To Pay Upfront or Not To Pay?
The controversy over paying “upfront” fees arises primarily because timeshare resale scammers (and semi-scammers) are notorious for charging upfront fees and not delivering on their promises. For that reason, people wanting to sell their timeshare are usually and legitimately advised to NEVER pay an upfront fee.
But contrary to that popular notion, there should have been no problem with paying a fee (or deposit) in advance for those services.
Indeed, it is done all the time for many other services all across the board. But what happened in the timeshare resale business (aside from the outright fraudsters) was that these charges were mostly from companies who were, and continue to be, only in the ‘upfront-fee’ business and for many of these companies that became the sole purpose for their existence. Too many such companies never made, or make, any real effort to sell a timeshare owner’s inventory. Indeed, as state laws began to address this issue, several large companies that for years called themselves “timeshare resale” companies changed their names and/or descriptions to “timeshare listing” companies so as not to fall afoul of new regulations. Make no mistake: They are still in the “upfront fee” business, and any actual resales that happen with such companies are mostly accidental.
Over the years timeshare resale companies have changed the tag (‘name’) for what they call advance fees to include everything from pre-closing costs (allegedly so the timeshare owner doesn’t back out from the alleged buyer) to appraisal fees, title searches, special escrow accounts, deposits, etc. Now, for legal reasons, most simply call them advertising fees, charges, rates, etc.
All resale businesses, legitimate and otherwise, have fixed overhead (costs) to run their companies, the websites and so forth. Because they do, charging an advance fee for advertising purposes is an acceptable business practice to offset legitimate costs. That is simply the way things work!
From an advertising perspective the legitimate resale companies are using the timeshare model in that they can get (e.g.) 1,000 ‘sellers’ to spend $60 each year (until their unit sells/rents) and they now have an annual advertising budget of $60-K to promote their websites and advertise owner’s inventory online, in print ads, etc.
Again, this is an acceptable business practice and any timeshare resale company that charges no more than a hundred dollars (give or take) is not necessarily money foolishly spent by a timeshare owner wanting to ‘list’ their time. This is often much less expensive than an owner going it alone, although a caveat is that such a listing is rarely successful in actually getting your timeshare sold.
Putting It In Perspective
To put that advance advertising fee into perspective when dealing with a legitimate resale company, this is the same process a timeshare owner would follow if they listed their time for sale, rent or trade in the classifieds section of their local newspaper.
In the newspaper system the owner writes up the copy, decides how long the ad is to run, pays the appropriate advance advertising fee (with no guarantee of results) and the paper is published with the ad therein.
Some timeshare resale companies in fact don’t charge anything at all for a listing, while others charge as little as (e.g.) $20 to $50 dollars for a listing or a very modest membership fee to become a member of that organization whereby their members can advertise their time to existing members and other interested parties who may visit the organization’s websites, etc.
Then there are those timeshare resale companies that charge multiple hundreds of dollars for their advertising rates and efforts. Before they are condemned outright, they usually have posted on their websites where they advertise (TV, Radio, National and/or Local newspapers, magazines, etc.) and if they do so and that information is current and can be verified then that, too, is an acceptable business practice.
HOWEVER, the problem is that too many of these companies only claim to advertise their website(s) and the timeshare owners’ inventory in those other venues and although they may be able to point to (e.g.) one newspaper whereby they do have a current ad, the cost of the (usually) three or four line classified relative to what they are charging each (private) timeshare seller/renter in advance can be obscene.
As an example, if a timeshare resale-rental company claims to currently advertise in (e.g.) a regional or national newspaper, etc. and because they are doing so and can prove that one ad is published, they attempt to justify an advance advertising fee of (e.g.) $800 – $1,200 or more.
But, as with the previous example of 1,000 “sellers” this company is generating $800,000 to $1.2 Million each year from timeshare owners, yet that one ad may only be costing them $15-$25K (more or less)!
Is it legitimate? You bet. Is it telling? That depends, in part, on the owner of the timeshare resale company because some are actually more motivated by that advertising fee than they are by working hard and earning commissions from selling owners’ time.
Free listing services are of course always welcomed but so are those timeshare resale companies that charge a very modest advance listing fee and/or charge a commission on the sale or rental of the timeshare owner’s time.
Anything beyond that should most likely be avoided. And before you hand any money over to a timeshare resale or listing company, do your due diligence. You can start by checking out our How to Spot a Scam page, along with our special warning on the Mexico Escrow Fraud schemes.