Would you buy a car without first test driving it? Probably not. So how could you pay thousands of dollars on something you’ll keep for many many years without seeing how it performs? That’s the theory behind renting a timeshare before you buy it. There are limitations to this because brand new timeshares developments won’t have any owners for you to rent from, or the new owners won’t be tired of it yet and won’t be renting it out. However, if you have your eye out on a “used” timeshare, you could rent it before you consider buying it for good.

Where do you go to rent? If you have a specific place in mind, simply call up the management office and ask if there are any rentals available. If you don’t have a specific place in mind, you probably won’t want to rent it for the sake of test trying it out. You can rent a hotel or something in the geographic region to see if that place is for you because timeshare experiences can vary greatly. There’s no sense test trying a timeshare you won’t be getting (unless you simply want to take advantage of favorable rates).

What to look for? Now that you’re test driving a timeshare, take great pains to look at the little things on the property. Is there an adequate level of maintenance? Are the paths kept clean, trash bins emptied, grilling areas clear and pools properly maintained? You’ll be paying a lot of money each year for maintenance, be sure to see that the property is kept in good condition with your hard earned money. Check the rooms for proper maintenance as well, are the showers, sinks, and toilets in good working condition? If you have a kitchen, are all the appliances working properly? How about the windows and sliding doors? Be meticulous about everything. You’ll be writing a check each year for maintenance and it will help your mind to know that it’s going towards maintenance, not some guy sitting around in an office sucking up air conditioning.

So, before you buy a timeshare, test drive it first if you can.

So, what’s the catch? (always be asking what’s the catch!) The catch is that you often need to sit in a multi-hour long sales pitch where the salesperson will be extreme aggressive and throw every single sales tactic at you in an attempt to get you to buy. They need to close 10-20% of all their leads in order to stay in the business, so they’ll try everything. And, if you’re human, chances are you will be tempted at one point during the presentation… and 10-20% of you will pull the trigger and buy a timeshare. That’s what they’re banking on.

Some words of warning about scamming, it does still happen. Don’t go to a timeshare presentation if the giveaway seems too incredible, like a free car or boat or something else. Don’t go to a timeshare presentation if the giveaway requires you to put down a deposit, say for hotel rooms or flights. Don’t agree to do anything if you don’t feel 100% comfortable.

If it sounds too good to be true, it is.

Let us compare the cost of owning a Disney Vacation Club membership versus all the other options available to you if you were to stay at a resort.

The example used at MouseSavers is this one:
Let’s say you buy 160 points at Saratoga Springs Resort. For purposes of this example, 120 points would cover 11 nights of vacation in a Saratoga Springs Studio unit: a 6-night stay (including one weekend night) in Magic Season and a 5-night stay (including one weekend night) in Choice season.

• Your dues for 160 Saratoga Springs Resort points cost $659 in 2007. (This ignores the buy-in cost of $16,640 and the associated opportunity cost.)
• If you rented points from an owner to stay in a Saratoga Springs studio for the same dates at $11 a point, it would cost you $1760.
• Maybe you’d be just as happy staying in the least expensive Disney Deluxe hotel room, and you’re able to get a modest discount on the hotel room. If you stayed at Wilderness Lodge in Regular Season with a 10% discount, 11 nights would cost you $2925.21 with tax in 2007.
• If you paid the full “rack rate” charged by Disney to stay in a Saratoga Springs studio for 11 nights in Regular season, it would cost you $3789.89 with tax in 2007.

The takeaway here is that the difference between a typical discounted rate, of $3000 for the Wilderness Lodge, is far more than the annual dues of $659 if you owned membership in the Disney Vacation Club. However, even if you factor in the opportunity cost and the fixed membership fee, you’re still looking at savings. So why doesn’t everyone do this?

Not everyone is planning on visiting Disney for eleven days each year. If you were, then the Disney Vacation Club is a perfect choice, much like many other timeshares (especially if you purchase on the secondary market), for the Disney-phile.

So, the lesson here is that if you are going to visit Disney every year like this guy, then timeshares and vacation clubs is your best bet. If you don’t plan on going every year, you could always rent points from an owner and get a big discount!

So, if you leave with only one thought, it should be that you need to perform your due diligence when it comes to the decision to buy timeshares. There is no right or wrong answer, simply an informed decision that only you can make.

The main components to TCO for a timeshare are:

• Opportunity cost
• Annual or maintenance fees
• Usage fees
• Exchange fees
• Exchange club membership fees

Opportunity cost refers to the second best alternative for your money. For example, if you pay $5,000 for a timeshare, that’s $5,000 you don’t have sitting in an investment account earning a return on your money. Your opportunity cost is the income you would’ve earned from that investment.

Annual or maintenance fees are those fees you pay to the timeshare for the upkeep of your room.

Usage fees are those fees you pay when you use your timeshare.

Exchange fees are those fees you pay when you exchange your timeshare at the exchange company’s spacebank. We assume that you’ll do this every other year (or none at all) in the example below.

Exchange club membership fees are the fees you pay for the ability to exchange your time any year you’d like.

Total cost of ownership:

• $800 - 10% of $8,000 purchase price of the timeshare.
• $200 - annual and maintenance fees.
• $100 - usage fees.
• $80 - exchange club membership.
• $60 - exchange fees, every two years.

Total cost: $1,240

How does this drive the purchase price? It has to do with the opportunity cost. As you can see, that’s the biggest driver of the price (your annual/maintenance fees may be higher than $200 a year!), so you should use this metric to drive your purchasing decision.

