Little profit in resale of time sharesBy MARK ALBRIGHT, Times Staff Writer
© St. Petersburg Times
published April 14, 2003
People who mistakenly think a time share is an investment that will pay off when it's resold are likely to face a miserable return on a purchase frequently made at credit card interest rates.
"The minute you sign the closing papers, the value of what you bought depreciates to less than half what you paid for it," said Richard Thrawl, a time-share investigative supervisor with the Florida Division of Land Sales, Condominiums and Mobile Homes. "A lot of people don't realize that $14,000 for a time share at 17 percent interest actually doubles what they pay."
About half the price of a new unit is consumed by the cost of selling it in the first place. Sales commissions gobble up to 15 percent of the price. Gift premiums used to gather prospects often cost as much as $500 a head. Only 10 percent of customers who sit through a sales pitch actually buy.
In 2002, the average time-share week sold for $14,200 nationally, according to Ragatz Associates, a Salem, Ore., market research company that tracks the industry. The average unit resold by an owner fetched $5,000.
The Pinellas County property appraiser uses new sales to estimate taxable values of time shares because there are too few comparable sales in the second-hand market.
Nonetheless, dozens of time-share brokers have cropped up, eager to charge fees to help owners sell. RCI, the biggest of the time-share exchanges, set up its own auction site for resales, much to the chagrin of some time-share resort developers. Auction sites are also appearing in places such as eBay.
Regulators say a few brokers demand up to $599 to list a time share, then do little more than post it on a Web site. But the regulators gave up trying to police the action after a Leon County circuit judge ruled time-share resellers need not be licensed because they are only selling advertising.
Judy Ashby, a St. Petersburg bus driver, has been trying to unload the $6,000 time share she bought 11 years ago in Daytona Beach for more than a year. Her travel needs changed once her four kids grew up. But she's stuck paying $500-a-year maintenance fees for a unit she has not used in years.
"We got bored with it," she said. "Dealing with the exchange was a pain and cost even more money. There are cheaper travel deals out there. But after paying this outfit $299 to market my time share a year ago, they never returned any of my phone calls."
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