Timeshares (part 2): Get to know the lingo

Recently, I wrote about researching a good timeshare deal. Today, I’d like to examine the top buying mistakes, along with some of the timeshare variations available in the marketplace. This will help you get a better idea of what timeshare would best suit your needs.

What not to buy

The easiest way to avoid a timeshare dud is to follow the advice that was given to me: never buy a timeshare you don’t really want in the hope you can exchange it.

The key to getting the maximum value out of a timeshare, says one veteran, is to buy what you’ll use, when you need it. That way you’ll still use the timeshare vacation even if you can’t exchange the week for another vacation option.

Another rule of thumb is to avoid off-season weeks. “You’ll end up giving away an off-season timeshare, just to get rid of it,” says DG Southen, an experienced real estate investor from London, Ont. Instead, become familiar with the busy times for every resort and buy a week that’s in demand. You’ll pay more upfront, but you’ll also have an easier time off-loading it on the resale market, or renting it out to other vacationers, or exchanging it in the timeshare marketplace.

What you can buy

Before buying a car, you would first decide what type of car you needed. The same applies to a timeshare.

While a timeshare is ownership and/or use of real estate for specific periods of time you do have four different options as to how to purchase this vacation time.

Fixed week. Buying a fixed week timeshare ensures that you have occupancy rights for the same week and usually the same unit year after year. This is based on the timeshare calendar, which counts weeks based on the initial check-in day, which is usually a Saturday. For instance, if you purchased a timeshare for unit 122 for the 23^rd week, then you would have a guaranteed occupancy for that unit on the 23^rd Saturday of each calendar year. The attraction to a fixed week is that there is a level of certainty as to when you can use your timeshare vacation. The drawback is the resale value can often be lower than timeshares with floating weeks, which offer a bit more flexibility. (Fixed week calendar sample for 2012-2013).
Floating week. Also known as a flex week, this timeshare gives you the right to use a unit during a specified period. The catch is you must contact the resort to reserve a specific week during your floating period. While this type of timeshare gives you more flexibility it also means you can’t delay in reserving a week, as you are competing with all the other timeshare owners that share your floating block of time. Each resort will set their own policies on how far in advance owners can reserve floating weeks, with some resorts opening up the spots only nine months in advance, while others allow for reservations two years before your check-in date.
Rotating week. If you purchase a timeshare on a rotating week then your usage week will change from year to year based on a fixed schedule. For example, if your timeshare is on a four week rotating basis, then your first year usage might be for week four, second year usage will be for week 18, third year usage would be for week 36 and your fourth year of usage would be for week 48. In year five, the cycle would start again and repeat. Timeshare properties with rotating weeks allow owners an opportunity to use the resort during every season, ensuring that everyone gets a chance to visit the resort during the most popular seasons.
Points system membership. A vacation club membership doesn’t offer ownership rights. Instead it provides its members with a currency—points—which may be used to purchase various vacation options. The idea is to provide members with one-stop shopping for their vacation needs. Because of this, these memberships are often more flexible then other timeshare types. However, a point system will also require you to research and reserve your vacation well in advance, especially for high demand periods. Some resort systems allow vacation owners to reserve 13 months in advance, while others require 10 months before reservation date.

It should be noted that point systems have had problems because of bookings. This has led to legal actions against various membership clubs (see the blog about class action suits brought against various timeshare companies).

Despite these problems, vacation clubs remain popular within the timeshare community. To understand how points work, let’s assume that a two-bedroom in Florida costs 140,000 points each week (about 18,000 point for weeknight stay and 25,000 point for each weekend night). If you owned 280,000 points you could book two weeks at the two-bedroom, or you could opt to book a one-bedroom (at a cost of 100,000 points for the week) and spend the rest of your points at a nearby theme park or on a guided expedition.

Most point systems will require you to use your points within the year they are earned, or you will lose them. Another option is to deposit your points into an exchange company, which will charge their own fees for use. The key is to read the fine print and calculate what your costs will be for using this type of timeshare.

Get to know the lingo

Once you understand the type of timeshare you’re interested in buying, you’ll need to become familiar with timeshare lingo so you can start to decipher what’s being sold in the resale market. Here’s a sample of a few of the more pertinent terms:

Accrued weeks: Any unused weeks from the previous year that have been banked and are available for use in the current year. This option is not always available so double check before you buy if this is an important feature for you.

Anniversary date: This applies to timeshare vacation clubs and refers to the day earned points accumulate in your account.

Banking: The ability to store unused weeks, or points, to be used later.

Every-other-year (EOY) or Biennial: A timeshare that allows you to buy the deed or right-of-use for every second year. This also means your maintenance fees will be biennial.

Fixed unit: Where the owner has the rights to the same physical unit every year.

Fixed week: Where an owner as the right to use a specific week during the calendar year (usually identified by a number, such as #34 denotes use of a unit for a week starting on the 34^th Saturday in a calendar year).

Floating week: This week may be used by the owner at any time during the calendar year or during the season that was bought based on the resort’s availability.

Levy: Administrative fees charged to point system members by the resort for use of a particular week.

Lockout unit: A lockout or lock-off is a unit that can be divided into two or more separate sections. For example, a lockout unit could be used as a two-bedroom or it could be split into a hotel unit and a one-bedroom unit.

Quartershare: Three-month interval ownership with a rotating schedule.

Red week: Refers to the peak season at a resort during which timeshare properties are at their most desirable.

Season: Seasons are typically blocks of time throughout a calendar year that express the value of a period of use. For example:

At RCI: