While problems plaguing the housing market get all the headlines, owners of timeshares also have their problems. The market for timeshares has declined, along with the market for homes and condos.
In a number of states, officials have begun to crackdown on companies promising timeshare owners they can sell their property, but who charge a large fee upfront. In Illinois, Attorney General Lisa Madigan is now warning timeshare owners in her state that scammers have moved into the space, collecting money but making no attempt to sell anything.
Madigan says the scam typically works like this: a timeshare owner gets a call out of the blue from someone claiming to be a timeshare reseller. They have a client who wants to buy their timeshare, are they interested?
In this market, getting an unsolicited call from someone wanting to buy your timeshare is cause for jumping up and down. It sounds too good to be true, and of course, it is.
If the owners rise to the bait, the scammer tells them they must pay a refundable security deposit or fee to ensure that the sale goes through, and instructs them to wire money to an out-of-state bank account.
Taking the money and running
As soon as the owners wire the money as directed, theyve fallen victim to the scam. In most cases, by the time the owners realizes theyve been defrauded, the con artists have closed out their bank account, disconnected their phones and disappeared.
Victims filing complaints with the Attorney Generals Office have reported wiring as much as $5,000 to the scammers, Madigan said.
In some versions of the scam, the con artists tell the owners theyve found potential renters for their timeshare. In others, a person posing as a prospective buyer makes the initial call and urges the timeshare owners to contact the fake reseller immediately to complete the sale. Also, in some instances, the owners are asked to charge the security deposit to their credit card rather than transferring the money by wire.
Many scammers briefly rent a P.O. Box or office suite as a business address, and in some cases create Web sites to trick consumers into believing they are legitimate.
Seniors living on fixed incomes and persons suffering the effects of the economic downturn may be especially vulnerable to the scam, because they may view their seldom-used timeshares as a source of much-needed money. Madigan cautioned that consumers should never assume they will recoup their purchase price for their timeshare, especially if they have owned it for less than five years and the location is less than well-known.
If you are actively trying to sell a timeshare, here are some
things to remember:
• Dont agree to anything on the phone or online until youve had a chance to check out the reseller. Contact the Better Business Bureau (www.bbb.org) and the state Attorney General (www.naag.org) in the state where the reseller is located. Ask if any complaints are on file.
• Ask the salesperson for all information in writing. Under Illinois law, a timeshare reseller must enter into a listing agreement with the owner signed by both the owner and the reseller that discloses certain specified information, including the resale agents contact information and the fees to be charged for the resale agents services.
• Check with the state Department of Professional and Financial Regulation to confirm that the reseller is registered as a real estate agent, as required by state law.
• Ask if the resellers agents are licensed to sell real estate where your timeshare is located. If so, verify it with the state Real Estate Commission. Deal only with licensed real estate brokers and agents, and ask for references from satisfied clients.
• Ask how the reseller will advertise and promote the timeshare unit. Will you get progress reports? How often?
• Ask about fees and timing. Its preferable to do business with a reseller that takes its fee after the timeshare is sold. If you must pay a fee in advance, that's a very bad sign.