Timeshares 101

"Timeshare" used to be a dirty word, and it still leaves a bad taste in many mouths. Say the word to some folks and they begin conjuring up images of a group of people who could make used car salespeople look like amateurs.

Time has changed the timeshare industry, softened its edges and blurred its old, shyster image.

What is a Timeshare?

The word "timeshare" describes a person's right to use a vacation property during a specified block of time each year. The property is typically a condo in a resort complex and your access may be as part owner or on a lease-type basis, depending on the contract. Timeshare units typically feature "at-home" amenities, such as fully furnished kitchens and laundry rooms, and they range in size from studios to multi-bedroom units.

Types of Timeshares

Timeshare companies offer variations when it comes to access. The different programs include:

• The choice of vacationing the same week each year.
• A more flexible plan wherein you reserve the particular time slot you want on an annual basis.
• Choosing a different location every year.

Advantages of Owning a Timeshare

The biggest advantage of a timeshare over a traditional vacation home is that you pay only for the time you use it. Other advantages include:

• Maintenance: There is none. Your maintenance fee pays for all the upkeep.

• Ease of planning: When you own a timeshare, you always know when you'll be vacationing and where.

• Vacations are less expensive: When you use the property's kitchen, you'll save the money that you would have otherwise spent eating in restaurants.

• Flexibility: Use the timeshare company's exchange program to swap locations with other owners. This way you can visit a new place each time you vacation.

Disadvantages of Owning a Timeshare

• Fees: Timeshare maintenance fees can run up to $500 a month and frequently rise 4 percent every year.

• Value: Timeshares don't hold their resale value like traditional residential real estate purchases.

• Financial: Paying upfront for your vacation and paying fees on time may be challenging in a bad economy.

• Trading with others: To trade vacations with other timeshare owners you'll need an attractive location and time period. If you don't, you may find it impossible to locate someone willing to trade with you.

What to Consider When Shopping for a Timeshare

Timeshare sales people are really good at what they do. They may offer you a free night at the resort, and all you have to do is attend their tour or presentation. The pressure to buy is subtle yet high. Resist their urgency and resist the temptation to buy immediately because it's a "limited-time offer." Think before you sign on the dotted line. The Federal Trade Commission suggests that you consider the following:

• Ask questions. While the salespeople should be able to answer your questions, talk to current owners as well. How often do the maintenance fees increase? Are there supplemental fees that you need to know about? How well managed is the resort?

• Check the timeshare company's record with the Better Business Bureau and the attorney general of the state in which it's located.

• Have your attorney go over the contract before you sign it.

Remember that the cost of the timeshare is higher than the amount offered by the salesperson. Add to that figure the interest, taxes and maintenance fees. Oh, and don't forget to factor in the cost of airfare to and from your timeshare.

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