Aftermarket Prices of Wyndham Timeshare Points

The following spreadsheet contains an analysis of all sales of Wyndham timeshare points on eBay over a two week period.  We had heard from numerous sources that it was impossible to sale Wyndham points in the open market.  We had also been told by industry experts that if someone was willing to buy your points (usually a mega-renter or resale company), they would require the seller to pay several months of maintenance fees as well as closing costs.  Wading through the above, and all things being equal, we still wanted to know the going aftermarket price being paid for Wyndham timeshare points.

Therefore, after considerable work by our brilliant analyst, we were finally able to ascertain that the market price for Wyndham timeshare points is a whopping $3.25 per thousand (1,000) points ($3.25/k).  See spreadsheet.  This price does not take into account that the seller is likely to pay all sale and closing related fees (including 3+ months of future maintenance fees on the points being sold).

Therefore, considering the average price for Wyndham points is $150/k are higher, the open market price for Wyndham points is phenomenally less expensive (98% cheaper) than buying points directly from Wyndham.  Consequently, based on our diligence, it would seem horribly ill advised to buy Wyndham Timeshare points directly from Wyndham. Master ebay sales of Wyndham timeshares

Shred.5

Wyndham Reportedly Shredding Documents to Prevent Discovery in Lawsuits

Several co-oberating reports have come to light that Wyndham managers and executives have begun shredding sensitive documents requested in numerous federal and state employment and sales fraud lawsuits. These documents have also been requested in on-going investigations by the SEC and FTC.  This picture shows a huge “shred-it” truck at the sales offices of Wyndham’s resort in Nashville, Tennessee.

Shred.5

 

The picture was taken by a Wyndham owner just this week, describing the shredding activities as way out of the ordinary. Such conduct would violate several federal and state laws, as well as court orders. Our requests and calls for more information from Wyndham have not been returned.

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Wyndham Reports 2014 1st Quarter Earnings

PARSIPPANY, N.J. (April 24, 2014) – Wyndham Worldwide Corporation (NYSE:WYN) today announced results for the three months ended March 31, 2014.

First Quarter Highlights:

  • Adjusted diluted earnings per share (EPS) was $0.78, an increase of 10% from adjusted diluted EPS of $0.71 in the first quarter of 2013.  Reported diluted EPS was $0.69, compared with $0.19 in the first quarter of 2013.
  • Domestic RevPAR up 7.6%.
  • Net Vacation Ownership Interest sales up 15%.
  • The Company repurchased 2.1 million shares of its common stock for $150 million.

“We are off to a great start in 2014,” said Stephen P. Holmes, chairman and CEO.  “In our Hotel Group, domestic RevPAR growth accelerated.  In Vacation Ownership, a combination of increased sales and a lower loan loss provision drove strong revenue growth.  In our Exchange and Rentals business, peak season summer vacation rental bookings are up from last year.  We continued to generate strong free cash flow and to return a significant portion of that cash to shareholders.”

FIRST QUARTER 2014 OPERATING RESULTS

First quarter revenues were $1.2 billion, an increase of 5% from the prior year period.  The increase reflects growth in the Company’s lodging and vacation ownership business segments.

Adjusted net income was $102 million, or $0.78 per diluted share, compared with $98 million, or $0.71 per diluted share for the same period in 2013.  The performance reflects solid operating results across all of the Company’s businesses and lower interest expense.  EPS growth also benefited from the Company’s share repurchase program.

Reported net income for the first quarter of 2014 was $90 million, or $0.69 per diluted share, compared with $27 million, or $0.19 per diluted share, for the first quarter of 2013.  Reported net income included several items not included in adjusted net income.  The net result of these items unfavorably impacted first quarter 2014 net income by $12 million and unfavorably impacted first quarter 2013 net income by $71 million.  Full reconciliations of adjusted results to GAAP results appear in Table 8 of this press release.

Free cash flow was $269 million for the three months ended March 31, 2014, compared with $233 million for the same period in 2013.  The growth of free cash flow largely reflects favorable timing of working capital.  The Company defines free cash flow as net cash provided by operating activities less capital expenditures.  For the three months ended March 31, 2014, net cash provided by operating activities was $315 million, compared with $274 million in the prior year period.

