LITTLE ROCK - While the purchase of a vacation home may not be financially feasible for many consumers, investments in timeshare units may offer many of the same benefits with substantially less cost.
Yet, timeshare ownership may have pitfalls, and the Attorney General's Office regularly receives complaints about unscrupulous timeshare resellers who attempt to take advantage of consumers. So, as Arkansans begin to make their summer travel plans, Attorney General Dustin McDaniel issued this consumer alert today.
A timeshare is real estate in which an owner buys the right to use the property for a designated period of time. Almost all timeshares are located at popular vacation destinations, and they are typically condominium units that have multiple owners. Many timeshare owners who purchased their property during a timeshare-sales boom in the 1970s and 1980s have been looking to sell their shares, leading to an increase in the last few years of timeshare resale companies. Some of those resellers are disreputable.
"Because of the depressed housing market in the past few years, some timeshare owners have decided to sell, largely because the cost of their investment continues to increase," McDaniel said. "When selling their timeshares, consumers should be wary of any reseller that asks for an upfront fee or makes an unsolicited call seeking business."
Marketing costs for the timeshare were usually included in the unit's purchase price, making it difficult for the property to retain its value. Also, given that many resort areas have a glut of properties, the depressed values for timeshares may make them difficult to resell.
When reselling, McDaniel said timeshare owners should consider the following:
- Most legitimate resale companies will not make an unsolicited call with the promise to help resale a timeshare.
- Even though the reseller may say it has willing buyers ready to purchase the property, it most likely does not.
- Reputable resellers will not ask for an advance fee. Instead, they will charge commissions to be paid only upon sale, like a typical real estate transaction.
- Those advance fees may be labeled as a "marketing" fee, "listing" fee, or "Internet advertising" fee. Whatever the label, such advance fees should not be paid.
- Before agreeing to receive resale assistance, get an independent appraisal from a licensed appraiser.
- Conduct business only with licensed real estate agents. Before entering into a contract for resale, contact the Attorney General's Office, the Arkansas Real Estate Commission or the Better Business Bureau to ask about the company or real estate agent.
For consumers who are considering purchase of a timeshare for the first time, McDaniel joined the Federal Trade Commission in offering this advice:
- Visit the resort to evaluate its quality, and talk to other timeshare owners. Research the track record of the seller, the resort developer and management company.
- Make sure the benefits and obligations of the timeshare are on the purchase contract. If all the promises made by the seller aren't included on the purchase contract, consider walking away from the sale.
- Never act on impulse or under pressure. Sellers may offer purchase incentives while consumers are visiting a resort, but the timing of a purchase is up to the buyer. All promises and representations made in a sales pitch should be made in writing.
For more information about timeshares and timeshare resellers, or other consumer-related information, call the Attorney General's Consumer Protection Division at (800) 482-8982 or visit the division's website, www.GotYourBackArkansas.org.