On the surface, purchasing a timeshare may sound like a great idea. As the name implies, a timeshare involves purchasing an interest in a vacation home or resort that you share with others throughout the year, simplifying the process of annual vacation planning. However, entering into a timeshare agreement may be a bad idea for a number of reasons.
Because others also use your timeshare, availability is limited. You may only have access to your timeshare during one predetermined week during the year, and the terms of the contract may not allow you to change. If an illness, a death in the family, or unexpected business trip occurs during that time, you're pretty much out of luck. Your only hope is to find another owner on short notice who is willing to trade weeks with you, assuming your contract permits this.
The timeshare industry is rife with fast-talking salespeople who paint a rosy picture of a timeshare purchase. You may be dazzled with glossy brochures that present your timeshare as a glorious vacation paradise. If the timeshare is in a faraway location, you might not have the opportunity to visit it before making your purchase. When you finally get there, you could be disappointed with what you find. In the meantime, you've made a long-term financial commitment with little hope for escape.
In general, timeshares make for lousy long-term investments. If you wish to sell your timeshare, expect its fair market value to be much lower than your original purchase price. When you factor in any associated selling costs, the return on your investment will be even less. Beware of hiring a timeshare resale group that promises to sell your unit for a lofty price in return for a fee, as they often fail to deliver. According to the Federal Trade Commission, if you are approached by a reseller, it is wise to be skeptical and to thoroughly vet the individual or company.
While that timeshare in the Poconos may sound like a great idea now, it could be a different story 10 years, or even five years down the road. If you are planning to start a family, you could outgrow the location over time. A job change may require you to relocate across the country, making your timeshare less accessible. There's also a chance that you'll simply tire of vacationing in the mountains and start pining for an annual excursion to the beach instead.
Chris Joseph writes for websites and online publications, covering business and technology. He holds a Bachelor of Science in marketing from York College of Pennsylvania.