Top Ten Cities Experiencing a Housing Recovery

Written by Sam on August 25, 2009 – 2:09 pm -

Forbes.com (via Yahoo!) lists the top ten cities that are possibly experiencing a housing recovery. To determine the top cities they analyzed areas with high house sales growth rates in the last year but with relatively low foreclosure rates.

The top cities are:
10. San Jose, Calif.
9. Santa Barbara, Calif.
8. Redding, Calif.
7. Denver, Colo.
6. Bremerton, Wash.
5. San Luis Obispo, Calif.
4. Salem, Ore.
3. Colorado Springs, Colo.
2. Lincoln, Neb.
1. Miami-Ft. Lauderdale, Fla.

It looks like California has a strong showing with 4 of the top 10 spots. With real estate in a slump across most of the country, it’s probably a good time to buy a house. The only problem is if you have to sell your house as well. In my state it seems like the higher-priced houses have taken a bigger hit. I have one acquaintance who recently bought a house for about $400k that had previously sold for close to $1 Million before the crash. That’s a change in value of $600k. In contrast, the value of houses in my neighborhood, which are now selling in the $200-300k range, have gone down in value an average of $50k. This would seem to favor a strategy of selling a house in a lower price range (say $100-300k) and buying a house in the upper price range, but that has a much higher potential upswing in value once the economy recovers. Not that I would recommend such a strategy, but it seems to make sense.


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10 Truths About Timeshares

Written by Sam on August 14, 2009 – 2:08 pm -

timeshareLike many of you, we are always looking for a good deal. So when we recieved an offer for 2 nights in a king-bedroom suite for only $69 at a local resort, we took it. In addition, we would receive a $100 gift card good for shopping or fine dining–all we had to do was go to a 90-minute tour and presentation. By my calculations, they were going to pay us $31 for a fun weekend getaway.

Anyone who has attended a timeshare presentation is laughing out loud right now. Because once you’ve been through it, you know the reality is far from the marketing pitch.

Truth #1: 90 minutes takes longer than an hour and a half. In our case it was three hours–and I suspect it would have been longer if the sales rep thought he had any chance of getting us to buy. If you ever choose to hear a timeshare sales pitch, expect to sit for double the time. You also may want to practice your get-up-and-walk-out-of-the-room-while-someone-else-is-talking skills. These sales reps are well prepared to talk around any objection, even “I’m not interested and will not buy.” Getting up and rudely walking out may be your only way out other than being at their mercy for an undetermined amount of time.

Truth #2: A timeshare will not save you money. The first thing our sales rep did was determine how much we spend on hotels per year. We estimated six nights at $100 each, for a total of $600. Multiply that by twenty years, and we will have spent at least $12,000 on hotel accommodations. For that same price we could own a week of timeshare! Sounds good…except for the fact that the yearly maintenance fees alone cost $800, 30% more than we spend right now. And that doesn’t include payments on the property. Not nearly the savings he was trying to make us believe we would get.

It was curious that the price of the timeshare was exactly what we would spend on hotels over 20 years. I wonder what would have happened if we had said we spend $1,000 a year. Would the price have gone up to $20,000 for the timeshare?

Truth #3: You will see a lot of numbers, but not the ones that matter. They gave us a lot of numbers–a white board full of figures floating around. But none really helped us determine if we can afford it. When we asked the sales rep for specifics on costs and fees we were told he would lose his job for disclosing such information. We were told that AFTER we signed we would receive an owners manual with all the details. So we had no way to determine the real cost until it was too late.  ARE YOU KIDDING ME?

After the fact, I came home and jotted down the basic figures we were given. Assuming the numbers he gave me were real and not unrealistically low, I determined that the monthly cost of a timeshare would be at least $225; that’s compared that to the equivalent of $50 a month we spend now!

Truth #4: They want you to finance your “purchase” because it makes the timeshare company more money. The company offered tons of perks and rewards for each year you finance the timeshare through them. Not a surprise since they charge 14.5% interest! Check out these numbers:

  • Price: $12,000
  • Downpayment: $2000
  • Closing costs: $500
  • Balance to be financed at 14.5%: $10,000
  • Interest paid over the course of the loan: $8993.60
  • Principle and interest paid over the course of the loan: $20,993.60

The total cost, including downpayment, closing costs, principle, interest and maintenance fees for 20 years, is $37,494.60.

In the end, you would pay 75% more to finance through them. No wonder they offer perks!

Truth #5: You are investing in vacations, not real estate. Our sales rep kept explaining that we are investing in real estate. True, timeshares sell you a piece of property during a certain period of time each year. You do get some sort of deed for the property. But the real estate comparison ends there. If the value of a timeshare will increase over time and is in such demand, why is it so difficult and expensive to sell a timeshare? As I looked for information online, there was twice as much information on selling timeshares than on buying timeshares.