BUSINESS UNIT RESULTS

Lodging (Wyndham Hotel Group)

Revenues were $237 million in the first quarter of 2014, a 7% increase over the first quarter of 2013.  The increase reflects higher RevPAR, franchise fees and EBITDA-neutral hotel management reimbursable fees.

Total system-wide RevPAR increased 4.0% compared with the first quarter of 2013.  The increase reflects a 7.6% domestic increase, partially offset by a 4.3% decline in international RevPAR, primarily reflecting unfavorable currency movements.

Adjusted EBITDA for the first quarter of 2014 was $68 million, a 17% increase compared with the first quarter of 2013.  The increase was primarily due to the revenue increases and the favorable timing of marketing expenditures.

As of March 31, 2014, the Company’s hotel system consisted of approximately 7,500 properties and 646,900 rooms, a 2.4% room increase compared with the first quarter of 2013.  The development pipeline included over 955 hotels and approximately 117,000 rooms, of which 60% were international and 69% were new construction.

Vacation Exchange and Rentals (Wyndham Exchange & Rentals)

Revenues were $379 million in the first quarter of 2014, a 1% increase over the first quarter of 2013.  In constant currency, revenues were flat.

Exchange revenues were $187 million, a decline of 3% from the first quarter of 2013.  In constant currency, exchange revenues declined 2%, as a 1.6% increase in average number of members was offset by a 3.7% decline in exchange revenue per member.

Vacation rental revenues were $176 million, a 6% increase over the first quarter of 2013.  Excluding foreign currency, vacation rental revenues were up 2%, reflecting a 1.4% increase in transaction volume and a 0.8% increase in the average net price per vacation rental.

Adjusted EBITDA for the first quarter of 2014 was $95 million, a 1% increase compared with the first quarter of 2013, reflecting the impact of foreign currency and acquisitions.

Vacation Ownership (Wyndham Vacation Ownership)

Revenues were $593 million in the first quarter of 2014, an 8% increase over the first quarter of 2013, primarily reflecting higher gross VOI sales and a lower loan loss provision.

Gross VOI sales were $410 million in the first quarter of 2014, an increase of 7% over the first quarter of 2013, reflecting a 4.3% increase in tour flow and a 2.8% increase in volume per guest.

Adjusted EBITDA for the first quarter of 2014 was $115 million, a 2% increase compared with the first quarter of 2013, reflecting the revenue increases.  Excluding the favorable resolution of a lawsuit in the prior-year quarter, adjusted EBITDA increased an additional $11 million.

Other Items

  • The Company repurchased 2.1 million shares of common stock for $150 million during the first quarter of 2014.  From April 1 through April 23, 2014, the Company repurchased an additional 0.6 million shares for $42 million.  The Company’s remaining share repurchase authorization totals $476 million as of April 23, 2014.
  • Net interest expense in the first quarter of 2014 was $25 million, compared with $30 million in the first quarter of 2013, reflecting lower rates associated with recent financings and the benefit of a fixed-for-floating rate swap.

Balance Sheet Information as of March 31, 2014:

  • Cash and cash equivalents of $203 million, compared with $194 million at December 31, 2013
  • Vacation ownership contract receivables, net, of $2.7 billion, compared with $2.8 billion at December 31, 2013
  • Vacation ownership and other inventory of $1.0 billion, unchanged from December 31, 2013
  • Securitized vacation ownership debt of $2.0 billion, compared with $1.9 billion at December 31, 2013
  • Long-term debt of $2.9 billion, unchanged from December 31, 2013. The remaining borrowing capacity on the revolving credit facility, net of commercial paper borrowings, was $1.3 billion as of March 31, 2014, unchanged from December 31, 2013

A schedule of debt is included in Table 5 of this press release.

Outlook

Note to Editors:  The guidance excludes possible future share repurchases, while analysts’ estimates often include share repurchases.  This results in discrepancies between Company guidance and database consensus forecasts.

For the full year 2014, the Company provides the following guidance:

  • Revenues of approximately $5.250 – $5.350 billion
  • Adjusted EBITDA of approximately $1.215 – $1.240 billion
  • Adjusted EPS of approximately $4.23 – $4.33 based on a diluted share count of 130 million

Conference Call Information

Wyndham Worldwide Corporation will hold a conference call with investors to discuss the Company’s results, outlook and guidance on Thursday, April 24, 2014 at 8:30 a.m. EDT. Listeners may access the webcast live through the Company’s website at www.wyndhamworldwide.com/investors.   An archive of this webcast will be available on the website for approximately 90 days beginning at noon EDT on April 24, 2014. The conference call may also be accessed by dialing 800-369-2125 and providing the passcode “WYNDHAM.” Listeners are urged to call at least 10 minutes prior to the scheduled start time. A telephone replay will be available for approximately 90 days beginning at noon EDT on April 24, 2014, at 800-944-8789.

