The sale of real estate by dividing it into “timeshare” units has been around for a long while and it is a very lucrative way for developers to sell properties in vacation areas like Mexico, Disney Land, and other prime locations. Buying a timeshare means that you and other people are buying the same property and sharing the property. These shares are normally divided into weeks so they can sell the same place 52 times before it is considered sold out. You end up paying for a portion of the property value, and a common area cost for upkeep of the building and grounds.
Most timeshare’s are sold at a presentation that you get invited to, normally they will offer you a free 3 or 4 day stay at a timeshare property to get you to come to a sale’s meeting. These are good for saving money if you know you will not buy the property and you are willing to go to the presentation you can normally end it in a few minutes. Just tell them you filed bankruptcy and the presentation is over.
The incentives to come vary wildly and that is where the timeshare scams normally start. They may offer you a new car, a boat, two week luxury stay, these are the types of incentives that will get you listening. And once you listen you are probably in trouble, now I am not saying all timeshare’s are illicit but you must be leery of anything anyone is trying to sell you in general.
Westgate Resorts a notorious timeshare company was ordered to pay back 1 million dollars by a Utah court and forced to layoff employees and scale back efforts because they were offered travel vouchers worth about $500 dollars, however when they attempted to use the vouchers they discovered they where all but worthless 1/6th of the supposed price. Westgate was not telling the customers that they where getting a voucher but that they where getting a vacation to Anaheim.
Other timeshare scams involve reselling of timeshare’s and normally you will get a cold call saying they can sell your timeshare, however anyone who “cold calls” with an offer to sell your timeshare is a fraudster just hangup. They will attempt to give themselves credibility by claiming to be a registered company and may even offer you to talk to their lawyers and will probably attempt to fax you a contract with a buyer’s name, these are fraudulent. After they have you on the hook they will say you need to pay them money, it may be for advance legal fees, a security bond, registration of the deed or so on, just get off the phone.
Some incentives will give you a 7 night stay at the resort for a very low price and you will get down after paying the fee, the travel arrangements and then when you get to the presentation you will be told that there is no record of your booking and we are full so you must find somewhere else to stay. These types of attacks are brutal and end up costing people a lot of money.
Sometimes after you pay your “registration fee” the company will go out of business and you will be out of your money. I have heard of people timeshare investing where they are told they can buy a second for a very low fee and sell it to someone else for a profit, they are normally stuck with two timeshare’s.
What you can do to avoid the scam
Never ever buy or sell on the spot, always sleep on any financial transaction and think about the deal and make sure it is right for you, these sales rep want you to make up your mind now and will tell you that the offer is only good for today. If you remember in the 10 Signs of a Scam article we discussed that any offer that is good is not a limited time offer.
Always read the fine print on any offer this includes the incentive offers as they normally include what is really going on, most people get excited and do not read the needed information and end up getting scammed. Also read the contract closely and if you can get an attorney to review it. If you were promised something and it is not in the contract do not sign it because all they have to do is follow the contract. You will not get it.
If the presentation is high pressure just leave, you have the right to leave at any time, stand up and say “Thank you for your time, we are leaving now” and make sure you leave they will attempt to keep you in your seat and argue with them but you have the right to leave and demand that right.
As with any type of transaction with another company ask for references and call them, see if the other owners are happy. However do not weigh your whole conclusion on these people as you may be calling the cell phone of someone in the back corner of the office.
Never buy an investment timeshare as it is very hard to sell a timeshare, there are more timeshare owners trying to sell than timeshare owners trying to buy timeshare’s. Your resale price will probably be 20% to 60% of the original purchase price plus you have commissions you now have to pay. You will not succeed as a timeshare investor there is just not a strong enough market.
{ 2 comments… read them below or add one }
Ever hear of http://www.BocaDelmarmex.com? I have been contacted by phone (having looked at real estate in the past ten years) by what they call AIHG (Atlantic International Holdings Group) with Robin Leach as an endorser, so they say. The web site looks legit; my contact tells me that for $5,000 I would be one of 365 owners (not a user) in a “club.” The resort plans 153 clubs, each of which will have four full home units with pool, etc. and these units will be sold to the public as time shares for $59,000 each which gives that owner a 15-year use. Each club will have it’s own pres., secretary, board of directors, etc. The first club is not yet built and the money from the 365 investors in each club pays for the building of the homes. It sounds a bit suspicious but perhaps this is done on a regular basis? How can one know that the bank to which I would wire the $5,000 really goes toward a legitimate investment? It is HSBC Bank, I believe my contact said. Any tips on this type of potential overseas investment opportunity? I am in the U.S.
P.S. To AIHG “investment opportunity in a resort in Mexico”….no incentives have been offered.