Timeshares are tough to sell, even in the best of times. Now a perfect storm of trouble has turned some of those slices of paradise into albatrosses, making the shared vacation properties and their hefty annual fees nearly impossible to unload and breeding a horde of scam artists preying on motivated sellers.
Nearly 8 million people -- about 7 percent of U.S. households -- own a timeshare, which is basically a vacation property owned by many people who take turns using it.
The down economy and the fact that the first generation to buy timeshares some 35 years ago has been retiring means many people are looking to sell. Craigslist, eBay and specialized listing service Redweek are chock-full of offerings.
But how much they're worth is a different issue. One Florida listing service estimates that most timeshares are selling for no more than 10 percent of the original price. Some owners are lucky to get pennies.
"We've never seen the resale market where it is now," said Brian Rogers, head of the Timeshare Users Group, a consumer advocacy group in Jacksonville, Fla., that runs the listing service. Most owners "huff away mad" when told their timeshare has depreciated like a Yugo, he said.
Then there are the scams.
Resale scammers feeding on desperation have run so rampant that the Better Business Bureau last month named timeshare resale swindles one of the top rip-offs of 2010.
Generally, the swindles go like this. In one, someone tells you they have a buyer lined up, just pay a flat fee. In another, some company says they'll take your unwanted timeshare off your hands and sell it for an upfront fee that can be thousands of dollars. Many like to advertise by postcard.
Florida has launched a statewide crackdown on timeshare resale fraud. Its Attorney General's office already has sued 11 companies and has investigations open on at least a dozen more.
Even the top industry group, the American Resort Development Association in Washington D.C., has issued five consumer advisories on resale scams in the past six months. "In a down market they come out of the woodwork," said president and CEO Howard Nusbaum.
Indeed, timeshare sales plunged 35 percent to $6.3 billion in 2009, the latest year for which data are available, according to the association. Sales have dropped 40 percent from the 2007 peak.
Nusbaum blames the current trouble on the recession and credit freeze, as well as the demographics of retiring baby boomers. Not only have cash-strapped consumers cut back on luxuries, but resort developers have found it harder to line up the credit to offer consumers. Most new timeshares are sold directly by resort developers such as Hilton, Marriott, Wyndham and Starwood, who provide their own financing.
"All of those lines kind of collided to kind of make this a little noisier than it used to be," Nusbaum said.
There are just not as many consumer protections in the secondary market, where timeshares get resold, he said. "We're kind of where the used car industry was in 1962," he said.
People have to give up thinking that timeshares are a financial or real estate investment, he added. It's a lifestyle investment, and its real value is the use owners get out of it.