The Company will post guidance information on its website following the conference call.

Presentation of Financial Information

Financial information discussed in this press release includes non-GAAP measures, which include or exclude certain items.  These non-GAAP measures differ from reported GAAP results and are intended to illustrate what management believes are relevant period-over-period comparisons and are helpful to investors as an additional tool for further understanding and assessing the Company’s ongoing core operating performance.  Exclusion of items in our non-GAAP presentation should not be considered an inference that these items are unusual, infrequent or non-recurring.  A complete reconciliation of reported GAAP results to the comparable non-GAAP information appears in the financial tables section of the press release.  It is not practicable to provide a reconciliation of forecasted adjusted EBITDA and adjusted EPS to the most directly comparable GAAP measures because certain items cannot be reasonably estimated or predicted at this time.  Any such items could be significant to the Company’s reported results.

About Wyndham Worldwide Corporation

One of the world’s largest hospitality companies, Wyndham Worldwide (NYSE: WYN) provides a wide range of hospitality products and services through its global portfolio of world-renowned brands.  The world’s largest hotel company based on the number of properties, Wyndham Hotel Group is home to many of the world’s best-known hotel brands, with approximately 7,500 franchised hotels and 646,900 hotel rooms worldwide. Wyndham Exchange & Rentals is the worldwide leader in vacation exchange and the world’s largest professionally managed vacation rentals business, providing more than 5 million leisure-bound families annually with access to over 107,000 vacation properties in over 100 countries through its prominent exchange and vacation rental brands. The industry and timeshare ownership market leader, Wyndham Vacation Ownership develops, markets, and sells vacation ownership interests and provides consumer financing to owners through its network of over 190 vacation ownership resorts serving approximately 907,000 owners throughout the United States, Canada, Mexico, the Caribbean, and the South Pacific. Based in Parsippany, NJ, Wyndham Worldwide employs approximately 32,800 associates globally.

What is Missing

What the earnings report does not make clear is why the Company’s Bad Debt allowance continues to increase exponentially.  The bad debt allowance represents primarily timeshare mortgages that are being written off for default.  The report also alludes to certain contingent liabilities, including lawsuits, that Wyndham is reporting as having a probability of loss.  In fact, these lawsuits include numerous timeshare fraud and employment related lawsuits.  The timeshare fraud suits allege, among other things, that Wyndham induced timeshare owners to purchase or upgrade Wyndham timeshares.  The labor suits allege that Wyndham violated teh Federal Fair Labor Practices Act by failing to pay its employees for overtime.

wyndham worldwide

Wyndham’s Problems

Wyndham Reveals Timeshare Problems

Reprinted with Permission from Allyance Partners, Inc. In the latest Wyndham Worldwide annual report (10-k) filed with the Securities & Exchange Commission (“SEC”)[i], Wyndham seems to have disclosed a great deal more than first meets the eye.

Litigation Exposure & Reserve

In the litigation section of its financial notes, Wyndham stated that “The Company is involved in claims, legal and regulatory proceedings and governmental inquiries related to the Company’s business.”  While this is customary language for most public companies’ annual reports, one learns a great deal more buried further in the financial notes.

The report continues, “[Wyndham] records an accrual for legal contingencies when it determines, after consultation with outside counsel, that it is probable that a liability has been incurred and the amount of the loss can be reasonably estimated.[ii]

And then the other foot drops, “The Company believes that it has adequately accrued for such matters with reserves of $42 million and $35 million as of December 31, 2012. . . . Such reserve is exclusive of matters relating to the Company’s Separation. For matters not requiring accrual, the Company believes that such matters will not have a material effect on its results of operations, financial position or cash flows based on information currently available. However, litigation is inherently unpredictable and, although the Company believes that its accruals are adequate and/or that it has valid defenses in these matters, unfavorable results could occur. As such, an adverse outcome from such proceedings for which claims are awarded in excess of the amounts accrued, if any, could be material to the Company with respect to earnings or cash flows in any given reporting period. As of December 31, 2012, the potential exposure resulting from adverse outcomes of such legal proceedings could, in the aggregate, range up to approximately $25 million in excess of recorded accruals. ”

