Timesharing is a small but fast-growing sector of the tourism industry.

Though only three percent of Americans currently own a timeshare, that number is rising every year, along with sales. In 2007 sales revenue topped $10.5 billion, up from only $2.7 billion in 1997. Nearly 551,500 timeshare intervals were sold in the United States in 2007, for an average price of $19,216.

Worldwide, it is estimated that 5,400 timeshare resorts exist in nearly 100 countries; in America there are 1,641 resorts representing 180,200 units. Florida, California and South Carolina have the lion’s share of properties, hogging 39 percent of market share.

Though it may be tempting to jump on the timeshare bandwagon, it pays to think before you buy.

Decisions regarding where to buy, how much to spend, and what type of timeshare program is right for you should not be made in a vacuum—nor in the context of a 90-minute high-pressure sales presentation.

So if you’ve ever thought of buying into the timeshare lifestyle, or are just curious about whether it’s right for you, here’s a quick guide to help you master the basics.

THIS AIN’T YOUR GRANDMA’S TIMESHARE

The increase in sales and popularity of timeshares has been accompanied by an explosion in the number and type available.

The term “timeshare” no longer adheres solely to the classic one-week-per-year, condo-in-Waikiki format, which was common a generation ago. It has now expanded to include many permutations of ownership that differ widely in what they offer, but which overlap sometimes.

You can still buy the most basic type of timeshare option—a one-week interval at a deeded property in a single location—but dozens of variations on that theme are available. They include non-deeded ownership, points-based programs and fractional ownership; some timeshares are affiliated with hotel companies such as Disney, Marriott, Wyndham, Ritz-Carlton Club; and some are associated with exchange companies such as RCI and Intervals International, which allow you to swap a week in your “home” property for a week somewhere else.

To further confuse you, the names given to these timeshare plans do not necessarily have a standard definition. One company’s “destination club” may operate on very different principles than another company’s “residence club,” but may be virtually identical to another resort’s “vacation club.”

“Don’t be confused by marketing terms,” says Howard Nusbaum, president and CEO of the American Resort Development Association. “Make sure you do your research and find out exactly what the timeshare involves.”

However, there is one core principle all timeshares have in common: You are buying the right to stay in a condo (or house) in a vacation destination for a certain amount of time.

IS A TIMESHARE RIGHT FOR YOU?

Before you make the decision to buy or not, it makes sense to decide if the concept fits your needs first—or you might end up plunking down a pile of money for something that you may never use.

Nusbaum said that timeshares are a great idea for people who plan their holidays well in advance, and who like the security of knowing that they have a particular type of accommodation waiting for them wherever they go.

For example, if you only have two weeks of vacation per year and want to take your kids somewhere snowy (or beachy) during their school breaks, a timeshare might be a good investment. You get guaranteed pre-paid accommodation in a resort area and residence that—unlike most hotel rooms—allows you to spread out and fix your own meals.

However, if you aren’t willing or able to plan in advance and like to vary your vacations by sometimes going camping or backpacking around exotic locales, maybe a timeshare isn’t such a good investment.

“It can work for some people, but not me,” said Heidi C., a somewhat reluctant member of the Wyndham Vacation Club. “I travel a lot and rarely plan ahead, so I don’t use it a whole lot.”

However, if you think a timeshare will fit your needs, the next step is to narrow down your specific vacation style before you buy to help determine which of the many options is right for you.

“Know how you vacation before you buy,” advises Nusbaum. “Do you want to go back to the same place every year, or float around? Do you want to vacation at the same time every year, or have more flexibility? Do you want to take short trips or travel in big chunks of time? Is it important to be part of a hotel chain?”

TIMESHARES ARE NOT AN INVESTMENT

Before you fork over any money, make sure that you understand that a timeshare is not an investment in real estate—it’s an investment in your future vacations. You should buy one for the use you can get out of it, not for appreciation.

In fact, timeshares lose value as soon as you buy them, the same way a car does as soon as you drive it off the dealer’s lot. The real value lies in what you are getting for your money.

With a car, you are buying the right to drive that vehicle for years without paying rental fees. With a timeshare, you are pre-paying for the right to stay in a resort for a week or two per year, possibly for the rest of your life. A few quick calculations will reveal that, when compared to the cost of renting similar accommodation, timeshares can pay for themselves after about 15 years.

“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,” said Nusbaum.

DEFINITION OF TERMS

Now that you have an idea what the inherent value of a timeshare is, here is a brief summary of some of the terms common to the industry to help you navigate the buying process.

