How timeshare work

Some people see them as the chance of a lifetim­e, ­an opportunity to own a piece of a beautiful resort where they c­an have a dream vacation every y­ear. Others think they’re shady deals to be avoided at all costs. And lots of people sit through the sales pitch just to get the free gifts.

Most of us have either been approached by someone with an offer to buy a timeshare, or we know someone who has. Although they have a reputation as scams, most timeshare deals are genuine, legitimate real-estate offerings. However, that doesn’t necessarily mean they’re a good idea for everyone.

Usually, when you think about buying real estate, you envision an entire piece of property that you own by yourself. You can use it whenever you want and do whatever you want with it. 

A timeshare is a different kind of real-estate purchase. Instead of paying full price for the property and owning it yourself, you pay a share of the price. This share allows you to use the property for a certain period of time every year. The rest of the year, other people who purchased shares get to use the property. How long you get to stay there depends on your share. A 1/52 share will get you one week per year.

There’s really just one kind of property that people only want to use once a year — vacation property. That’s why you’ll find the vast majority of timeshares in vacation hotspots like Florida, Colorado and Mexico. A timeshare provides a nice place to stay while on vacation, so people who tend to return to the same vacation spot year after year are prime candidates for timeshare ownership. They never have to worry about finding accommodations for their annual trip, and the property is maintained for them, although share owners do have to pay maintenance fees.

While a 1/52 share is average, there are smaller shares (1/104, or one week every other year) and larger shares (1/12, which gives you an entire month to use the property each year). Larger shares can usually be split up for use at different times of the year. The specific time of year that a share can be used can affect the price — a share in the middle of prime tourist season will be more expensive. The specific time when your share can be used is scheduled ahead of time, although it may be possible to trade shares with other people at the same resort or even with timeshare holders at other resorts. We’ll discuss timeshare trading in more detail later.

Timeshare prices can vary tremendously based on share size, location and time of year, not to mention all the variables that affect any other real-estate value, ­such as condition of the property and the market for timeshares at the time.

The initial purchase price is not the only cost to consider, however. All timeshare resorts charge share owners annual fees for maintenance, utilities and taxes.

What is a timeshare?

The word “timeshare” has grown over the decades to include a wide variety of vacation products and plans. Also known as “vacation ownership” “holiday ownership” and “interval ownership”, its umbrella covers traditional deeded timeshare ownership, fractional ownership, private residence clubs, destination clubs, points clubs, and more. Some would even broaden the term further to include campground memberships and the “condo hotel” concept, in which a condo is purchased outright but the owner is only allowed to use it for a specific periods of time and it is rented by a hotel management company for the remainder of the time.

The purpose of timeshare is to gain all the benefits of owning your own holiday home but only for the weeks that you are actually going to use. You are effectively purchasing the same unit in the same week every year for which you then have exclusive use. Timeshare ownership removes all the issues that arise with owning a holiday home such as the maintenance and yearly costs that you can incur no matter how much or little you use your holiday home for example television licence, rates etc. By purchasing a timeshare you are sharing these costs with 50 other owners with the added benefit of exclusive all year round use of the leisure facilities.

Each share repesents one week of vacation. Each owner is entitled to ownership rights and privileges of the shares that they purchased. Price is usually determined by the resort’s location, size of the unit and the time of year purchased by a new owner, and owners pay an annual maintenance fee for the upkeep of the property.

This system makes vacation home ownership possible for many people who cannot afford a second home or who otherwise would not be able to enjoy such resort facilities.

It is important to remember that purchasing timeshare should never be viewed as a financial investment with the expectation of gaining a profit in either reselling it or renting it to someone else. Timeshare is an investment in lifestyle, in future holidays, in family time together, and when viewed that way it can be a good investment indeed.


1. What you get

You are purchasing the privilege to use a luxury accommodation in a resort or hotel, usually for one week per year. You get the comfort and convenience of a vacation home with the luxury of a resort,

2. What you’ll pay

The upfront price is based on location, unit size (from a studio to three bedrooms), amenities and the season you select.

3. Same time, same place?

With fixed ownership, you’re locked in to a specific week each year. With floating ownership, which is more common, you can reserve your vacation time on a first-come, first-served basis. Depending on the “exchange value”, the desirability of your timeshare — you may be able to switch to another venue within your home resort’s portfolio of properties, or you may be able to trade through an exchange company.

4. Buy for less.

If you buy a timeshare from the resort, you may be offered incentives (say, free membership in an exchange company), and you may enjoy greater consumer protections. But if you buy from a current owner, you’ll likely pay one-third to half as much, or even less.

5. What happens if you want out?

The industry is better regulated than it was, say, a decade ago. Most states allow you to cancel a timeshare contract, usually within five to seven days. To sell a timeshare, your best bet is to list it with a reputable resale broker

6. Bottom line

Timesharing is almost certainly cheaper, with fewer hassles (in terms of property management) and more flexibility, than buying a vacation home or condo. But don’t think of it as an investment; a timeshare doesn’t appreciate. The value lies in using it, and if you’re lucky it may have some residual value when you sell it.

Buying a timeshare

For the right people timesharing can be a great way to save money and ensure a high standard of holiday accommodation for years to come. However, it is vital that before you make any decision you understand all your options fully as a wrong move could be very costly indeed.


Take your time when buying!

No exceptions – never sign anything abroad! The fact that all timeshare transactions in the EU require a cooling off period by law should mean that salespeople should be more than happy for you to take home any contract or paperwork before signing it. However, rarely will you find a company who is that supremely confident in their product that they’ll want you to do that. More often than not you may feel pressurised to make a decision on the day, offered a “special” discount or be lured with some kind of upgrade for the rest of your holiday abroad. It is not always easy to do this, but resist!

Choosing The Right Timeshare for You

It is all too easy to fall in love with a timeshare resort which is testament to what great holidays you can enjoy if you get your purchase right. That said, it pays to approach this purchase as pragmatically as possible as whilst the resort you have visited may have stole your heart, you would probably prefer it left your bank balance as intact as possible! The better matched your eventual purchase is to your needs then the more likely you are to have some fantastic, great value holidays. A lot of timeshare negativity is a result of people buying (or rather being sold) a product which was not fit for their needs.

To visit or Exchange?

If there is a particular resort you want to regularly visit then don’t rely on exchanging into that resort via RCI or II and provided the resort’s credibility stacks up buy at the resort. Most resorts can be found on the timeshare resale market although the more particular your request, the less likely you’ll find it on the resale market. If you aren’t so much a creature of habit and imagine yourself exchanging to other resorts every year then you may want to look at RCI points.

Family Size

There is a big difference between how timeshare can work for couples and how it works for families so your stage in life is also an important consideration. If you have children at the beginning of their school years then make sure you buy a product that guarantees you can book your holidays during the peak periods Don’t forget, timeshare ownership is not a financial investment but more a holidaying investment. You may only recieve a small percentage of your initial outlay when it comes to sell although losses should be less if you buy from the resale market. Still, it is not a financial investment by any means.