Just as foreclosed homes can be had at a bargain, it’s possible to scoop up mere slices of time share detritus floating around beaches, mountains and other vacation spots.
Time shares, whereby owners are deeded a small portion of a property, can also go into foreclosure if owners don’t pay the annual maintenance or payments on a loan used to purchase the share, says Arthur Waloch, vice president of Aspen National Collections, a Grand Junction, Colo., firm that collects on delinquent accounts.
In fact, time share defaults rose about 10 percent last year, prompted by the dire economy, Waloch says. But in good times, too, he says, owners decide they’d rather not pay, even if it means forfeiting their portion of what was presumably their vacation dream.
The time share resale market is always crowded with shares owners don’t want, although most people don’t realize you can buy used time shares, which are priced far less than newly issued shares offered by resorts, says Brian Rogers, owner of Timeshare Users Group in Orange Park, Fla.
Now, the economy has swelled the resale market and prices are extremely depressed, says Rogers, who adds that he’s seen time shares that may have sold new for $15,000 now selling for $500.
It may be a distressed owner who wants to unload before a default mars his credit, or the association of other time share owners who want to see a defaulted share resold so the new owner starts picking up maintenance and taxes.
But beware: Those discounts can draw you in as easily as the complimentary weekend that seduced the original owners. Indeed, when you buy a time share, you contract to pay annual fees for the right to use a location for a specified time each year. That share is yours for years, unless you resell, says Rogers.
Buyers who do land a discount share will have earned their vacation because it takes some savvy to navigate this marketplace.
Although it does happen, very few defaulted time shares actually wind up at sheriff auctions, says Waloch, because the cost of foreclosure is too expensive relative to the value of the share.
The best place to find share bargains is on the Internet, he adds, at sites like eBay.com.
Internet listings should function like classified ads, linking buyers and sellers, says Rogers.
Scams abound in the time share resale market, although most schemes are aimed at desperate sellers, promising to resell their share for a fee, according to Jim DePriest of the Arkansas Attorney General Office. Still, DePriest warns against paying an upfront fee to purchase a timeshare on the resale market.
Conducting due diligence
The majority of time shares are deeded, meaning ownership is recorded with the county, just as with homes, Rogers says.
The deeded title could contain liens for unpaid taxes and other fees. Buyers shouldn’t be held responsible for back fees, but liens might encumber their ability to sell the share later, says DePriest.
Buyers sometimes hire a title company to ensure a clean deed is conveyed at the closing of the sale, says Rogers. However, when a share is had for just a few hundred dollars, many buyers don’t want to spend an equal amount on title charges, he adds.
At the very least, talk with the owners’ association or resort management, says Rogers. “Say, ‘I’m looking to buy week five from John Smith,’ and the resort can verify he’s the owner.'”
Deciding the worth
Besides asking yourself if your budget can accommodate the annual maintenance — which will likely rise in future years — make sure you’ll also be available to vacation during your designated time, says Rogers. Rent a week before you buy to get a real feel for how you like the accommodations.
Indeed, just as purchase prices are down, rental fees are dropping, too, Rogers says. You may be able to find a weekly rental at a cost lower than the current annual fee would cost you if your purchased, a factor that lessens the incentive to buy.