Whether you’re buying or selling a timeshare on the resale market, it is important to be aware that timeshare resale scams exist and to take steps to protect yourself. While no one wants to think they could be taken advantage of, the reality is that these scams are out there, and many of our clients have been victimized by these scams prior to contacting our company.
In the spirit of educating the public, and helping to avoid these unfortunate scenarios that give honest timeshare brokers a bad name, we’ve compiled some key points you need to know in order to avoid becoming entangled with these timeshare resale scams. Let’s take a closer look.
Understanding Your Broker’s Reputation
The first line of defense in preventing a timeshare resale scam, is to research any company you are considering working with thoroughly. This can include verifying their Real Estate licensing in their state of operation, checking online reviews, reviewing their Better Business Bureau rating, and performing an online search to see if past clients are sharing positive or negative experiences.
These precautions can usually avoid a large proportion of the fly-by-night companies, and is especially important if you have been approached by a company, rather than being the party that is reaching out to the broker.
Never Pay Up-Front Listing Fees
For timeshare owners who wish to sell their ownership on the resale market, it’s important to never pay any upfront listing or marketing fees. This is a common scam that involves the company promising the seller that their ownership is worth much more than the current fair market value, then collecting an upfront fee. In this situation, many sellers will never see offers near their asking price, and will not see any forward progress on selling their ownership.
Once the upfront fee has been collected, there is zero incentive for the company to produce results for their client. Any reputable timeshare broker will offer a free listing, and will only be paid their commission when the timeshare is sold. Even then, your broker should be paid from the proceeds of the sale, with no money out of the seller’s pocket.
As a seller, you should never find yourself having to pay your broker directly out of pocket. This one piece of advice alone could avoid approximately 75% of the scams that are currently targeting sellers on the resale market.
Review Contracts Carefully
Whenever you are entering into a Real Estate transaction, it is wise to review any purchase agreements thoroughly before signing. Be sure to read any contracts or agreements that are sent to you in full before signing. Don’t be shy about asking for clarification on anything you do not understand, your timeshare broker should be there to guide you through the process with the heart of a teacher.
Use A Third-Party Closing Company
One simple way to ensure you are protected throughout the timeshare transfer process is to ensure that your broker is using a licensed, bonded and insured closing company that is not affiliated with your broker. The closing company should be a third-party entity that will hold the buyer’s deposits in escrow, confirm the seller’s property matches what is offered in the purchase agreement, and work hand-in-hand with the resort developer to execute and provide any additional documentation needed to transfer the ownership.
Upon receiving a purchase agreement contract, you should be informed of the name, address, and contact information of the closing company that will be used throughout the transfer. We always recommend researching the reputation and licensing of the closing company that will be overseeing the transaction prior to making any deposits to ensure you are in good hands. Whether you’re a buyer or a seller, the use of a closing company is your last line of defense to avoid being victimized by a timeshare resale scam.
Never Use Wire Transfers To Send Money
In most real estate transactions, including timeshare purchases on the resale market, the buyer will be required to place a small deposit into an escrow account that is held with a third-party closing company. For timeshare resale buyers who are sending payment for their deposit, using a credit card to do so can offer a certain amount of fraud protection that is not offered when using a wire transfer service. This also applies to submitting your final payment for the remaining balance that is due based on your contracted purchase price.
Be vigilant, and be ready to walk away from any deal that requires you to pay cash or wire money, especially to another country.
If It’s Too Good To Be True…
Be wary of promises that sound too good to be true. For sellers, timeshare resale scams often involve exaggerated claims about the potential sales price of your ownership, so it is important to investigate these claims before taking any action. It can be important for sellers to start shopping for timeshares on the resale market, just as a resale buyer would, that are a close match to what you own. This can help sellers understand whether or not the projected sales price your timeshare broker is quoting is accurate or realistic.
By following these simple steps, you can protect yourself from timeshare resale scams and ensure that your timeshare resale experience is a positive one. Do not be afraid to ask questions and do your due diligence before entering into any agreements. By taking the time to research, read contracts, use secure payments, and be wary of promises that sound too good to be true, timeshare resale scams can be completely avoided.
Whether you are looking into buying a timeshare resale, or selling your ownership, feel free to contact us today. Our team of Licensed Real Estate Agents have years of specializing in all the name-brand timeshare developers, and will offer a free consultation to answer any questions you may have about the process.