Timeshare Contract Terminations

Also included in the Notes to the Financials was news relating to the increase in timeshare contract terminations.  While Wyndham does not characterize the rise in terminations as “material” for the purposes of its financial reporting, one can see a significant rise in loan losses in the following Wyndham table.

wyndham table 2

In other words, Wyndham had a 21% increase in timeshare contract terminations in 2012 in comparison to 2011.  This dramatic increase could be attributed to a number of things: lingering economic troubles, decrease in Wyndham vacation owner’s confidence and/or satisfaction, increase in timeshare cancellation companies and/or increase in aggressive sales techniques by Wyndham.  Whatever the cause, Wyndham is clearly beginning to see a “material” change in its vacation ownership business.

This can be seen in Wyndham’s policies relating to timeshare defaults.  For example, the Company stated relating to vacation ownership interest contracts that:  “The Company ceases to accrue interest on VOI contract receivables once the contract has remained delinquent for greater than 90 days. At greater than 120 days, the VOI contract receivable is written off to the allowance for loan losses. In accordance with its policy, the Company assesses the allowance for loan losses using a static pool methodology and thus does not assess individual loans for impairment separate from the pool.”

In other words, Wyndham does not expect to receive any future interest on contracts that remain delinquent for over 3 months, and rights off the debt after 120 days.  This is precisely why Wyndham will terminate the contracts after 120 days, because the associated loans have already been deducted as bad debt.

Wyndham Timeshare Revenue 

The annual report explains the profitability of its vacation ownership division as follows: “[Wyndham] generates vacation ownership contract receivables by extending financing to the purchasers of its VOIs. . . During 2012, 2011 and 2010, the Company’s securitized vacation ownership contract receivables generated interest income of $306 million, $322 million and $336 million, respectively.  During 2012, 2011 and 2010 the Company originated vacation ownership contract receivables of $1,074 million, $969 million and $983 million, respectively, and received principal collections of $771 million, $762 million and $781 million, respectively. The weighted average interest rate on outstanding vacation ownership contract receivables was 13.4%, 13.3% and 13.1% at 2012, 2011 and 2010, respectively.

As long as Wyndham continues to generate these numbers from its timeshare business, we should expect to continue to see the same overly aggressive sales and marketing program we’ve become accustomed to from Wyndham Vacations.  Until the timeshare defaults, cancellations and lawsuits become truly significant when measured by Wyndham’s P&L, the battle to purge deceptive trade practices from the timeshare industry will continue.

Read the Remaining Article….


[i] Wyndham Worldwide Corporation Form 10-K for fiscal year ended December 31, 2012 (ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934).

[ii] “In making such determinations, the Company evaluates, among other things, the degree of probability of an unfavorable outcome and, when it is probable that a liability has been incurred, the Company’s ability to make a reasonable estimate of loss. The Company reviews these accruals each reporting period and makes revisions based on changes in facts and circumstances including changes to its strategy in dealing with these matters. . . .” Wyndham 2012 10-K, page F-38.

By Allyance Partners, Inc. – www.allyancepartners.com

Walt Disney World May 2012 822-M

Wyndham Pays $3.9M

Los Angeles, CA: A $3,907,000 settlement has been reached in an unfair business practices lawsuit brought against Wyndham, a time-share company.

The settlement, which involves a $3,192,000 award for fraud and a $715,000 for breach of contract, among other things, was brought against Wyndam by Casablanca Express. Over a 19 year period, Casablanca Express and Wyndham built a business relationship whereby Casablanca helped Wyndham market and sell its timeshare products. At Wyndham’s request, Casablanca worked almost exclusively for Wyndham. As part of the contract between the parties, Wyndham agreed to give Casablanca a “wind-down” severance agreement, whereby Wyndham would pay Casablanca for three years after terminating its relationship with Casablanca so as to allow Casablanca time to rebuild its business with other clients. Wyndham also promised to give Casablanca the right of first refusal on all travel certificates used by Wyndham.

