Florida timeshares going for a steal

Article Courtesy of The Tampa Tribune

By Michael Sasso

Published January 2, 2010

TREASURE ISLAND - Timeshares are billed as a way to own a little slice of paradise.

But in this economy, some owners are practically willing to give away theirs.

Many timeshares are on the market for just $1,000, as owners try to get out of paying annual maintenance fees. That's good for buyers, tough for those trying to sell.

Rene LeBreton has been trying to sell one of his mother's three timeshare weeks at a Longboat Key resort for $3,900. It's only been on the market for a month, but he's surprised he hasn't gotten any calls yet.

Florida's timeshare industry surged in the mid-2000s, with many new properties in Central Florida and the Florida Panhandle; but since then, it's been whacked by the same collapse affecting homes, condominiums and office buildings.

Since September, two large timeshare resort companies in the Orlando area, Tempus Resorts International and Island One Inc., have filed for bankruptcy. Tempus operates a giant 717-unit timeshare and golf resort in Celebration called Mystic Dunes. Island One manages nine timeshare resorts around Florida and the U.S. Virgin Islands.

Part of the problem is that lenders such as Textron Financial Corp. and GMAC Commercial Finance have pulled out of the timeshare industry, causing a cash crunch for timeshare companies, said Elizabeth Green, an Orlando bankruptcy attorney who represents both companies.

Foreclosures, meanwhile, have soared as people have been unable to pay their yearly maintenance fees – or simply stopped trying and let resort owners foreclose.

Data on recent foreclosure rates are hard to find, but industry insiders acknowledge there's been a surge in timeshare developers forced to take back units. Foreclosure rates at any given timeshare property range from 10 to 30 percent, said Kevin Riley, an accountant who works with timeshare companies.

While developers try to sell off their own units, individuals are flooding the market with units for sale – posting ads on Craigslist, Redweek.com, Timesharing Today, or hiring brokers.

LeBreton listed one of his mother's three timeshare weeks at Longboat Key's Veranda Beach Club for $3,900. But considering he hasn't gotten a single call, he said he may let it go for as little as $2,500.

His mother, now 82, doesn't want to keep paying the $800 annual maintenance fee on each of her timeshare weeks, which she originally bought for $6,000 each. Plus, the travel from Louisiana to Florida has gotten difficult.

LeBreton's brother sold off a penthouse at the Veranda Beach Club for $12,000 -- about three-quarters of its original price.

Low prices aren't necessarily new in the timeshare resale market. Timeshares are more like cars than condominiums and houses, because they lose value once someone buys them.

Buying a week at a new timeshare often will set someone back $20,000 or more, with 50 percent of a developer's original cost going toward sales and marketing, said Jon Peet, who helps regulate timeshares for the Florida Department of Business and Professional Regulation. A family trying to unload its timeshare after a few years won't recoup that cost.

Even still, now is especially tough.

Timeshare units for sale on Redweek.com, an industry marketplace, are running about 25 percent less than in 2008, a spokeswoman said. Most people are seeking $1,000 to $5,000 for their timeshare weeks, with the median price about $3,000.

Carrie Stinchcomb, an Orlando timeshare broker, sees most sellers shooting for as little as $1,000 or $2,000. In the past, she was able to charge a $1,500 commission for selling a timeshare, but recently she's had to drop that to as low as $500.

"When the economy hit like it did, there are very few buyers out there," she said. "I'm getting bombarded by sellers."

Stinchcomb estimates she has 10,000 timeshares listed.

Locally, the timeshare industry never got as overbuilt as Central Florida and wasn't hit as hard, said Dennis DiTinno, who runs a resort management company called Liberte Management Group in Pinellas County.

Twenty-seven timeshare properties line the Pinellas County coast, compared with just one in Pasco and none in Hillsborough. Nearly all were built in the 1980s, and while they offer pools, gulf views and meeting rooms, they aren't like the massive golf course and sauna resorts of Celebration and Orlando.

DiTinno insists the delinquency rate on maintenance fees at his nine Pinellas timeshare properties is only about 4 percent, even if it's well into double digits elsewhere in Florida.

And, while more people are looking to sell, the local market isn't as flooded, either, DiTinno said.

One of his projects, a 47-unit timeshare property called Voyager on Treasure Island, is divvied up into more than 2,000 one-week intervals. Voyager's timeshare owners association has taken back about 40 intervals and is looking to sell them, and another 75 individual owners have put theirs on the market, DiTinno said. The average unit sells on the resale market for about $2,000 to $6,000, compared to an original selling price of at least $11,000, he said.

The local timeshare industry is ripe for a comeback, said DiTinno, who's in talks to help develop a new 38-unit timeshare project near Clearwater Beach and still sees potential for timeshares on the Pinellas beaches.

"We are still the unknown gem," he said.