Brand new resort and you want a spot. This is the number one reason people purchase a timeshare directly from a developer. If you can get a coveted timeshare on the secondary market, that’s wonderful because it’ll be a much better deal. However, if a resort is brand new, you won’t see any timeshares on the market because there simply hasn’t been enough time. Now, is that resort really all its cracked up to be and worth the demand? That’s for you to decide.

Very specific requirements. If you’re looking for a specific week in the year in a specific area, you might have to go to a developer simply because you may not find such a deal on the secondary market. The resale market will have plenty of supply, but depending on how specific your needs are, you may not be able to find something you want.

Bonus offers or amenities. Sometimes developers will offer incentives that you can’t get on the secondary market, such as bonus exchange weeks for a set number of years or bonus points available through some other program. Sometimes hotel companies offer hotel points in addition to the timeshare so you get a few hotel stays out of it as well.

Comfort. As with any resale market, there are unscrupulous characters trying to pull a fast one on an unsuspecting buyer to turn a quick profit. It’s a problem in any resale market of any car, be it timeshares or cars or houses, and sometimes people aren’t comfortable buying on the secondary market. This is a good, albeit expensive, reason to go with a developer sale rather than the resale market.

With a used car, you might be concerned that the car wasn’t properly operated, that it wasn’t maintained, or that it has hidden damage you don’t know about. With a used timeshare, you have none of those fears. An annual maintenance fee ensures the resort is maintained to the owner’s liking, that any damage is repaired quickly (so the room can be given to another timeshare owner), and everything is on the up and up.

The only thing you don’t get, when buying on the secondary market, is the opportunity to pay the exorbitant marketing and sales fees! So, where should you go if you want to buy a used timeshare?

• Resort Office: If you have a particular resort in mind, give the resort’s management a call. They should have information about any timeshares up for sale or they may be able to contact their owners to see if anyone has been considering selling. Dealing with the resort management puts you at a disadvantage because you often won’t get many data points to help you determine the fair price.
• Timeshare Resale Broker: There are probably as many timeshare resellers as there are sellers, so locating a timeshare reseller in the area you want to buy a timeshare will be helpful. The advantage of a broker is that they can usually give you a bunch of different options that will help you gauge the average prices.
• Internet: There are plenty of timeshare resellers and bulletin boards on the Internet, Google is your friend!

Those three are probably the best places to look but you can also try online auctions, Craigslist in the area, or even the local newspaper. I think you can save yourself a lot of searching time by going with the Internet or a broker.

You can buy timeshares in one of two ways: developer sales and the resale market. If you have no stomach to read the whole article, my takeaway tip is to always buy from the resale market.

Developer Sales

Developer sales are those “preview tours” or “timeshare pitches” those salespeople always try to get you signed up and registered for. They will give you tickets to shows, free meals, even straight up cash to get your but in the seat for a timeshare presentation. The old stereotype of a fly-by-night operation is just that, a stereotype, now developers run the full gamut from shady little companies to large resort firms like Marriot and Disney. Timeshares are not scams, but they are opportunistic.

Timeshare sales and marketing (all those freebies!) can account for at least 50% of a developer’s sale price. That’s right, if they quote you a price for a timeshare, you can count on around half of that paying for sales and marketing, not the unit! That is why buying from the developer is always a bad idea.

Resale Market

Like any other property, you can sell your timeshare (or your right to use it, in right to use ownership types) so the resale market is a great way to purchase a timeshare on the cheap. This isn’t like your home, chances are you can only get a fraction of the purchase price if you ever decide to sell your timeshare because such a large amount goes towards marketing and sales. You can usually get a timeshare for its actual value, which is 50% of the sale price (and you thought cars depreciated quickly!).

Like home sales, there is no clearinghouse for the sale of timeshares and thus no “price list” to help guide you as to how much a particular property is worth. There are two resources you can count on if you want to try to figure out how much a property is worth: real estate agents who may deal with timeshares in the region and the internet.

Direct Exchange

This is the simplest way possible, you just find a timeshare owner in the location you want to visit and you swap their week for your week. All you do is tell your respective resort management offices that you’re reserving a week for someone else. It’s the same process you go through when you give your week away to a friend or relative, you just make the reservation in their name.

Vacation Club

You don’t actually have to do much of anything except work it out with the Vacation Club management. Since they own all the resorts, you simply trade for similarly valued weeks at other locations. Obviously this only works if you’re actually in a Vacation Club, otherwise you’re left to option 3…

Timeshare Exchange Company

This is, now, the most common way to do an exchange. You deposit your week with the exchange company into their “space bank” and then select from a list of available inventory. The availability inventory will only include those weeks that the exchange company considers comparable to the weeks you’ve deposited. There is almost always a fee associated with exchanges.

Since the club membership is a right to use, you can sell, donate, give away your membership just as with a one-resort timeshare and the differentiator is the type of membership. The more expensive the membership, the more benefits and access you get.

Vacation Clubs can get very complicated in terms of ownership when you get down to the nitty gritty, so you’ll want to review the documentation very closely. For example, with smaller vacation clubs you may actually own a deed much like a typical timeshare.

Disney Vacation Club

The Disney Vacation Club is a prime example of a vacation club where you purchase a membership and then can use your time at a multitude of locations, not just Disney locations (they claim 500 on their website), even cruises. Another strength of vacation clubs, especially if they are affiliated with a big company such as Disney, is that they can offer amenities not typically available through your regular timeshares. For example, Disney offers ExtraMagic hours where you can go into their theme parks an hour early or stay up to three hours later, guest transportation, Disney service, and package delivery (in fairness, these are offered to all guests of Disney resorts).