In October 2008, claiming it needed help during the recession, Wyndham requested that Casablanca waive the wind-down clause in exchange for promises of a long-term, growing and exclusive business relationship going forward. At the time Wyndham asked for the deletion of the wind-down clause Wyndham had secretly decided to cease doing business with Casablanca. Shortly after Casablanca agreed to delete the wind-down provision of the agreement (and give up other financial entitlements) in exchange for the promise of a long-term, growing and exclusive business relationship going forward, Wyndham abruptly ceased doing business with Casablanca.

Loss of the value of the wind-down clause was valued at $6 million, and, lost profits on the breach of the right of first refusal provision of the contract in the amount of approximately $1 million.

Allyance Partners

Allyance Partners’ Client Dispute Division

Allyance Partners launches new program to help Timeshare Owners

Nashville, Tennessee May 23, 2013 – Allyance Partners, Inc. announced today the launch of its Client Dispute Division designed to advise clients involved in timeshare related disputes.    Allyance Partners have helped clients fraudulently induced to purchase real estate or enter into problematic real estate financing arrangements.  “One growing area of our dispute resolution unit has been transactions related to Timeshare property interests, said Walt Lippincott, President of Allyance.   “The very nature of timeshare transactions makes the entry of deceptive sales practices much more likely.  Timeshares are undivided or fractional rights to use certain property.  As such, the more complex nature of a timeshare interest lends itself to misunderstanding, confusion and, quite often, fraud.”

Allyance’s Dispute Division professionals include experienced attorneys, accountants and real estate experts.  “The Allyance team has been extremely successful in helping its clients resolve property disputes, including the ever problematic timeshare contract disputes,” said Lippincott.   Allyance’s timeshare related services include transactional document analysis, dispute negotiations, case mediation and resolution, contract rescission or remediation, and litigation support.    Allyance’s services are designed to achieve one goal, a favorable resolution to a client’s case.  That normally includes contract rescission or termination, debt cancellation and/or discharge, lien release, and expense recovery.

Allyance Partners’ General Counsel stated emphatically that “after researching hundreds of cases of timeshare fraud it became obvious that the law was clearly on the side of our clients.  We are armed and fully prepared to press our client’s claims through to a satisfactory outcome.  Unlike most timeshare “consultants,” we are always prepared to litigate these disputes, using all legal means to require equitable and legal redress of our client’s claims against the Timeshare Developer.  This often includes the repayment of certain funds by the development in order to compensate our clients for financial loss.”

Allyance Partners is a leading advisor in complex property transactions, including complicated property exchanges, creative real estate financing, private equity real estate vehicles, REITS, international real estate transactions and other exotic property conveyances such as undivided and fractional timeshare ownership.  Allyance professionals have decades of experience in timeshare related representation.  Reprinted with permission.

City Timeshares

Timeshare Basics

Understanding Timeshares

The thought of owning a vacation home may sound appealing, but the year-round responsibility — and expense — that come with it may not. Buying a timeshare or vacation plan may be an alternative. If you’re thinking about opting for a timeshare or vacation plan, the Federal Trade Commission (FTC), the nation’s consumer protection agency, says it’s a good idea to do some homework. If you’re not careful, you could end up having a hard time selling your timeshare.

  • The Basics of Buying a Timeshare
  • Before You Buy a Timeshare
  • Timeshare Exchange Systems
  • Selling a Timeshare Through a Reseller

The Basics of Buying a Timeshare

Two basic vacation ownership options are available: timeshares and vacation interval plans.  The value of these options is in their use as vacation destinations, not as investments. Because so many timeshares and vacation interval plans are available, the resale value of yours is likely to be a good deal lower than what you paid. Both a timeshare and a vacation interval plan require you to pay an initial purchase price and periodic maintenance fees. The initial purchase price may be paid all at once or over time; periodic maintenance fees are likely to increase every year.

Deeded Timeshare Ownership. In a timeshare, you either own your vacation unit for the rest of your life, for the number of years spelled out in your purchase contract, or until you sell it. Your interest is legally considered real property. You buy the right to use a specific unit at a specific time every year, and you may rent, sell, exchange, or bequeath your specific timeshare unit. You and the other timeshare owners collectively own the resort property. Unless you’ve bought the timeshare outright for cash, you are responsible for paying the monthly mortgage. Regardless of how you bought the timeshare, you also are responsible for paying an annual maintenance fee; property taxes may be extra. Owners share in the use and upkeep of the units and of the common grounds of the resort property. A homeowners’ association usually handles management of the resort. Timeshare owners elect officers and control the expenses, the upkeep of the resort property, and the selection of the resort management company.

