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ICM VACATIONS - Buying Tips

 

Type of Timeshare Plans

The two basic types of timesharing plans are deeded or leased. When an ownership interest on a piece of real estate is purchased it is referred to as a deeded plan. In a leased (or non-deeded) plan, the buyer purchases a lease, license, or club membership that entitles them to use of the property for a set number of years for a specific amount of time each year. The price of your unit in both timesharing plans is related to the season and the length of time you want to purchase. Meaning that a winter week in a warm climate is worth more than a summer week in the same location.

Shopping Wisely

The most effective ways to do this are by taking your time and comparison shopping - both of which drive timeshare sales personnel to distraction. They all want you to tour the resort, listen to their presentation and commit to a purchase within an hour and a half to two hours. Some may even offer you special "first day incentives" such as a price discount or an additional premium to purchase immediately following the presentation and tour. Don't fall victim to their pleas unless you are absolutely sure that you want to buy the property on that day. A perfect response is "We want to think about this. If we decide to buy, we'll be back another day." Basically if you are truly serious about buying a vacation-ownership property that you will use and enjoy for many years, don't just squeeze sales tours in around the edges of theme-park visits and other vacation activities.

Pricing

First and foremost, do your research. Should you visit a resort or any other sales office and like the property you see keep in mind that the listed price may not be the final price. Many resale companies tell customers that the property is worth far more than it actually is, sometimes exceeding the price that the resort or developer will sell it for. Like other property few sellers set firm prices meaning most are willing to negotiate. The pricing schedule typically contains enough profit to allow for some flexibility. Obviously, if you express enough interest in the product but are unsure about the price, the salesperson may respond with an immediate reduction in the price. This is called a drop in the industry and you should definitely take advantage of it. Both parties will benefit from a fair price sale.

Likewise, if you are financing your timeshare purchase the terms are just as important as the price. For instance if you want to save on the total amount spent, negotiate a lower rate over a shorter term whereas if you would like to have a lower payment each month then you can work for a higher rate over a longer term.

Finding Bargains

If you are a person that is looking for a great timeshare deal then checking the following places may be useful:

Classified advertising in newspapers, timeshare-related consumer publications and on websites such as ICM Group. Unsold units from less-than-prime locations. For example, if the unit looks out to an interior courtyard or parking lot instead of a golf course or ocean view then the seller should be flexible in negotiating prices for such accommodations. Resorts with resale units available. In the event that the owners' association may be assisting with unit resales or trying to sell timeshares it acquired through foreclosure from owners who failed to pay maintenance fees and property taxes. In some resort areas, independent real-estate brokers sometimes specialize in timeshare resales. Timeshares auctions also may be available at websites such as eBay and Yahoo. Convenience Versus Practicality

Having convenient pre-arranged vacation facilities is one of the main reasons people buy a timeshare property. Before you purchase a property give some serious thought as to whether you'll be able to use a timeshare facility year after year. If your vacation plans sometimes subject to last-minute changes, or vary in length and season each year then it is important that the property has flexible use plans. Also, should you be comparing timeshare plans of units in several locations make sure to find out if the club has enough units to satisfy demand.

Buying as an Investment?

To consider the purchase of a timeshare as an investment is a mistake. Simply because timeshare resales are normally difficult since you may face competition from the resort developer or local real estate agents may not include the timeshare unit with their listings. You should ask if the developer is going to set up a resales office on site once all the timeshares have been sold.

Ownership Costs

Timeshare property total costs include the mortgage payments along with any other additional fees that are involved with use and maintenance of the facility. These would include annual maintenance fees and taxes, closing costs, broker commissions, finance charges and travel costs. Annual maintenance fees can be up to $500 or more and cover the costs of staffing, operating, and maintaining the resort and need to be paid whether you use the unit or not. In case these fees rise, which they can at rates that exceed inflation, make sure to ask if there is a fee cap. When you are evaluating a potential timeshare purchase you should take into account all timeshare costs and compare them to the rental costs for accommodations with similar amenities at the same location for the same time.

Available Discounts

It is important to ask the salesperson for any discounts since often times various discounts incentives and promotions are available. Here is a list of some of the most common discounts used in the industry:

An incentive for buying immediately following the initial presentation, called a "first day" discount. A down payment larger than the standard 10 percent. Paying for the entire property in cash will many times get you a lower price. A quantity discount for buying more than more than one unit-week, or in the case of a vacation club buying more than a set number of points. A discount for electronic funds transfer from your checking account or credit card for monthly payments. A discount for purchasing a resale property. Often if the resort is being built in phases over a period of years some developers will operate a resale as a courtesy to owners who want or need to sell. Keep in mind that your accommodations won't be brand new and may lack certain amenities present in the newer units but may also come with a lower price. A discount for purchasing a new unit-week at a resort approaching sellout. Since the developer has only a scattering of unsold unit-weeks remaining in units, sales become more difficult and in order to move the remaining inventory a developer will often adjust the price.

Exchange Benefits

Exchange programs enable timeshare owners to set up trades with other resort units in different locations for an additional fee. Use caution when trading since they usually cannot be guaranteed and there may be some limits on exchange opportunities. For instance, you may need to make your request far in advance or you may not be able to "trade up" to a better unit even with the additional fee. A good rule is to expect a unit of approximately the same value as your own if you are going to trade.

Rescission Period

Should you change your mind after you have agreed to purchase a property; there is a " rescission period " mandated by state laws. During the recession period you are allowed to cancel a timeshare purchase and are eligible for a full refund. The length of the rescission period and the procedures you must follow to rescind vary from state to state and the resort must honor your decision to rescind if you follow the proper procedures. This does not prevent the sales staff from trying to talk you out of canceling the sale by offering to adjust the deal in response to whatever reasons you express for wanting to rescind. In short, waiting to buy until you're sure is a lot easier than to rescind after changing your mind.

Purchasing a Foreign Timeshare

Purchasing timeshare property outside the U.S. is something to be evaluated carefully because several issues deserve your consideration. To begin with timeshare products in many other parts of the world outside North America are a non-deeded right-to-use lease interest for a set number of years. As long as you understand this aspect the arrangement isn't intrinsically bad. You need to realize that the duration of your purchase has a finite time limit and that you won't actually share in ownership of the resort's real estate. The advantage is that because it is a right-to-use lease, it may be less expensive than a deeded timeshare at a comparable resort somewhere else.