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Contractual Obligations of Timeshare Agreements
Timeshare sales contracts should be read thoroughly to avoid being surprised with what entails once you are bound to the contract. A lesson that should be learned is that not all promises and claims made during presentations and sales pitch are true. Before signing make sure you know what you are getting into. It would be better if you have a lawyer to review the contract because at times some prospective purchasers who identify differences between what is in the contract and what was promised by the agent are likely to be told that the contract is only a "legal jargon."
Make sure that every promise and deal you have with the timeshare salesperson is written on paper.
Timeshare Maintenance Fees
You might not have been told of all the fees you have to pay when owning a timeshare. One thing you should know about timeshares is that annual maintenance fees will increase over time. Maintenance fees are necessary and will likely increase so the properties will not be run-down by time. Aside from maintenance, there is also what you call special assessment fees that you are obligated to pay.
Secondary Market for Time Shares
As far as timeshares for investments: they more likely depreciate in value.
There are a lot of people these days who think of selling their unit as the timeshare exit solution or maybe make a profit out of it to compensate all the maintenance fees but the reality is you will lose money on the sale of a timeshare. The original price typically covers 40% sales costs thus its value is lesser than you bought it. As a result, a resale will yield as low as 60% of the purchase price. Then you will have to pay a new commission as much as 20% to the broker who sells the property for you. Plus you shall also be careful of who will sell it for you for there are many resale agents and companies who are into frauds.
So when you decide to buy a timeshare or membership in a vacation club, you should know by now that resales are difficult. In general the market for resales is very small and full of competition. One survey stated that only 3.3% of owners were able to resell their timeshares the past 20 years. It would be better if you seek for a company who does not necessarily into reselling but those that specialize only in timeshare exit solution.
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