“Right to Use” Vacation Interval Option.  In this option, a developer owns the resort, which is made up of condominiums or units.  Each condo or unit is divided into “intervals” — either by weeks or the equivalent in points. You purchase the right to use an interval at the resort for a specific number of years — typically between 10 and 50 years. The interest you own is legally considered personal property. The specific unit you use at the resort may not be the same each year. In addition to the price for the right to use an interval, you pay an annual maintenance fee that is likely to increase each year.

Within the “right to use” option, several plans can affect your ability to use a unit:

Fixed or Floating Time. In a fixed time option, you buy the unit for use during a specific week of the year. In a floating time option, you use the unit within a certain season of the year, reserving the time you want in advance; confirmation typically is provided on a first-come, first-served basis.

Fractional Ownership. Rather than an annual week, you buy a large share of vacation ownership time, usually up to 26 weeks.

Biennial Ownership. You use a resort unit every other year.

Lock-off or Lockout. You occupy a portion of the unit and offer the remaining space for rental or exchange. These units typically have two to three bedrooms and baths.

Points-Based Vacation Plans. You buy a certain number of points, and exchange them for the right to use an interval at one or more resorts. In a points-based vacation plan (sometimes called a vacation club), the number of points you need to use an interval varies according to the length of the stay, size of the unit, location of the resort, and when you want to use it.

Before You Buy a Timeshare

In calculating the total cost of a timeshare or vacation plan, include mortgage payments and expenses, like travel costs, annual maintenance fees and taxes, closing costs, broker commissions, and finance charges. Maintenance fees can rise at rates that equal or exceed inflation, so ask whether your plan has a fee cap. You must pay fees and taxes, regardless of whether you use the unit.

To help evaluate the purchase, compare these costs with the cost of renting similar accommodations with similar amenities in the same location for the same time period. If you find that buying a timeshare or vacation plan makes sense, comparison shopping is your next step.

Evaluate the location and quality of the resort, as well as the availability of units. Visit the facilities and talk to current timeshare or vacation plan owners about their experiences. Local real estate agents also can be good sources of information. Check for complaints about the resort developer and Management Company with the state Attorney General and local consumer protection officials.

Research the track record of the seller, developer, and Management Company before you buy. Ask for a copy of the current maintenance budget for the property. Investigate the policies on management, repair, and replacement furnishings, and timetables for promised services. You also can search online for complaints.

Get a handle on all the obligations and benefits of the timeshare or vacation plan purchase. Is everything the salesperson promises written into the contract? If not, walk away from the sale. Don’t act on impulse or under pressure. Purchase incentives may be offered while you are touring or staying at a resort. While these bonuses may present a good value, the timing of a purchase is your decision. You have the right to get all promises and representations in writing, as well as a public offering statement and other relevant documents.

Study the paperwork outside of the presentation environment and, if possible, ask someone who is knowledgeable about contracts and real estate to review it before you make a decision. Get the name and phone number of someone at the company who can answer your questions — before, during, and after the sales presentation, and after your purchase. Ask about your ability to cancel the contract, sometimes referred to as a “right of rescission.” Many states — and maybe your contract — give you a right of rescission, but the amount of time you have to cancel may vary. State law or your contract also may specify a “cooling-off period” — that is, how long you have to cancel the deal once you’ve signed the papers. If a right of rescission or a cooling-off period isn’t required by law, ask that it be included in your contract.

If, for some reason, you decide to cancel the purchase — either through your contract or state law — do it in writing. Send your letter by certified mail, and ask for a return receipt so you can document what the seller received. Keep copies of your letter and any enclosures. You should receive a prompt refund of any money you paid, as provided by law.

Use an escrow account if you’re buying an undeveloped property, and get a written commitment from the seller that the facilities will be finished as promised. That’s one way to help protect your contract rights if the developer defaults. Make sure your contract includes clauses for “non-disturbance” and “non-performance.” A non-disturbance clause ensures that you’ll be able to use your unit or interval if the developer or management firm goes bankrupt or defaults. A non-performance clause lets you keep your rights, even if your contract is bought by a third party. You may want to contact an attorney who can provide you with more information about these provisions.

