Timeshare and Federal Reform of the Financial Sector, What Do They Have in Common? December 28, 2010
Posted by John Stephens in : News & Events, Timeshare Resale , trackbackI had a chuckle when I saw an article last week on Barrons.com about an exemption for the timeshare industry in the Dodd-Frank Wall Street Reform and Consumer Protection Act, which was signed into law over the summer. This is the Act that will provide new federal regulations for the financial industry as a result of the economic meltdown and subsequent recession that began in 2008.
According to the article, U.S. Congressman Alan Grayson (D-FL), now an ex-Congressman after losing his re-election bid in November, included a reprieve for the timeshare industry in the Act. He introduced an amendment that exempted the industry from new regulations requiring lenders to verify a prospective borrower’s income and employment status before approving a loan. Since a huge amount of timeshare bought through developers at resorts is sold with financing, such a provision could have been catastrophic for the industry.
Imagine a developer not being able to sell a week to a prospect at the sales table because they could not verify their financial and employment details on the spot. What would happen to the timeshare industry? Thankfully for the developers, they’ll never have to find out due to Grayson’s intervention and exemption of the timeshare industry from these new laws.
The reason I had to laugh was because there is a sector of the industry that operates every day without such financing – it’s called the timeshare resale industry. Timeshare sold on the secondary market is conducted, in the majority of cases, without third-party financing unless the buyer organizes his or her own financing prior to the sale.
People looking to buy timeshare on the timeshare resale market have already done their homework, know what they are looking for and can often take as much time as they need to close the deal. They don’t need anyone dangling a finance carrot over them to make a quick sale. You can find plenty of those deals by clicking here.
Maybe if the amendment had not gone through, the transparency and market forces that dictate prices on the timeshare resale market would have been introduced into the new sale dynamic. Thanks to Grayson, we’ll never know.
Comments»
Hey, I’m cool with buying timeshares on resale. I’ve done it. However, have you ever thought of the consequences if developer/company revenues are slashed. What happens to growth and expansion of resorts and corporations? What about new opportunities to travel to a new resort, place, etc? The timeshare industry continues to evolve and the accommodations are becoming much nicer. There are two sides to every story. Many companies such as Marriott, Wyndham and Hilton are offering discounts and perks on points for vacations as you invest more into the company. And in time it evens the playing field in comparison to resales, especially when the deed is passed on to children. How about listing the cons of buying multiple resale properties?
Not sure what you mean by the cons of buying multiple resale properties? If someone wants to buy multiple properties on the resale market, that’s their choice.
Consumers buying resale know that 50% of a new sale price goes to marketing costs and sales commissions, so my point was that if the new sale price was closer to the actual cost, then perhaps resorts wouldn’t need to rely so much on the financing options to sell their intervals and would have a more market-driven price point.