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Questions about Orlando Timeshare Resales?
Q. What is timeshare?
A. Timesharing or vacation ownership is a term that describes a method of use and ownership of a particular property. It normally allows you to use the property for a certain period of time each year. You pay an initial investment for the timeshare and then you will pay a maintenance fee each year for the upkeep of the timeshare.
Q. What are maintenance fees?
A. Maintenance fees are the cost to operate the resort. This fee is divided up amongst all resort owners. A portion of the maintenance fee is to build up reserves to pay for the non-recurring costs like furniture and appliances. A reserve is also typically set up to pay for other capital costs incurred because of physical deterioration. When a developer is still selling in a resort the fees may be subsidized and are subject to increase after the homeowner association takes over the association. Some states regulate how much is kept in reserve for future spending.
Q. How much are maintenance fees?
A. Maintenance fees will vary from $300-$1000. They will vary from resort to resort depending on location, size of unit, amount of amenities etc. There are occasionally special assessments charged to handle a specific problem at a resort that has not been funded.
Q. What is the difference in buying a resale timeshare and buying a “new” developer timeshare week?
A. When you purchase a timeshare from the developer you will be paying for all of the marketing that has been done to sell the timeshare. Buying resale you will generally have a savings of 40% or more. Also, while many hotel timeshare developers include their “hotel rewards” programs when buying in the resale market - some do not. When this is the case, you must decide if the "rewards" part of the program is worth several thousand dollars more to you. Your resale specialist can provide details on which “rewards” programs are included.
Q. What is the difference in a fixed week and a floating week?
A. A fixed week is a set week in a set unit that you will occupy every year. The value of this ownership is that you will know which unit you will be using and where you will be going. If you decide not to use the week you can make it a "floating week" for that year by depositing it into the exchange system. You will pay an exchange fee to do this.
A floating week is determined differently at every resort and you need to make sure if the week is floating the entire year or if there are seasons that it is available. Floating allows you the option of calling to schedule your week without paying a fee. It is still based on availability. If you are not using it at your home resort then you will need to schedule a week with the resort and deposit the week with the exchange company.
A flex week means that your week is fixed unless you call to exchange it. This allows you the priority of using a certain unit but the privilege of exchanging within the resort during a certain period without paying a fee.
Q. What is a point system?
A. The point system allows you to break up your vacationing into 3-4 day vacations. The point system allows you to make better use of your week by vacationing in off season. Every resort that has points has a different program and you should check with your resale specialist about the differences in the point systems. RCI Points are different than the points described above.
Q. What is a lock-off unit?
A. There are two types of lock off units. It is very important to determine which type you are buying. A lock off unit allows you unit to be used for two weeks of vacationing. You may use one week at the resort and exchange one week someplace else. You may use one week and rent out one week. Generally if you own a 2 bedroom lock off you will trade for two one bedroom units. Sometimes the lock off side does not trade through the exchange company. It is important to check with the exchange company to make sure you are buying an exchangeable lock off.
Q. What is the difference in a leased property and a deeded property?
A. A leased property is a right to use and will expire in a certain number of years. Those years can be from 20 to 99. It is important to verify that you can transfer your property if it is a right to use property. A deeded property means that you have a deed for the rest of your life and your heirs will inherit the property.
Q. What fees are involved in buying timeshare?
A. The fees include:
initial purchase of the timeshare, closing costs,
sometimes a membership transfer fee, and annual membership fee with the exchange company.
Q. What is "demand time" in timeshare?
A. Demand times are depicted by the exchange companies in colors. RCI color codes are red, white and blue pertaining to exchanging during certain times of the year for each resort based on how high the demand is for time of year.
Red = Greater Demand
White = Average Demand
Blue = Lesser Demand
For Interval International (II), the same concept applies, but the II colors for the same seasonal demand periods, are Red, Yellow, and Green.
Q. What is an exchange?
A. An exchange is the depositing of your week with an exchange and then the requesting of a week to use in place of the week you are depositing. The exchange company does not have to find someone to use your week before they will give you an exchange. Once you deposit the week you are done with it. It is very important to deposit your week early to have more power with your week. Each exchange company has slightly different rules for exchanging. There is a fee involved in exchanging your week. Additionally, fees will vary depending on whether you are exchanging a RCI or Interval International week; or RCI Points.
Q. Why are prices so low on the timeshare resale market?
A. There are a couple of reasons for this. When your purchase from the developer you are paying the marketing fees for the developer. These are generally around 50% of the sales price. When the unit goes on the resale market the client has hopefully enjoyed the benefit of the timeshare for a few years so he benefits by use but not financially. When you buy a resale you will benefit from the use but you will also benefit financially.
Prices are based on supply and demand. When you have a large resort with several thousand owners there will generally be a number of timeshares on the market. That will keep the prices lower.
Q. How do I select a company to buy a resale timeshare from?
A. You should buy from a licensed real estate broker. If you deal with individual sellers or non-licensed companies you are risking the money that you pay as well as you will have no place to turn if there is a problem later. When you purchase from a non-licensed company that is supposedly working as a for sale by owner company there is no recourse if you have a problem. Additionally, always make sure any money is put into escrow until closing.
Q. What should I watch out for when buying a resale timeshare?
A. You will want to make sure the property is free and clear of all encumbrances. That includes the maintenance fees and taxes are paid. Make sure that all mortgages have been paid. Just as buying residential real estate, a closing attorney, who represents your interest, will provide closing services that assist you in making sure all of the above are satisfied.
Q. Is it necessary to pay an upfront fee when listing a timeshare on the resale market?
A. You should never pay an upfront fee for selling timeshare. You should not work with companies that own advertising companies. Generally their advertising company will tell you your timeshare is worth an inflated price and then sell the same timeshare through their licensed real estate agency for the true value. This is done only to collect an upfront fee from you.
Q. Is an appraisal necessary to sell timeshare?
A. No. As in residential real estate, an appraisal is rarely used in assessing market value. Instead “market comparables” are typically used when assessing the fair market value of a property. Appraisals, in most cases, are just another way of collecting an upfront fee.
Q. Can we take our pets when we timeshare?
A. Not usually. Most resorts do not offer pet friendly timeshare.
Q. What sizes of accommodation are available?
A. Timeshare accommodations are quite varied - sized as small as a hotel room and as large as a 4 bedroom unit.
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