Be wary of offers to buy timeshares or vacation plans in foreign countries. If you sign a contract outside the U.S. for a timeshare or vacation plan in another country, you are not protected by U.S. laws.

Timeshare Exchange Systems

An exchange allows a timeshare or vacation plan owner to trade units with another owner who has an equivalent unit at an affiliated resort within the system. Here’s how it works: A resort developer has a relationship with an exchange company, which administers the service for owners at the resort. Owners become members of the exchange system when they buy their timeshare or vacation plan. At most resorts, the developer pays for each new member’s first year of membership in the exchange company, but members pay the exchange company directly after that.

To participate, a member must deposit a unit into the exchange company’s inventory of weeks available for exchange. When a member takes a week from the inventory, the exchange company charges a fee. In a points-based exchange system, the interval is automatically put into the inventory system for a specified period when the member joins. Point values are assigned to units based on length of stay, location, unit size, and seasonality. Members who have enough points to secure the vacation accommodations they want can reserve them on a space-available basis.

Members who don’t have enough points may want to investigate programs that allow banking of prior-year points, advancing points, or even “renting” extra points to make up differences. Whether the exchange system works satisfactorily for owners is another issue to look into before buying. Keep in mind that you will pay all fees and taxes in an exchange program whether you use your unit or someone else’s.

Selling a Timeshare through a Reseller

If you’re thinking of selling a timeshare, the FTC cautions you to question resellers — real estate brokers and agents who specialize in reselling timeshares. They may claim that the market in your area is “hot” and that they’re overwhelmed with buyer requests. Some may even say that they have buyers ready to purchase your timeshare, or promise to sell your timeshare within a specific time.

If you want to sell your deeded timeshare, and a company approaches you offering to resell your timeshare, go into skeptic mode: Don’t agree to anything on the phone or online until you’ve had a chance to check out the reseller. Contact the state Attorney General and local consumer protection agencies in the state where the reseller is located. Ask if any complaints are on file. You also can search online for complaints. Ask the salesperson for all information in writing. Ask if the reseller’s agents are licensed to sell real estate where your timeshare is located. If so, verify it with the state Real Estate Commission. Deal only with licensed real estate brokers and agents, and ask for references from satisfied clients. Ask how the reseller will advertise and promote the timeshare unit. Will you get progress reports? How often?  Ask about fees and timing. It’s preferable to do business with a reseller that takes its fee after the timeshare is sold. If you must pay a fee in advance, ask about refunds.  Get refund policies and promises in writing.  Don’t assume you’ll recoup your purchase price for your timeshare, especially if you’ve owned it for less than five years and the location is less than well-known.

Understanding Timeshares

If you want an idea of the value of a timeshare that you’re interested in buying or selling, consider using a timeshare appraisal service. The appraiser should be licensed in the state where the service is located. Check with the state to see if the license is current.

Contract Caveats

Before you sign a contract with a reseller, get the details of the terms and conditions of the contract. It should include the services the reseller will perform; the fees, commissions, and other costs you must pay and when; whether you can rent or sell the timeshare on your own at the same time the reseller is trying to sell your unit; the length or term of the contract to sell your timeshare; and who is responsible for documenting and closing the sale.

If the deal isn’t what you expected or wanted, don’t sign the contract. Negotiate changes or find another reseller.

Resale Checklist

Selling a timeshare is a lot like selling any other piece of real estate. But you also should check with the resort to determine restrictions, limits, or fees that could affect your ability to resell or transfer ownership. Then, make sure that your paperwork is in order. You’ll need: the name, address, and phone number of the resort, the deed and the contract or membership agreement, the financing agreement, if you’re still paying for the property, information to identify your interest or membership, the exchange company affiliation, the amount and due date of your maintenance fee, the amount of real estate taxes, if billed separately.

Reprinted with permission from Allyance Partners.

storm over timeshare

Timeshare Prices

Timeshare Prices Plummet to $1

Unable to sell his parents’ ocean-front timeshare for the past year, David Suder became so fed up he offered to give it away. They paid $8,000 for the Orange County, Calif. unit a decade ago, but since there are no willing buyers, and his 81-year-old mother, now a widow, can no longer afford the monthly maintenance fees, Suder says he doesn’t have a choice. The San Diego-based real estate investor is offering the unit for free in the hopes that someone will take it before his mother dies. “I don’t want to inherit it,” he says. “I want it to go away.”