Deeded vs. Non-deeded

A “deeded” timeshare is one where you own the title to a small part of the property, the same as you do with your primary home. Non-deeded, or “right-to-use” timeshares give you the right to use a timeshare for a specified amount of time, the way a lease on an apartment does. There is little difference between these two types of property in terms of the type of vacation experience you’ll have, only in the ease and rights you have when transferring or selling it. Deeded property can be sold or bequeathed to a family member, just like conventional property.

Fixed vs. floating weeks

In a fixed-week system, timeshare owners are guaranteed to be able to stay in the same unit for the same week every year. Floating week systems allow owners the right to use their unit for one week during a pre-specified season. A reservation must be made well in advance to reserve the week.

Fractional Ownership

A fractional ownership arrangement is similar to a standard timeshare in the sense that you are buying the right to stay in a particular property for a certain number of days per year. But, unlike standard timeshares, the number of guaranteed days is higher, the properties are usually more luxurious … and the price tag can be higher.

For example, buying into the Ritz-Carlton Club costs anywhere from the low $100,000s to the high $800,000s, and gives you the right to stay in a luxury home from two to eight weeks a year. Amenities include golf courses, spas, concierge services and five-star restaurants. Properties and weeks can be traded among the various locations, which include Aspen, Colorado and Kapalua Bay, Hawaii.

Fractional ownership is a very small part of the overall timeshare market. It’s popular as an alternative to second home ownership for those who have the money but don’t want the hassle of maintenance or security.

Points

Some companies, like Wyndham, have timeshare programs that allow you to buy points which are redeemable for accommodation, instead of buying a specific property. You will generally still have to pick a “base” property, but you are not locked into staying there—it just acts a proxy for trading purposes.

Points can be used for accommodation in any number of locations, or can be bought or sold to other time-sharers. They have the advantage of letting you stay somewhere in increments of less than a week. Some companies even let you redeem points for dining, cruises, car rental or other vacation amenities.

Like other timeshare programs, points programs will cost you a hefty chunk of money up front, plus monthly or yearly maintenance fees. You can generally pick from amongst different “plans” which vary in the number of points you’re allotted per year, according to price. Points-based timeshares can either be deeded or non-deeded.

Fees

Be mindful of the fees that come with your timeshare program, because they can vary substantially from resort to resort (and company to company) and can add a significant amount to your monthly or yearly expenses. They include maintenance fees, homeowners’ fees, rental fees, trading fees and property taxes (depending on location).
There may even be other “hidden” fees that are not always specified in the initial timeshare presentation, but which show up in the fine print of the contract.

In addition, some resorts may levy a special assessment on owners to recover losses in the event of a natural disaster such as a hurricane. Make sure you know ALL the fees involved with your timeshare, and make sure that you can afford them on an ongoing basis before you sign on the dotted line.

TRADING PROPERTIES

Nowadays few timeshare owners are content to return to the same property year after year. Instead they trade their property for another one that’s either within their resort, or that belongs to an outside entity.

For example, if you’re a member of the Disney Vacation Club, you can either trade within Disney-owned resorts in Key West, Vero Beach or Saratoga Springs (among others), within Disney partners, or within a non-Disney exchange company.

RCI and Intervals are the two major non-resort exchange networks which allow you to trade outside of your timeshare club. They are affiliated with thousands of locations worldwide. There are also independent grass-roots exchange organizations such as www.TimeShareownersCommunity.com that let you further expand your options. RCI charges a reasonable $89 annual fee for membership.

If you haven’t bought a timeshare yet and think you may want to become a trader, keep in mind that some locations have more trade-in value than others.

“A lot of people buy in a place they have no intention of going back to, because they know it has good trading power,” said Susan McGowan, vice president of communications for RCI. “Hawaii will get you more options than if you own in Branson, Missouri. In the end you’ll get to go where you want to go, but not necessarily in peak season. It’s best to be logical in your expectations.”

It is hard to estimate exactly what the trade-in value of any individual property is, especially considering that most of the major timeshare companies have proprietary exchange formulas that add complexity to the system. But as a general rule of thumb, beach-y resort destinations like Florida and Hawaii are most valuable, as long as the resort is not in an overbuilt area.

Though trading sounds like a win-win proposition, there can be a downside. You may have to spend a certain amount of time navigating paperwork and company bureaucracy to complete a swap or join an exchange club. And there are often additional fees and costs involved.

