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Timeshares: Everything you need to know before buying in

Are timeshares a good investment?
What to know before buying a timeshare 03:33

Timeshares, which allow individuals and families to split ownership of vacation homes, can appear enticing, but almost always come with strings attached as well as hidden red flags.

Fractional ownership models can seem tempting: Buyers effectively purchase rights to use a second home for a given length of time every year, in perpetuity. In this sense, timeshares provide some of the perks of owning a second home without the same hassles and headaches, and at a relative discount, because multiple parties buy in.

However, these agreements come with their own restraints, carry maintenance fees which can rise quickly, and don't have value as investments, like true home ownership does. 

They don't gain value

The Federal Trade Commission has even warned consumers never to enter into "timeshare agreements for their investment value," because timeshares don't appreciate and can be hard to sell.

Other frustrations, timeshare owners say, include not being able to use their residences during the times they want to and struggling to sell or exit the agreements when they no longer wish to own them. 

Maine resident Paula Laverty, a timeshare owner since 2004, has long enjoyed the relatively carefree experience of vacationing at two different properties.

This year, however, she was unable to secure the particular dates in 2024 during which she had hoped to go skiing with her granddaughter.

That's in part, she said, because of the complexities involved in timeshare ownership.

"It is a full-time job to understand all the ins and outs and changes, but it is imperative to do just that," she told CBS MoneyWatch. "You have to have a PhD in timeshares. And if you use the vacation options, depending on your situation, while never a good investment, it can work."

How many people actually own timeshares?

The idea of partial home ownership was conceived in Europe in the 1960s, and timeshare arrangements arrived in the United States roughly a decade later, according to the American Bar Association. They rose in popularity in subsequent decades as a version of second-home ownership that was affordable to those Americans for whom a vacation property would otherwise be out of reach. 

The industry is now worth $8.1 billion, with more than 1,500 timeshare resorts in the U.S., according to the American Resort Development Association (ARDA). Nearly 10 million U.S. households own timeshares, which can also mean seasonal rights to a home within a vacation club with resort-style amenities.

How much do they cost?

Major hotel brands like Hilton Grand Vacations, a Hilton spinoff, Marriott Vacations Worldwide, formerly owned by Marriott International, and Wyndham Destinations, owned by Travel + Leisure Co., all sell timeshares, which are also sometimes called "vacation ownerships."

Typically, interested buyers choose a "home resort," to which they purchase deeded interest in a property. 

Hilton bills its offering as one that "entitles you to all the benefits of owning a vacation home without the responsibilities of traditional home ownership." 

Costs vary based on the size of the vacation home and duration of the stay. According to Hilton, the average purchase price for a new buyer is roughly $22,000.

ARDA says the average cost of a timeshare that a buyer can use for one week a year is $24,140. But that's just to buy in. Owners are also pay annual maintenance fees, which typically run into the thousands of dollars. And, unlike owning a true second home, timeshare owners don't enjoy conveniences like the ability to leave their ski or beach gear in the unit, because so many other parties — who are strangers — also have ownership.

For her timeshare, Laverty staked out two weeks every year at the Marriott Mountainside Vacation club in Park City, Utah, at a cost $76,000. She also purchased one week at the Marriott St. Kitts Vacation Club for roughly $29,000. She said she spends roughly $6,000 a year just to maintain both timeshares — whether she uses them or not. 

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"Hard to predict" assessments

New York Attorney General Letitia James urges consumers to consider additional "annual timesharing costs" and "special assessments" before purchasing timeshares, which are governed by state laws. 

"These assessments are hard to predict and might arise when you least expect them. You will still be responsible for paying for typical vacation costs, such as meals, transportation and miscellaneous expenses," her office said in a statement. 

The FTC also warns consumers that timeshare maintenance fees tend to rise every year, some at rates that exceed inflation. 

Lengthy sales pitches 

Timeshare sellers often target consumers when they're already on vacation and offer incentives like free vacations or other bonuses in exchange for attending lengthy sales pitches. That often involves trying to wear attendees down, so that "by the end of the presentation you're so exhausted that you'll sign anything just to get out of there," the FTC warns.

That's one reason why, depending on state laws and company policy, consumers typically have a five- to seven-day "cooling-off" period during which they can cancel a timeshare contract they might have entered into impulsively. 

The Better Business Bureau has also warned consumers about aggressive sales tactics, highlighting the experience of a woman who signed an agreement in Branson, Missouri, following a grueling five-hour sales pitch. The consumer had no interest in buying a timeshare, but had been offered two free nights at a timeshare resort in exchange for attending a 90-minute presentation

"They talked me into it," she told BBB. "I'm a diabetic. After five hours of talk, talk, talk, talk, talk, I just gave in. I needed something to eat."

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"It's a horrible investment"

For her part, Laverty likes knowing she has a ski vacation locked in every year. Planning a similar trip elsewhere would be more complicated and potentially more costly, she said. She usually trades her week at St. Kitts for a third week at Park City, she told CBS MoneyWatch.

"I would never say it's a good investment. It's a horrible investment because maintenance fees keep going up, but it makes it really easy to go skiing," she said. "I don't have to make any reservations — I'm good to go."

Laverty also said she has run the numbers to determine if it's worth the cost of upkeep. "I keep trying to do the math in my head but, would I get two or three weeks in skiing for what I'm paying? From a standpoint of — I'm on my own, I have to make reservations but I don't have to shop around, I know I'm on the mountain — I think it makes sense," she said. 

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No easy way out

Although it's easy to enter into a timeshare, it's hard to get out of them. 

"There is virtually no resale market for timeshares. Timeshare units can be found selling online for as little as $1, with the seller absorbing many of the closing costs in hopes of having someone else buy their stake," the BBB said. 

There's even an industry dedicated to helping consumers exit their timeshares, which some critics say is problematic in its own right. Exit companies can charge consumers claiming they'll resell their timeshare when in reality, they do little or nothing, according to critics.

"The truth is, the timeshare market is overcrowded, and it can be hard, if not impossible, to sell a timeshare. And no one can guarantee a sale or big returns," the FTC warns. 

In fact, some owners are willing to give away their timeshares to get out of paying annual maintenance fees. On timeshare rental and resale marketplace Red Week, a two-bedroom unit at a vacation club in Kissimmee, Florida, is listed for sale for $0. But it's not free. The catch? Annual maintenance fees are $1,160.

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