While real estate – and even vacation real estate – is starting to show signs of recovery, timeshares remain in freefall. During the first quarter, the number of for-sale-by-owner postings doubled compared to the same period a year ago on RedWeek.com, a popular resale site. Another site, SellMyTimeshareNow.com, says owner sales are up 20% during that period.

Experts say even in better times, most sellers never saw a return on their investment. “Very few timeshares increase in value,” says Alisa Stephens, executive producer at RedWeek.com. As values sink and desperation grows, the number of owners giving their timeshares away for $1 – or less — has doubled in the past year, says Brian Rogers, of Timeshare Users Group, an owner advocacy group. “There’s never been a worst time to try to sell a timeshare,” he says.

Typically found in resorts, timeshares allow multiple buyers to purchase rights to use a property, like a hotel room, suite or condominium, for one to two weeks per year over a long period of time. They appealed to buyers who believed the timeshare’s purchase price was lower than the total amount they’d spend for hotel stays on future trips. Timeshare owners could also invite family and friends to stay with them for free.

Those perks never materialized for many timeshare owners who had to cut back on travel since the recession. Others couldn’t afford their timeshares after losing their jobs. Up to 48% of timeshare owners are behind on their annual maintenance payments by at least a year – up from 37% in 2007, according to TimeshareResortCollections.com, which helps resorts to recoup past due payments. The company covers about 80% of the timeshare industry.

To make up for these losses, resorts have been increasing the maintenance fees on the individuals who continue to use their timeshares. Average annual maintenance costs hit an all-time high of $731 in 2010, up more than 8% from the year prior, according to the latest data from the American Resort Development Association. Experts say those costs are still rising. And for some owners, they’re a big reason to sell, says Lisa Ann Schreier, director of Timeshare Insights, a consultant to timeshare buyers and sellers.

Faced with rising medical bills, John Chase, 62, and his wife decided to sell their timeshare at a megaresort in Orlando. After the listing lingered on the market for two and a half years, the couple chose to give it away just so they could avoid the maintenance fees. Though they bought it for $4,000 in the late ‘90s, they ended up selling it for just $1. Chase says he never expected to sell so low, especially since the sales pitch he received when he purchased the timeshare led him to believe its price might increase.

For their part, resorts are changing their approach to timeshares. Howard Nusbaum, president and CEO of ARDA, says consumers should buy timeshares to use them – not as an investment. Resort developers, he says, are now marketing timeshares to a smaller group of high-income consumers who are more likely to be able to afford timeshares and who don’t need a loan to purchase them. Sales between resorts and buyers totaled $6.4 billion in 2010, according to the latest data, down 40% from their peak in 2007, according to ARDA. Experts say 2011 data isn’t expected to be much better.

The data is in stark contrast to vacation homes, where demand is rising. Roughly half a million vacation homes sold in 2011, up 7% from 2010, according to data released last week by the National Association of Realtors.

To be sure, some timeshares are retaining values better than others. Owners with timeshares at brand-name resorts are likely to recoup the most, especially if those locations are in areas where real estate supply is limited, like Key West or Myrtle Beach, says Jason Tremblay, CEO of SellMyTimeshareNow.com.

Before selling at a huge loss, timeshare owners might want to consider some alternatives. Stephens suggests renting the timeshare to vacationers at a price that covers the annual maintenance fee but is cheaper than what travelers would pay to stay at a hotel. Or consider asking the resort if it will buy the timeshare back; the price it might offer won’t be near what the owner paid the developer originally but could be higher than what other buyers are offering.

Other sellers say they’ll hold out until a buyer comes along. Joe Cantu and his wife paid $15,000 for a two-bedroom suite at a high-end resort in Las Vegas seven years ago. They recently welcomed a new baby, and they’ve been trying to sell the timeshare. His asking price is $3,500, but despite the resort’s amenities, which include a putting green, sand-bottom pool and in-room massage services, he hasn’t received offers close to that in the eight months it’s been on the market. “I’ll just keep it posted as long as I need to,” he says.

Reprinted with Permission from Allyance Partners.

http://allyancepartners.com/timeshare-prices-plummet-2/