Why are timeshares generally considered a “scam” or “rip-off”?
Do any legitimate timeshares exist where the deal works as advertised?
Generally, Timeshares are talked about in the context of a joke and are rarely taken seriously, but they must have been, or at least to appear to have been, viewed and taken more seriously at some point.
In: Economics
One of the problems is that for a timeshare to be really and truly worth it a lot of rare things need to line up between the seller and the buyer. A house is expensive to buy, expensive to maintain. The demand for vacation time clusters tightly around some limited time ranges. If you own a house or condo or apartment- there are a ton of ways to profit off that ownership. It’s going up in value every year, you can charge a lot just to normally rent it out or use AirBnB or VRBO.
To make it more profitable to sell it as a timeshare, you’re giving up on future sale or rental prices as those go up, and you still have to keep maintaining the place. So the sales price needs to be pretty high, and/or the maintenance prices need to keep going up and up just to make sure you’re not losing money over a simple rental. A long or short term rentals opens it up to a wide market and people could be paying to use it a lot of the year. Timeshare locks it into only the people who buy in and it may be empty a lot of the year. Those few people need to be paying in more than other rental options to make it worth it.
From the buyer’s perspective You need to be really and truly committed to going to the same place every year for a very longtime. You need to be flexible enough with dates that you can work with what’s available. You need to have the up-front capital and patience to break even with what a hotel would have cost many years down the line at best.
So because the numbers and reality won’t work out for most people, timeshare sellers who are scrupulously honest and transparent would have a hard time making money and getting people signed up. And buyers who are thoughtful, logical and realistic are much less likely to want to buy in. And so you get a client base of less logical people, and a seller pool of less scrupulous people and it sort of compounds on itself.
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