“Going back and forth between Wyndham and their partners is frustrating, time consuming and annoying,” said Heidi C., the reluctant Wyndham owner. “And forget about it if you need to change dates or cancel your exchange. It can be a real hassle.”

RE-SELLING

Some experts say that the best bargains are in the re-sale market. If you don’t mind not being the “first” to buy into a new development, look for a resale.

New timeshares re-sell at discounts of 60 per cent or more off their initial price, with the exception of intervals in highly-sought-after resorts like Disney and certain Marriott properties. These can fetch 80 percent or more of their original value.

But, in most cases, re-sold units hold their value fairly well if re-sold multiple times.

For example, a Hawaii unit that is bought new for $20,000 might only be worth about $5,000-$8,000 as a re-sale. However that same unit re-sold again would likely net the same $5-$8,000.

“By and large timeshare do hold their re-sale value,” said Eric Keifer, owner of TheTimeshareCounselor.com. “Unless a new resort goes in down the street, maintenance fees go up, or a hurricane rips the roof off, it will hold its value.”

Price often depends on the personal circumstances of the buyer and seller, and the laws of supply and demand. Desperate sellers will ask for less, while those who aren’t in a hurry to sell will be in a position to hold out for more.

There are many ways you can buy a re-sale. Though certain real estate brokers specialize in timeshares, most people opt to buy private party through the internet. There are dozens of reputable sites such as Redweek.com, Myresortnetwork.com, and Bidshares.com where you can buy direct from an owner. You can also find hundreds of timeshares on eBay, with some selling for as little as $1.

Now, a $1 timeshare with low fees may sound like a steal, but make sure you know what you are getting yourself into. If you have no desire to stay in a run-down studio unit in a ski town in the middle of summer (and it’s unlikely that anyone would want to trade you for it), then you’ll just be saddled with the task of trying to re-sell it.

So if you are a potential buyer, make sure you find out all the facts about your re-sale before you buy. View all the deed and title documents, learn what the ongoing fees and taxes are, how many days are available and in what season, if it’s fixed-week or floating, and research the trade-in value. Also make sure there are no delinquent maintenance fees, and find out which exchange network the timeshare is affiliated with.

And if you are a seller, be patient. Leifer said the process can take from six months to a year. He also advises sellers to be wary of brokers who offer to sell your timeshare for an upfront fee. It is rarely necessary to list your property with a fee-based broker since it is so easy to list it with a no-fee or low-fee internet broker.

DON’T WORRY, YOU’RE PROTECTED

Though the timeshare industry still has a faint whiff of disreputability around it because of the sins of its past—and because of the often high-pressure tactics employed by sales representatives—buyers are in a much better position nowadays to get good value for money.

“Timeshare has a bad reputation from the 1970s, when there was less regulation,” said Susan McGowan. “But now it is one of the most heavily regulated industries.”

As the timeshare industry has grown, nearly every state and country has passed consumer-protection laws pertaining to the sale and ownership of units to ensure that customers get what they pay for.

“Even Dubai recently signed legislation about timeshare and fractional ownership,” McGowan said. “You have to have a regulated industry so that it doesn’t become unscrupulous.”

In addition, if you find yourself signing on the dotted line during a pull-out-all-the-stops sales blitz—but wish you hadn’t as soon as you walk out the door—you do have recourse. Most states have a “cooling off” period of three to five days post-sale, during which time you are legally permitted to back out of the contract.

There are still occasional reports of scammers who ask ridiculously cheap prices units for units that don’t exist, but these are few and far between nowadays. Remember the old proverb “if it sounds too good to be true, it probably is.”

Work with a well-known, reputable company, and if it’s a lesser-known firm, do some background checking with the BBB or the state attorney general’s office to see if the company has been the subject of complaints or investigations.

And if you do ultimately decide to buy, be an active, involved owner. Considering all the types of timeshares and the variety of options and add-ons available, it’s wise to not only know what you’re buying, but to stay on top of things in order to get the most out of ownership—as you would with any major investment, be it a car or a business.

“The key is to have a great relationship with a sales person,” said Heidi C. “There are tricks and way to maximize your membership, but you have to keep the lines of communication open.”

For more advice on purchasing your timeshare, check out ARDA’s tips at https://www.vacationbetter.org/when-you-purchase

By Karen Elowitt for PeterGreenberg.com.

One option advertised widely is the Great Vacation Club. Find out Is The “Great Vacation Club” Really Great?

If you’re trying to figure out if a timeshare seller is legitimate, check out Scam or Legit? How to ID Credible Travel Web Sites.