10 Tips: Considering a time share? Take steps to protect yourself

Have you ever been intrigued by the idea of buying a time-share unit in a place you love? If so, you’re certainly not alone.

More than 4.4 million U.S. households have been bitten by the “vacation ownership” bug and have purchased time shares, according to the American Resort Development Association. Time-share sales surpassed $10 billion last year.

While this method of vacationing is becoming increasingly popular, there are still pitfalls to avoid. The following tips can help you avoid getting trapped in a time-share nightmare.

1. Don’t go to that time-share presentation. You don’t have to attend one of those notorious sales pitches to learn about time shares. You may be enticed to attend such a presentation because of an offer of a free trip, a TV set or meals with alcohol — which, of course, could impair your judgment. Rather than endure high-pressure sales tactics at such an event, do in-depth research about time shares in the privacy of your own home.

2. Know the difference. Consumers essentially have two kinds of time shares to choose from. With a conventional time share, you pay a purchase price and ongoing maintenance fees for the right to use a unit in a development at pre-planned times. With a vacation interval plan or a vacation club, you use points to book stays at locations around the country or world. Marriott, Hilton, Hyatt and other hotel chains operate such clubs.

3. Know yourself. How likely are you to use a time share year after year? Are your vacation plans sometimes subject to last-minute changes? How much do you genuinely love the place or places where the vacation units are based? You’ll be responsible for the costs of your time share whether you use it or not.

4. Don’t view this as an investment. Like new cars, time shares tend to depreciate quickly — and they’re typically very difficult to resell. As you do your homework, research recent resale values on similar properties to see the lay of the land. View this for what it is: an investment in vacations with your family in a spot or spots you really enjoy.

5. Beware of resale scams. Stay away from people who offer to help you resell your time share for an upfront listing fee. Such sales programs often are fraudulent. Instead, try to sell your time share by listing it with a licensed real estate broker or agent, or by placing an ad in a newsletter or magazine. Or, seek the services of a company that allows you to exchange your time share for a unit in a different area.

6. Say no to financing. If you’re sure you want to pay for a time share, do so up front in cash. Most vacation developments will allow you to finance the purchase, but their interest rates are often exceptionally high. Expect to pay about $15,000 to $20,000 for about 20 years of use. Nicer units often cost more than that.

7. Don’t get gouged. Annual maintenance fees for time shares can range from $300 to $500 and can rise at rates that equal or exceed inflation. Whether you’re paying for a conventional time share or for points through a vacation club, find out whether your plan has a fee cap or an inflation-protection plan.

8. Assess your priorities. How would a time-share purchase affect — or hinder — your other financial goals? Are you on track to save enough for your children’s education and your retirement?

9. Know the drill with unfinished and foreign properties. If you take the risk of buying an undeveloped property, put your money in an escrow account. If you sign a contract outside the United States for a time share in another country, you probably will not be protected by U.S. or state laws.

10. Do your homework. Research the reputations of the time-share seller, developer and management company through the Better Business Bureau. Ask for a copy of the property’s current maintenance budget, and find out what’s done to manage and repair the property. Definitely visit the resort and ask multiple owners about their experiences.

Source: http://today.msnbc.msn.com/id/24357286/ns/today-money/t/dont-get-caught-time-share-nightmare/