This is a great twist on a very long standing real estate method. I read about the idea recently and want to pass it on to others. If the original poster can contact me, I’d be very happy to give them credit for the idea.
You want to sell. You would be willing to rent if you can’t sell. However, if you rent, you often have to rent it really cheap to attract those interested in a “great” rental deal (read that as low cost). How can you get a little more cash for the rental and potentially sell your timeshare? Enter the option to buy plan.
First, recognize that you have to separate the cheap renters from those truly interested in buying. Next, do something similar to what the resorts do to get potential customers - give something of value to the potential buyer (just don’t do the give your time away). Finally offer to sell it at a price less than the resort so both parties feel good about the sale. As they say, “The Devil’s in the details.”
Set your fee for rental at about what your annual fees are. I know this won’t attract the low ballers, but it will work with the right renter/buyer. Advertise in places like www.Craigslist.com , local newspapers in the area of your timeshare, local newspapers in VERY large metropolitan areas with people that traditionally go to your resort area, and any other free or very low cost listing location like timeshare users groups, www.RedWeek.com, and similar web sites. Make sure you begin advertising several months before the date of your week.
Your ad should stress the Rent to Own factor, not the cheap rental. Let the reader know they can “Try it before they Buy it.” Let them know your charge is to cover your annual fees so they know up front what to expect if they end up buying. Explain to them, when they contact you, that if they decide to rent it, visit the timeshare without the stress of a sales presentation, have more time than the limit of only a few days as the resorts normally do, and finally decide to buy, all they have to do is check what the resort is selling for and you’ll be willing to sell it to them well below that price. You might even offer to credit their rent as part of the purchase price if they complete the sale.
Here’s a twist on the above suggestion. Talk to the resort in advance and tell them you are planning on sending a friend to stay in your unit. Ask them what they might give you as a referral if you can talk the friend into taking the tour, whether they buy or not. Now when the potential renter contacts you, tell them you can credit them with up to twice the rental cost if they will take the sales tour on one of their days but they don’t have to decide to take that tour until they arrive and see the resort first hand. If they do take the tour, decide to buy, complete the contract with the resort, they will have a few days to rescind the contract and get their money back without penalty. Tell them to call you, fax a copy of the purchase contract to you (or a copy store near you) immediately. You will agree to sell yours to them at a cheaper price. Now, if they are really interested in buying, this will give them the incentive to get their best price and contact you to buy yours instead.
What’s the risk to the buyer? They have already agreed to purchase at the resort’s price. All they are doing is trying to use that deal to get a better deal. Since you really want to sell, there is very little chance you will back out of the deal. The only consideration is timing and financing. Once they send a fax to you of the contract, they have established the purchase price of the option if you have agreed to a $ or % below the resorts best price to them.
If they need to finance the purchase, do a little homework and an Internet search for “Timeshare financing”. There are a few companies that will finance secondary sales. Do this BEFORE you begin trying to rent it and have them ready when the time comes to use them. Find out what their financing requirements are and tailor your sales contract to reflect those requirements.
The Devil details. What you will need is a general contract for someone renting your timeshare. If you don’t know what you’re doing, find a closing company on the Internet. Many of them will already have this service of rental contracting for a nominal fee. It’s worth it to be safe and secure. In addition, you will need a fairly simple Option to Purchase agreement separate from the rental contract. you can often get this from a Realtor in your area as a sample. Essentially all it says it that the Renter will have the option to purchase the timeshare upon completion of the rental contract plus X# days following that for a specific price (can be a % of resort price, $$$ below the resort price, etc. any way you want it worded that makes sense). If you’re going to give them credit for their rental fee, include that as well. Try to keep it as simple as possible. It should be less than 1 page when you’re done. Here’s a sample you can follow. Please remember, I’m not an attorney and if you’re concerned, please seek a legal opinion. I’m sure they will want to add a lot more to the option contract. Make sure there is no specific tie between the two contracts other than as mentioned in this example. Don’t combine the payment on the two contracts.
++++++++++++++++++++++++++++++++++++
Option to Purchase Timeshare
This agreement is by and between (the names that appear on the current timeshare), hereinafter known as Seller, and (the names of the renters wanting this option to purchase), hereinafter known as Buyer.
Buyer wishes to buy and Seller wishes to sell the timeshare described as (legal description as found on your deed) .
Therefore, this option to purchase is made under the following conditions:
1. The option purchase price shall be $1.00 paid by the Buyer to the Seller, which shall not be refunded nor applied as part of the purchase price under any circumstances and shall be forfeit by the Buyer in the event the parties do not complete the purchase transfer of the timeshare.
2. The Buyer shall rent the timeshare during the dates of (Specific dates on the rental contract) according to the rental contract separate from this Option to Purchase.
3. Upon completion of the rental period, the Buyer shall have 30 days to exercise this option or it shall become null and void with forfeiture of the option purchase price by the Buyer.
4. The Timeshare purchase price shall be $____________. (or $________ below the price offered by the Resort to the Buyer in writing, or some % below the Resort price, or some other agreed upon criteria for establishing a sale price. These alternatives in ( ) should replace the initial $_________. Use only one of the choices given here, don’t confuse the issue by multiple pricings.)
5. Seller shall credit the Buyer with the full rental fee paid as part of the purchase price to be credited as down payment. Under no circumstances shall the rental fee be considered anything other than rent unless there is a completion of the purchase from the Seller to the Buyer at the price established above.
6. If financing is required, the Seller shall cooperate fully with the Buyer in their attempt to acquire financing.
6. Closing shall be by an agreed upon closing company experienced in title transfers of timeshares in the area of the timeshare location. (If you’ve established a closing company already, put their name here instead of the general statement.)
No other conditions or terms have been agreed upon except as written herein. Any modification to this contract must be in writing signed by both parties. Any legal action taken as a result of this Option to Purchase shall be governed by (your state) and must be filed in the (your county).
_______________________________________ _____________________
Seller Date
_______________________________________ _____________________
Seller Date
_______________________________________ _____________________
Buyer Date
_______________________________________ _____________________
Buyer Date
++++++++++++++++++++++++++++++++++++
The concept here is to find a person interested in buying at your resort, but wanting to try before they buy. Give them that opportunity plus the ability to buy for less then the resort’s best deal to them. Don’t look for the cheap renters. They seldom want to buy, anyway. If you consider the resort giving a few free days to potential buyers as an indication of your needing to give a full week away free to compete, don’t! Those who take advantage of such offers generally know it advance what their getting and why. Many people would like to try but don’t want the high pressure sales approach. This gives them that option.
Good luck in your endeavor.
Dr. Ken Rich
