Vacation overload? Consider these options for selling your timeshare
How to sell your timeshare
- Look to sell the timeshare by approaching the resort’s sales department.
- Consider an independent broker or licensed Realtor to help with sales efforts.
- Negotiate a buyback agreement with the resort, similar to a deed in lieu of foreclosure.
- Stop making payments or declare bankruptcy only if you’ve run out of options.
If you financed the purchase of a timeshare property, but are no longer willing or able to make the costly loan payments or annual maintenance fees, there are ways to get out of the debt.
Timeshare contracts can be difficult to escape regardless of a loan, but having debt related to the property can make things even tougher. The good news is, there is more than one option to free yourself from ownership responsibilities.
Sell the property
If you financed your timeshare purchase with a loan, make sure you understand the loan’s characteristics. Lenders do not view timeshare loans the same way as home mortgages, which are secured loans that give the lender an asset to repossess if the borrower defaults. Since timeshares quickly depreciate in value, most institutions avoid lending on these properties or offer high-interest, unsecured loans. An unsecured timeshare loan functions like a personal loan, meaning you do not have to pay off the loan balance when you sell the property.
If your resort has its own sales department or homeowners association, start the process by approaching them. They may be able to connect you with a broker or offer advertising space through their website or newsletter. You do not have to sell your timeshare through the resort, however. There are many web-based companies that specialize in timeshare resales and rentals, so browse them to compare services and pricing. Independent brokers or licensed Realtors are an option, although the American Resort Development Association says their fees can approach 30 percent of the sales price.
You may add the existing loan balance to your listed sales price to recoup what you’ve paid, but it’s quite possible the property will have depreciated past the point where you’ll break even. Most timeshares take at least a few months to sell, so be prepared to wait, and consider renting the property during that time as a way to garner some income.
You do not need an appraisal to sell the property. Many brokerage services use a tool called a comparative market analysis to determine a fair sales price based on what other units at your resort are going for. Alternatively, if you wish to avoid broker fees, you could list your property for sale through a local newspaper, or sites like Craigslist or eBay.
Be aware that many timeshare contracts contain a provision called right of first refusal, allowing the resort to accept or refuse a sales offer. If they accept the offer, your deal goes through unscathed. If they refuse, they must purchase the property for the agreed-upon price. This is a profitable business model for the resort as they can intercept any lowball offer and resell to someone else at full value.
The Federal Trade Commission warns timeshare owners to be skeptical of companies that approach you with a sales offer and claim it’ll be easy to sell your property quickly or for a good price. The FTC began cracking down on these scams in 2013. Sellers should question any broker before signing a contract. Check with your state’s attorney general, real estate commission or consumer protection agency to make sure the company is legitimate, and avoid brokers that charge upfront fees. You should only pay after the property is sold.
If your resort has a sales office, they may be willing to negotiate a buyback agreement, although they’re under no obligation to do so. This process is similar to executing a deed in lieu of foreclosure on a home. You’ll need to sign a quit-claim deed that removes your interest in the property. The lender will also need to approve the transaction and will consider your repayment history, remaining loan balance and the resort’s desirability in their decision.
Your lender may also approve a short sale for an amount less than the loan balance. They may recognize that a timeshare has depreciated in value and will look to recoup whatever they can. But even if the lender approves a short sale, the timeshare resort will likely require you to be up to date on maintenance fees before ownership can be transferred.
Another strategy is to hire a timeshare exit company that will negotiate a buyback with the resort. These companies can be costly, however. Again, be skeptical of any company that requires an upfront payment for their services, even if they offer a money-back guarantee should they fail to dissolve your contract.
If the above options fail, a final solution is to stop making payments and walk away from the timeshare. The resort will likely send your account to a collections agency, costing you additional fees and negatively impacting your credit score. But the resort may also be more willing to terminate the contract so they can find a new owner and start collecting income again.
Filing for bankruptcy can achieve the same objective. You will remove the existing debt and avoid any collection efforts, but there are severe credit consequences that can impact you for many years. Before considering bankruptcy, seek legal help to understand the long-term ramifications.