REALTOR® lies within the ambition to sell the property for commission. A commission paid to the REALTOR® is usually based on a percentage of the sale and thus becomes the best interest of the REALTOR® to get the best price for the owner’s property. This may also reassure the owner that the property will be sold based on the desire of the selling REALTOR® to be compensated by the amount of commission earned at time of closing. 

Though utilizing a REALTOR® to sell a timeshare property is an available option, it is important to note that not all REALTORS® may have the capability of selling timeshare property. When an owner seeks a REALTOR® to sell the property, he/she may realize at this point that a timeshare specialist who is also a REALTOR® will be a better option. A timeshare specialist will be more accustomed to the details of a timeshare resale and the requirements which dictate a sale.  A timeshare specialist may be able to better explain the items related to the property sale to the interested buyer and may be familiar with the resorts which would put them in a better position to answer questions that a buyer may have.

Considering the number of sales that a timeshare resale specialist has completed, is also a good indication of the degree of specialty being offered to the seller. Not only is this indicative of the REALTOR®’s ability to close a timeshare property sale, it can also be a suggestive measure of the number of potential buyers the REALTOR® has. It is important to owners to be aware of the number of potential buyers that will be exposed to their properties because the number of buyers exposed may be proportional to the expediency in which a buyer becomes interested in the timeshare property for sale.

Technology available to the REALTOR® may also be an option an owner may consider when utilizing a timeshare resale specialist. Some of the items worth mentioning are technologies such as direct mail capability, or the use of contact lists or mailing lists of prospective buyers.  Technological advantages may also include database technologies that allow a REALTOR® to search for prospective buyers based on criteria.  A timeshare specialist may also have access to a contact list of interested parties who have submitted their information to the REALTOR® for the purpose of purchasing a timeshare vacation destination. Interpersonal networks between REALTORS® are also another method that timeshare specialists rely on to move properties.  With emerging technologies that cater to the real estate professional, the potential for networking becomes endless. Unified messaging allows timeshare resale specialists to be on top of their correspondences by having Voicemail, email, paperwork, and faxes centralized in desktop settings. In some environments, real estate offices have begun taking this technology beyond the confines of the office cubicle. Mobile technology is a blessing for REALTORS®.  Though this realm of technology may seem to be a forward thought, the truth is, it is already here. With the implementation of mobile office and telecommuters becoming a normal trend, timeshare resale specialists are able to suit the needs of the owner now more than ever. These kinds of technologies separate the REALTOR® of today from the REALTOR® of yesteryear. Between the ability to use technologies to support an office on the go, and the advent of extreme multitasking, timeshare specialists have the option to supersede older and less desirable methods of selling timeshare property.

Advertising Companies
Getting your Property in Front of Buyers
Yet another option to those who wish to sell is the method of utilizing an advertising company to generate inquiries toward the owner’s property. Unlicensed advertising companies may put a timeshare owner’s property on the market via internet websites that will allow numerous site visitors to view the details of the property. When potential buyers show interest in the properties listed, the advertising company will send the owner a list of potential buyers who may be interested in the property. Once a potential buyer becomes interested in the property offered, the owner must take the steps to begin the sales process.

Some unlicensed advertising companies may or may not provide access to licensed agents to facilitate the sale of a timeshare property. If the advertising company does not offer the owner access to the expertise of a REALTOR®, the owner must complete the process of selling their timeshare on their own.

On the contrary, some advertising companies may offer the owner access to a REALTOR® who specializes in the resale of timeshare property. This will allow the owner to consult with the REALTOR® throughout the selling process if questions or issues arise during the remaining steps towards closing. Some areas where a REALTOR® may be able to provide expertise may be how to locate a reputable escrow company or what paperwork will be required to complete a title transfer. Though it would be possible for an owner to generate interest and locate a buyer through an unlicensed advertisement company without the assistance of a REALTOR®, the process may be less of a hassle to complete with the availability to consult with a REALTOR® who can offer guidance in selling within the confines of specific real estate policies and ethics. The process of selling timeshare properties may not be easy to understand therefore unlicensed advertising companies may allow the owner access to REALTOR®s to answer specific questions the owner may have related to the sale of their timeshare property. Regardless of the advice of a licensed REALTOR®, the selection of an escrow company and title company lie within the responsibility of the owner if the method of utilizing an unlicensed advertising company to sell timeshare property is selected.

Local Real Estate Office
Seeking available resources locally.
It is not uncommon for a timeshare owner to enlist the help of a real estate office local to their area. Some owners may see this as a wise choice to consult with a local real estate office to benefit from the advice of a licensed agent to help sell their timeshare property. There are over two million licensed agents in the USA and about half or 1.3 million of them are REALTOR®s. Though the discretion of brokering the sale is up to the local real estate office, the responsibility of judging the expertise of the licensed agent brokering the sale falls within the responsibility of the property owner. It may be plausible to the owner that their local real estate office does not have the means available to sell their timeshare property in which case the local real estate office may have to rely on a third party to assist in brokering the sale. Though the potential to sell a timeshare property through a local real estate office exists, the owner may quickly realize that the success of the sale is dependant on the capabilities of both the agent and the resources available to the local real estate office. Some local real estate offices may not have the ability to advertise nationally and internationally however, if a timeshare owner is fortunate enough to find a local real estate office that has the capability to facilitate the sale of timeshare property, the entire process can be guided through to closing with the assistance of a licensed real estate agent.