Truth #6: You are signing up for a one-on-one (or one-on-two, if married) high-pressure sales pitch, not a lovely tour of the property.. When we entered the sales offices, we were impressed by the lavish decor and saw beautiful glassed-in rooms where people were watching sales videos. We also saw sales reps touring people around the property. “That won’t be so bad,” I thought. Well, it turns out the videos and tours must be for people who’ve already purchased or expressed interest in purchasing. In our case they put us in a small office for the entire three hours with no discussion of the resort facilities or amenities. We were exposed to a high-pressure pitch from a sales rep who wouldn’t take no for an answer. It was excruciatingly painful, and I frankly felt a little violated. For an idea of what the experience was like, check out this article about what a timeshare presentation is like and how to avoid pitfalls.

Truth #7 Timeshare presentations are about buying, not about learning. Don’t make the mistake of thinking you can go to a presentation to become informed. You must go prepared to buy, or not buy. Timeshare companies offer incentives that are only good RIGHT NOW, TODAY; tomorrow is too late. You cannot have a night to sleep on it, you cannot consult your accountant or lawyer. Tell me, who makes real estate purchases for tens of thousands of dollars in such a way?! To learn about timeshares, you might want to read a book, like Surviving a Timeshare Presentation, or Timeshare Vacations for Dummies by Lisa Ann Schreier, a former timeshare sales rep who offers an “insider” look.

Truth #8 Timeshare sales reps are friendly, but they are not your friend. And the friendliness only lasts until it’s clear you’re not going to buy. The way our sales rep framed things, buying a timeshare seemed to make so much sense; it was in our best interest; our sales rep was only trying to help us make a sound financial investment. Don’t be fooled! These are highly trained professionals and they are only trying to help themselves out with a nice commission on a sale. All his friendliness abruptly ended towards the end of the three hours when it became clear we wouldn’t purchase TODAY. In fact, it was odd because we expressed interest in the timeshare and said we would consider it, but wanted to have more time. I would think a good sales rep would take our information and follow up in few days. Instead there was no interest in following up; it was as though he knew the deal would crumble under scrutiny.

For an inside look, read sales tips that timeshare sales reps share to help each other out. In this article, entitled Timeshare sales techniques-Warm up the author says that the first step is to make friends with your clients. There’s also an entire blog dedicated to the subject or timeshare sales techniques.

Truth #9 A timeshare will always cost you money, not make you money. Even once you finish making payments on a timeshare, you still have to pay maintenance fees, whether or not you use the timeshare. They explain that one of the great benefits is that you own it forever, and can pass it along to your children. Ironically, it seems that some children don’t want the financial burden that comes with a timeshare. In fact, I found a company called Timeshare Relief that specializes in taking over timeshares – ones that are paid in full – to relieve the owners of the financial responsibility. Among the testimonials is a video testimonial of some “satisfied clients who realized Timeshare Relief was their only answer to receive financial freedom and escape their a life long burden of their Timeshare.”

Truth #10 A timeshare might be a great choice for your family. I won’t argue that timeshares may be a great decision for some people. But making a decision about purchasing a timeshare is not one you want to make while on vacation, under pressure, with no time to think about or discuss it. The package we were offered seemed like it might be a good fit for us–in about three to five years. Right now we take a lot of smaller vacations; long weekends instead of week-long trips. Also, we don’t have an extra $200 per month to dedicate to travel (which does not include the extra gas, airfare, food, and excursion costs). When we are ready and a timeshare makes sense, we will do a lot of research, and then make a purchase if it makes financial sense.

There’s really no reason to make a timeshare purchase decision under pressure. There are plenty of companies that specialize in re-selling time shares. Not only can you purchase them for a fraction of what you’d pay in a high-pressure sales pitch, but you can have the time to browse and find the deal that best meets your needs. I have relatives who have purchased a few timeshares. The first one they purchased under pressure at a sales pitch. Within a couple of days, they saw an ad for a timeshare re-seller and were able to find the exact same timeshare at about half the price. Luckily, they were able to cancel their original purchase and take advantage of the lower-priced offer.

In summary, I won’t say if it’s worth it to take advantage of these great timeshare offers or not. For me personally, having to sit for three hours in a high-pressure situation, wasn’t worth the essentially-free nights stay. On the other hand, I know people who don’t mind going through the process and they will take advantage of such offers regularly. If you know the pitfalls to avoid, more power to you. For me, after sitting for three hours and considering the possibility of spending nearly $40,000 on a timeshare over the next 20 years, a piece of Japanese wisdom rings true: There is nothing as expensive as free.

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