Posted on: Thursday, June 23, 2005

THE COLOR OF MONEY
Consider your resources before joining time-share boom

By Michelle Singletary

One of the things many people can expect when they take their vacations is a pitch to buy a time-share.

A time-share is a way for regular working folks to have a piece of a vacation home, albeit one week at a time.

U.S. time-share sales continue to climb. In 2004 time-share sales grew 21.4 percent to $7.87 billion, according to the American Resort Development Association, a Washington, D.C.-based trade association representing the vacation ownership and resort development industries. Approximately 1,600 U.S. time-share resorts serve 3.87 million households, according to the association.

In 2004, a two-bedroom unit sold at an average price of $16,977. Studio/hotel units sold at an average price of $6,262. One-bedroom units sold for $10,821, while three-bedroom and larger units sold for an average of $24,166.

I know how many people get persuaded that a time-share is right for them. A sales person shows them around a resort where children are laughing and splashing in beautifully maintained pools. The adults are sipping chilled drinks with little umbrellas in them.

But before you buy into this vacation dream, ask yourself if this is something you can afford. In the interest of full and fair disclosure, I own three time-share weeks. I've enjoyed the ability to stay in five-star vacation resorts for several years now.

But I didn't buy because it was an investment. Time-shares are basically buying future vacations today. In fact, don't even think of this purchase as an investment.

For years, the time-share market suffered from illegal sales practices and poorly run developments. However, with the entry in the time-share market of major chains such as Marriott, Sheraton, Hilton and Starwood, the industry's image and resorts have improved.

Before buying a time-share, consider these tips from the American Resort Development Association:

• Visit before you buy. Talk to existing owners about their ownership experience. Many time-share resorts offer discounted mini-vacations that will give you a chance to check out the place.

• Check out the developer. Call your local Better Business Bureau or check with state consumer authorities to see if any complaints have been lodged against the time-share company.

• Read all documents carefully. Because there are so many options, be sure you understand exactly what you are buying.

• Take a timeout before you buy a time-share. Study the paperwork outside of the sales presentation. You may even want to wait until after your visit to buy so you will no longer be tempted by that sun-drenched beach.

If, after you've taken all these precautions, you think a time-share is right for you, here are some ownership options, according to the Federal Trade Commission:

• Deeded Time-Share. Your interest in the time-share is legally considered real property. Much like a house, it's yours to sell, use or give away during your allotted periods. In this case, you will likely have an annual maintenance fee.

• Interval Option. This is where a developer owns the resort. You purchase the right to use a week for a specific number of years — typically between 10 and 50 years.

• Fixed or Floating Time. In a fixed time option, you purchase the unit for use within a certain season of the year.

A time-share can be a great way to see the world. But make no mistake about it — this is a luxury. Don't even think about buying a time-share if you don't have your financial life together.