Do you own a timeshare property you'd like to sell?
There are legitimate real estate brokers who can help you, but timeshare resales are also fertile ground for scam artists, so you need to be careful.
Timeshare resale fraud became popular in the aftermath of the 2008 credit crisis. After people lost their jobs and maybe their homes and saw their investments fall 50% or more in value, they realized they couldn't afford to keep paying maintenance fees and taxes for their timeshares — and they weren't about to vacation there anyway. So they tried to sell them, often turning to sales agents for help.
It turns out that many of those agents are crooks.
Complaints to the Federal Trade Commission went from 819 in 2009 to 2,182 in 2010 to 6,041 in 2011 — causing the FTC to launch a crackdown on timeshare resale fraud. The FTC and law enforcement agencies have taken 191 actions against fraudulent resales and travel prizes in 28 states; nearly 200 individuals face criminal prosecution.
In Florida alone, 69 people were accused this year of scamming timeshare owners out of more than $14 million, including many victims who are elderly or in financial distress, the FTC said.
Here's how most of the scams work:
Once people find out that you're trying to sell a timeshare (perhaps you post it on a website), an agent contacts you, saying he has an interested buyer — but that you must pay a fee upfront to secure the deal. After you pay, you never hear from the agent again and no buyer materializes. The upfront fees typically range from $300 to $3,400, says the FTC.
Has a crook contacted you? There are lots of warning signs. Watch out if the agent:
- Asks you to pay money before he provides any services.
- Asks you to pay only by cash, wire transfer, money order, certified check or cashier's check.
- Refuses to meet in person or provide you with a business address that you can visit.
- Says you don't need to read lengthy agreements because "it's just a bunch of legalese."
- Claims there is a strong demand for timeshares in your area, enticing you to sell (and pay upfront fees).
- Asks you to give your personal financial information (such as bank account or credit card numbers) over the phone or Internet.
- Says you can walk away from your timeshare simply by transferring it to a third party.
- Says you needn't talk with your family, attorney, accountant or financial advisor.
If you want to sell a timeshare, the FTC offers this advice:
Get everything in writing: Never agree to anything over the telephone or online.
Investigate: Contact the state attorney general's office and consumer protection agency in the state where the seller does business. Ask whether any complaints have been filed against the company, and search online for complaints.
Check for appropriate licensing: Ask whether the reseller's agents are licensed to sell real estate where your timeshare is located. If they are, double-check their claim with that state's real estate commission. Deal only with properly licensed real estate brokers and agents, and ask for references from clients.
Pay only after your unit is sold: Deal only with a firm that collects a fee after the sale is concluded and the transaction closed through a bank or title company.
To file a complaint with the FTC, visit ftc.gov/complaint and click on the Complaint Assistant icon or call 877-FTC-HELP (877-382-4357). And to help avoid being scammed, talk with us before you make any financial decisions. We'll be glad to help.