Before you start reading this chapter, you need to read Chapter 14 first. Much of the same information in that chapter applies to this chapter, so I will not repeat it here.
Setting the Price
Read the Set the Price section in Chapter 14. For the purpose of selling, you need to research and arrive at fair market value (FMV).
The most likely price at which you will sell your timeshare is the FMV. You may want to set the price just a little bit higher in order to give yourself a little bit of negotiating room. If you’re too much higher, however, you’ll scare away a good percentage of the potential buyers. They will think you’re an unreasonable seller; and there are a huge number of unreasonable sellers hoping to sell their timeshare for a price well above the FMV.
It’s tough to acknowledge, but many timeshares typically sell on the resale market for 5%–25% of their original purchase price from the resort developer. Consequently, for a timeshare that sold originally for $20,000, you can expect to get at most $4,000 to $5,000 for it in a normal market; and that assumes it’s a high-season week at a good resort and is free and clear.
For several years after the 2008 financial crash, the timeshare market was very depressed, and you could buy otherwise valuable timeshares for $50 or $100. For low-season timeshares, that may continue to be the case forever. Indeed, a new industry sprung up offering to take people’s timeshares off their hands, not for a purchase price, but for a fee as high as $4,000. In other words, if you could not sell your timeshare, you had to pay somebody to take it from you. During that era, determining a FMV was practically impossible.
The bottom line is, expect to be realistic when you sell your timeshare. You need to know what the value is, even if the value is zero or less. Otherwise you’re just wasting your time making an effort to sell.
Having said above that offering your timeshare at a price above FMV is not going to be productive, the opposite also has its drawback. If you list your timeshare at below FMV out of ignorance, you are cheating yourself. Someone may come along take advantage of your generous offer. Or they will be suspicious of your offer and will decline to treat it seriously. Accordingly, knowing the FMV is perhaps the best technique in negotiating to sell your timeshare.
Examine Your Motives
Why are you selling your timeshare? Timeshares are hard to sell, and often it takes a very long time to find a buyer. If you’re not highly motivated, you probably will not be successful. If you are highly motivated to sell, you have to ask yourself what you will take to get rid of the timeshare (and its obligations). It’s better to do this before you get an offer so that you can negotiate more quickly, rationally, and effectively.
Provide Complete Information
Buyers make decisions based upon the information they get. If you provide sketchy information, you’re much less likely to make a sale. Therefore, you need to provide as large a volume of information as possible in your advertising. That will bring you more prospects. Once you start negotiating with someone, you need to be ready to provide complete backup information so that no question about the resort, the timeshare, or the details of the transaction are left unanswered. That will take research on your part even after visiting and enjoying your timeshare resort for several years.
Buyers are scared to death of private sellers because they‘re not sure how they can be protected in closing the deal. Indeed, the only way buyers can be protected is to close the timeshare sale with a timeshare closing firm that typically also acts as an escrow agent. When the buyer understands that his or her funds for the purchase will not be delivered to the seller until the seller signs a deed (or bill of sale), records it, and signs and delivers other requisite documents, he or she will feel safe to make a purchase. As a basic sales tool, you need to provide all this information ahead of time.
It could be that the buyer doesn’t trust you to pick the closing firm (escrow agent). Don’t be offended. Have a list of other timeshare closing firms that you can recommend to the buyer. Let the buyer choose his or her own closing firm so long as it’s legitimate and specializes in timeshare closings.
Give the Bad News
Always give the seller the bad news about your timeshare. That will give you more credibility and eliminate a potential buyer’s feeling that he is or she has been misled. Whatever the bad news, the buyer is likely to find out sooner or later before the transaction is complete.
For instance, the bad news may be that the resort instead of being located at the resort attraction (beach, amusement park, historic site, ski slope, etc.), it’s located three miles away. That means the buyer will need to have a car to use the timeshare. That bad news is easy to overcome if the buyer was planning on using a car.
If the buyer was planning on flying in and using the airport shuttle to get to the timeshare for a week without a car, that may be a deal killer. It’s better to kill the deal upfront and not waste everybody’s time than to have such a fact pop up later and cause egregious disagreement. Keep in mind that most timeshare resorts have at least a few negatives. Use your common sense. What may not be a negative to you may be a negative to a potential buyer.
The clever salesperson will turn negatives into positives. For instance, you could point out that a timeshare that’s three miles away from the local attraction (e.g., beach) is less expensive than one located at the attraction.
Accept Personal Property
If you will accept personal property in lieu of cash for your timeshare, don’t be afraid to advertise it. The most common personal property is a note. In essence, you’ll be providing an owner carryback loan for the buyer. The note can be for the full purchase price or for just a portion of the purchase price plus a cash down payment.
Don’t secure the note with a mortgage. It’s extra expense, and you’ll probably never foreclose on the mortgage (too expensive), even if the buyer defaults. If you sell your timeshare, you don’t want it back. It may be easier and cheaper to collect on a note in default (e.g., through a collection agency) than to foreclose on a mortgage. On the other hand, if the buyer has paid you a lot of money for an expensive timeshare, you’ll want to secure the note with a mortgage.
Timeshares are difficult to sell even when the market is normal. What if the buyer offers you a car for your timeshare.? First, the car will have to be in acceptable condition. Second, it will have to be of acceptable value. Third, you’ll have to take the time and effort to dispose of the car. You might give it to a relative or friend, but chances are you’ll sell it locally. Cars are generally easier to sell then timeshares. This could be a good deal for both parties. Read Chapter 5 for details on accepting personal property in payment for your timeshare.
Selling Your Timeshare on a Lease-Option
In the right situation in negotiation with a potential buyer, you may want to propose that he or she lease property for a period of time.
This gives someone reluctant to buy the timeshare an opportunity to try it out for three years (or whatever period). You are relieved of the annual maintenance fees for three years and depending upon your negotiations may even make a little bit of money in addition. The lease also contains an option (not an obligation) to buy the timeshare at today’s FMV.
If someone leases the timeshare and falls in love with it, he or she may eventually buy it from you at FMV. If the FMV of the timeshare goes down during the term of the lease (it happens), the buyer is unlikely to go through with the sale. If the FMV of the timeshare goes up, it’s the buyer’s reward. You may also want to give the buyer a little incentive by accepting a certain percentage of the lease payments as a credit toward the purchase price.
Summary
This chapter together with Chapter 14 provide you with some negotiation basics. Therefore, read Chapter 14 too before negotiating.