Net Listing Companies
Net listing agreements exist as another option to owners to get their properties on the market for sale. Generally a Net listing agreement requires the owner to determine what they want to “net at closing”.  A sales price can then be calculated by the broker factoring in the broker’s profit before the broker attempts to sell the timeshare property. By utilizing this method for selling a timeshare property, the person brokering the sale may obtain a significant amount of profit by selling the timeshare for more than the owner’s set net price. This may pose a conflict of interest for the person brokering the sale if the owner is not prepared to set the net price since a lower net price yields more profit for the person brokering the net listing agreement.

Intermediary Methods
Mediation between the owner and the sale.
Allowing a person to mediate the sale of a timeshare can be yet another option available to an owner interested in selling their timeshare property. The term broker is a broad expression utilized in the industry and can encompass different ranges of protocols or responsibilities which vary greatly. Simply put, a broker is a person who works between two parties to negotiate a contract between a seller and a buyer. In essence a sales person, a brokerage company, a licensed realtor, or a timeshare specialist can intermediate between a buyer and a seller. If an owner decides to utilize a broker to sell the timeshare property, the burden of ensuring the broker meets the requirements deemed appropriate falls within the responsibility of the owner. By utilizing a REALTOR® as a broker to sell a timeshare property, an owner may find confidence in relying on the education of real estate guidelines that REALTOR® must adhere to. This may reassure the owner that every method utilized to sell the timeshare property falls within suitable procedures according to methods set forth by the National Association of REALTORS®. 

Utilizing a Salesperson
It may also be an option for a timeshare owner residing outside the USA to utilize a sales person to broker the sale of their timeshare property. If this method is utilized, the owner is relying on the sales skills of the person brokering the sale to generate interest in their property, draft appropriate contracts as well as ensure the title process is completed legitimately.

If an owner chooses to utilize a person to broker the sale of their timeshare, depending on the methods utilized by the broker, the owner may lose the use of their property while it is on the market for sale. By certain methods utilized by some brokers, an owner may also lose the ability to exchange points through their timeshare resort, or lose the ability to rent their property while it is on the market for sale. Some persons brokering the sale of a timeshare property may also request full control of the property while it is on the market.

Additional Options
Other options may be available to sell a timeshare property, however the ones listed above are the most common in the timeshare resale industry. Depending on the method utilized an owner may encounter certain fees which may be requested to facilitate the selling process of a timeshare property. Some FSBO networks or Advertising companies may request an advertisement fee as do newspapers, magazines, etc. In general, advertisement fees cover the cost of overhead of marketing and advertising a timeshare property for sale. The overhead covered may relate to the expenses incurred through direct mailing of flyers, postcards, or sales brochures to prospective buyers. Online methods of advertisement may cover the cost of technology and staff involved in maintaining internet advertising. The fees may vary depending on the frequency of advertising or the amount of people reached through publicizing a timeshare property for sale.

Fees
Additional fees such as commission may be incurred at the time of sale if an owner utilizes a REALTOR® who works on commission. It is customary for a commission fee to be based on a percentage of a sales price or a minimum commission amount. It is also common for the commission fees to be paid at the time of closing and funding.

Escrow
Escrow fees will also be requested during the closing process. Some escrow companies charge a standard fee for closing the sales transaction and may also provide other options available to the owner such as title insurance. The fees charged for escrow can vary between companies in the closing process of real estate and timeshare property. In some instances a closing company may provide title insurance or utilize a third party title company to issue title insurance. Standard fees may also be incurred through the title company that transfers ownership of the property with the option to purchase additional services relating to the closing process. An owner may also incur fees at the title transfer process to cover the cost of recording the transfer of ownership at a local court house where such records are stored. Aside from common fees related to escrow and title transfer, the resort at which the timeshare property is located may charge fees to transfer ownership information. This fee can vary.


Understanding the process and being prepared
When an owner begins the process of selling their timeshares, they may encounter steps or processes for which they are unprepared. During the sales process, an owner may quickly discover common misunderstandings about the timeshare industry. One of the most common myths about timeshare properties involves the belief that timeshare property can be lucrative investment. In actuality, the value of a timeshare exists only in the use of the property. If a timeshare is not being utilized, it is hard to quantify the value of it since maintenance fees are being paid on a property that is not being utilized. Alongside this misunderstanding is the idea that a timeshare can be sold as profit in similar ways residential real estate can be sold to gain proceeds related to the appreciation of a property. Not all timeshare property will appreciate in value.  Some timeshare properties may only equate to 25% to 50% below the cost at which it was purchased, or developer pricing. If you use the timeshare you get your money’s worth.

There are many methods available to sell timeshare properties that are available to an owner. If an owner wants to be an active participant in every step of selling their timeshare property, they will likely be interested in the FSBO method. On the contrary, if the owner does not have the available time answer calls 24/7 and oversee the sale of their timeshare property, a Licensed REALTOR who is a Timeshare Specialist may be a more appealing option. Considering the many options and varying degrees of methodology between a FSBO method and utilizing a Licensed REALTOR, an owner should be able to find a method of selling their timeshare that suits their needs.