I have been approached by companies claiming they can sell my timeshare quickly, and there are already buyers waiting... but I will have to pay an upfront fee. I want to sell my timeshare, but how can I trust this isn't just a scam?
We get asked, all too often, about companies that solicit timeshare owners to help them "get out" of their timeshares. They use words like "timeshare relief" and "timeshare redemption," but the only thing they are trying to do is relieve you of thousands of dollars.
Here's our latest report on the opportunistic — and probably illegal — timeshare scams that prey on owners who really want to sell or even give away their intervals. Just as important, we offer tips on ways that you can protect yourself while trying to sell your timeshare.
Timeshare scams still prey on owners who are desperate to sell
Timeshare scams are old news — they are so commonplace, in fact, that most news organizations ignore them. This lack of coverage actually compounds the problem, leaving owners with very few reliable places to get straight information about the safest way to get of rid of their timeshares.
The American Resort Development Association, the trade association that lobbies for developers, says the situation is getting better, thanks to legislation enacted in many states to crack down on companies that defraud sellers. But law enforcement officials also say that timeshare scammers are getting more and more sophisticated, to both hoodwink sellers and avoid prosecution. Bottom line: timeshare rip-offs are still prevalent in the marketplace.
Their high-pressure pitches are disarmingly simple. They will "guarantee" to get you out of your timeshare and transfer title to a third party. You will pay, on average, $5,000 for this service. Months down the road, you may or may not get word that title has been changed to someone else. In many cases, the title transfers to a non-existent party or a limited liability corporation (which are known as Viking ships, full of empty timeshares). These companies then vanish, change their phone numbers and start the solicitation process all over again. At your end, however, you'll be left holding the bag. Your resort's HOA will contend that you still own the timeshare and will continue to bill you for maintenance fees.
How to avoid scams when selling your timeshare
So what can the average owner do to avoid getting trapped in a resale scam?
RedWeek contacted many professionals to get the answers. Here are their recommendations:
- Do your homework, using the Internet. When contacted by an unknown company, either through the mail, e-mail or phone, conduct a Google search for a complete list of entries about the company. Then expand the search with the word "scam" to see what else surfaces. Check the Web site of any company that contacts you, unsolicited, to help you unload a timeshare. Legitimate companies usually include information about their headquarters, address, principal owners and business services. Scammers, who use the Internet to find clients, frequently provide little or no information on their home page other than a toll-free telephone number to get additional information. They also include generic information about the difficulty of selling timeshares and, most importantly, a fill-in-the-blanks page where you can send them information about yourselves. Don't do it. If a company looks legitimate, make sure to contact them directly to be sure they are the same company that contacted you — scammers will often capitalize on the reputation of a legitimate company to get you to give their unrelated organization money over the phone.
- Don't give information about yourself to any company that calls you, blind, to help you get out of your timeshare or maintenance fees. In the past, these companies used postcard mailings to contact potential clients. Today, most use direct calls from telephone boiler rooms where their only goal is to get you to attend a special presentation, in your neighborhood, about timeshare "relief." If you attend one of these presentations, at the end, they will offer to relieve you of your timeshare if you agree to pay them $5,000 on the spot. Keep your wallet in your pocket.
- Don't agree to pay large "up-front" fees to a timeshare resale company that offers to help sell your timeshare. Legitimate real estate professionals may charge a commission (averaging $1,000 to $1,500) at the close of escrow as part of a sale, but they never charge more than a small fee to get you started. Scammer companies, on the other hand, will pressure you to pay an up-front commission of $1,000 or more to cover their alleged marketing costs for helping you advertise and sell a timeshare. After you've paid the fee, you may never hear from the company again.
- Contact your state Real Estate Department or Attorney General's office to see if the company has a license to do business in your state and, more importantly, any record of complaints on file about their business practices. You may also check the company's Better Business Bureau ratings, but these can be unreliable, so don't rely on a good BBB rating by itself. Many companies that want to trick you out of some hard-earned timeshare money pride themselves on having A-plus ratings.
- Search RedWeek's forums, or similar trusted online message boards, to see what other owners say about the company. Beware of any glorious reviews, because they may have been planted by the scammers themselves. You can also ask questions on these forums to see if other owners have been contacted by the same company — and find out what happened to them.
- Contact your timeshare resort to find out if they have a resale or give-back program. Most of the major brand name timeshare companies have under-publicized resale departments where they will either help you with resale or explain how you can surrender title to your unit and walk away. Independent resorts may not have resources to handle these chores in-house, but will commonly refer you to licensed real estate brokers who handle resales for the resort (and often end up listing on RedWeek). Wyndham, the largest timeshare chain in the world, just launched an "Ovation" program to help owners who need to divest their timeshares. Some resorts, moreover, charge approximately $1,500 to accept a deed-back in lieu of foreclosing on an owner who is delinquent on fees.
- Contact a licensed real estate agent who handles resales. Many resorts, especially upper-end timeshares, have favored relationships with local brokers, so they will offer referrals. Many resort-rich vacation areas, in addition, have local real estate companies that specialize in timeshares. Using the Internet, these companies are easy to find. But if you don't know where to look, start with the Licensed Timeshare Resale Brokers Association. All of its members handle resales; they are knowledgeable about the industry and, most importantly, can tell you what your timeshare is really worth on the secondary market.
- Post your timeshare for sale or rent on RedWeek.com. RedWeek's resale and rental postings are inexpensive, easy-to-use, and effective. RedWeek also provides complete information about what other owners are using as sales and rental prices for their timeshares. This is a good benchmark to determine the market value of your timeshare. RedWeek also offers a full-service resale program, with commissions of only $399 or 3% - sellers save an average of $825 in commissions compared to other licensed brokers.
