Critics question realtor Wayne Stroman's timeshare resale business

By the late 1960s, timeshares were popping up in Hawaii, and by the 1980s, they had completely canvassed the American vacation landscape. Today, they are a favorite of baby boomers and yuppies alike, who save money by buying a timeshare instead of a vacation home that they can only use a few weeks of the year. Disney, Marriott and Hilton are among the industry leaders. In 2006, timeshare sales climbed to $10 billion, with more than 4.4 million Americans owning one, according to the American Resort Development Association, a trade group in Washington, D.C. representing developers. And there is no slowing down. ARDA, which was established in 1969 and has nearly 1,000 corporate members, estimates 25,000 new timeshare units will have been built between 2006 and the end of 2007.

"Basically what our code is asking for is transparency," says ARDA President and CEO Howard Nusbaum. "We want to make sure the consumer understands what they are paying for and what the promises are."

Included in the ethics code and member guidelines are requirements that resale salespeople shall not knowingly convey false or misleading information to an owner about the property's resale market value. Also, before taking an up-front fee, companies are supposed to provide owners a written statement explaining the purpose of the fee.

Nusbaum says the reason for these guidelines is that "verbal communication can be a lot fuzzier than a written one."

Indeed.

To be sure, the timeshare resale industry is one of the more confusing out there. Yes, owners are buying real property, but it does not behave and appreciate in value like normal real estate, so while it may look like a duck and talk like a duck, after you buy it and bring it home, it doesn't walk like a duck.

"Timeshares are not supposed to be looked at as an investment," says Bill Rogers, founder of the Timeshare User's Group, a consortium of timeshare owners who have banded together and created a forum for swapping information. "In fact, about ten years ago ARDA said they cannot sell these as real estate investments any more, but rather as something you use, like a car. You didn't buy your car as an investment and you're not going to get your money back when you sell it."

Rogers and others in the industry, including Stroman, say the average timeshare loses up to 50 percent of its value once the owner drives it off the lot.

The main reason a new timeshare costs markedly more than a used one is the marketing costs a developer spends to sell it in the first place, Rogers says. Developers wine and dine prospective buyers, luring them in with rock-bottom room rates at their fancy hotels. All you need to do, they say, is take a tour of the timeshare and sit through what often turns out to be a very lengthy and pressure-packed sales presentation. This can account for about 50 percent of the selling price.

Many people do not take this into consideration when they buy a timeshare, so they are shocked at how little they can recoup when they try to sell it.

"On the buy side," says Rogers, "people take advantage of the market and can save themselves a lot of money. On the sales side, you have to price it halfway decent, but halfway decent is very, very low. And unfortunately, most people start by trying to get most of their money back and it's not going to happen, so it's a matter of time, of how long is it going to take them to get realistic and lower the price to where people will be interested."

But what if it is the licensed real estate salesperson who sets the price or allows an unknowledgeable owner to set his own price, as well as his expectations, too high?

"A legitimate broker should be able to tell you about what you can get for your resale," Rogers says. "But some companies," he says, "do the old give-you-an unbelievable-price straightaway just to get you to commit to their up-front fee, and then six months down the road they'll say, 'Well, you've got this listed for way too much and we need to cut it in half.' But by then, they've already got your money. It's a rip-off."

It's also a scenario that sounds all too familiar to many Stroman customers.

Rick Shepherd of Trophy Club, a small town 30 miles outside Dallas, is pissed. He says he gave $499 to Stroman to sell his timeshare and all he got in return was a bad attitude and lies.

"It's not so much the money," he says. "It's the principle. I don't like getting screwed, plain and simple. I was duped, and I feel like a dumbshit."