Archive for the 'Jane Bryant Quinn – Financial Author' Category

NEWSWEEK – The Trap in Time Shares

Saturday, January 17th, 2009

The Trap In Time Shares

Warning to all vacationers who-on impulse let a sales agent talk them into buying a share. It’s easy to love these holiday , but only as long as their pleasures suit style of life. If your taste ever changes, a time share can hang around your neck like an albatross. In most cases, there’s no certain way of pulling free.

One reason time shares are so popular is their close fit with the baby boomers, who want a family vacation spot but can’t afford a home of their own. Instead they buy a slice of a home-say, a single week at a summer resort. Led by luxury offerings from such brand-name hoteliers as Disney, Marriott and Hilton, U.S. sales this year are expected to reach a record $2.5 billion.

Price tags on new time shares are not low. Two-bedroom units average $9,500, up to a top of $18,000. Annual fees (for maintenance and taxes) average $350 and can reach $770. But you’re not locked into the place you buy. Swaps can be had for a similar week at a unit somewhere else.

So what’s not to like about this deal? Mainly, its perpetuity. At some point in the future you may not want this holiday anymore-because your children are grown or your spouse has died. But you can’t store a time share down in the basement next to your dusty exercise bike. Annual maintenance fees continue. To escape them you have to sell-and that’s when you learn that a time-share resort is easy to join but tough to leave.

_B_A glut:_b_At many resorts, “used” time-share weeks are a glut on the market. In almost all cases, they can’t be resold for anything close to what you paid. You’re doing well if you get even half the original price. Where there aren’t a lot of weeks for sale, you might luck into 80 percent or more. But time shares in older, less spiffy resorts, or in undesirable weeks of the year, often draw no bids at all.

That stands in sharp contrast to the pitch of many sales agents, who lead you to think that resales are easy. Officially, the industry deplores that line. “Time shares should not be purchased for investment or resale,” says Tom Franks, president of the American Resort Development Association (ARDA). Developers who permit salesroom hype are playing a hypocritical game: tsk-tsking the deceptions in public while privately hauling money to the bank.