Here's how a timeshare exchange system works: A resort developer has a relationship with an exchange company, which administers the service for owners at the resort. Owners become members of the exchange system when they buy their timeshare or vacation plan. At most resorts, the developer pays for each new member's first year of membership in the exchange company, but members pay the exchange company directly after that.

To participate, a member must deposit a unit into the exchange company's inventory of weeks available for exchange. When a member takes a week from the inventory, the exchange company charges a fee.

In a points-based exchange system, the interval is automatically put into the inventory system for a specified period when the member joins. Point values are assigned to units based on length of stay, location, unit size, and seasonality. Members who have enough points to secure the vacation accommodations they want can reserve them on a space-available basis. Members who don't have enough points may want to investigate programs that allow banking of prior-year points, advancing points, or even ?renting? extra points to make up differences.

Whether the exchange system works satisfactorily for owners is another issue to research before buying. Keep in mind that, you will pay all fees and taxes in an exchange program no matter whether you use your unit or someone else's.

Selling a Timeshare

If you want to sell your deeded timeshare, and a company approaches you offering to resell your timeshare, go into skeptic mode:

Don't agree to anything over the phone or online until you've had a chance to check out the reseller. Contact the Better Business Bureau, state Attorney General, and local consumer protection agencies in the state where the reseller is located. Ask if any complaints are on file.

Ask the salesperson for all information in writing.

Ask if the reseller's agents are licensed to sell real estate where your timeshare is located. If so, verify it with the 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. It's preferable to do business with a reseller that takes its fee after the timeshare is sold. If you must pay a fee in advance, ask about refunds. Get refund policies and promises in writing.

Don't assume you'll recoup your purchase price for your timeshare, especially if you've owned it for less than five years and the location is less than well-known.

If you want an idea of the value of a timeshare that you're interested in buying or selling, consider using a timeshare appraisal service. The appraiser should be licensed in the state where the service is located. Check with the state to see if the license is current.

Contract Caveats

Before you sign a contract with a reseller, get the details of the terms and conditions of the contract. It should include the services the reseller will perform; the fees, commissions, and other costs you must pay and when; whether you can rent or sell the timeshare on your own at the same time the reseller is trying to sell your unit; the length or term of the contract to sell your timeshare; and who is responsible for documenting and closing the sale.

If the deal isn't what you expected or wanted, don't sign the contract. Negotiate changes or find another reseller.

Resale Checklist

Selling a timeshare is a lot like selling any other piece of real estate. Check with the resort to determine restrictions, limits, or fees that could affect your ability to resell or transfer ownership. Then, make sure that your paperwork is in order. You'll need:

the name, address, and phone number of the resort;

the deed and the contract or membership agreement;

the financing agreement, if you're still paying for the property;

information to identify your interest or membership;

the exchange company affiliation;

the amount and due date of your maintenance fee;

the amount of real estate taxes, if billed separately.

For More Information

To learn more about vacation ownership, contact the American Resort Development Association. It represents the vacation ownership and resort development industries. ARDA has nearly 1,000 members, ranging from privately-held companies to major corporations, in the U.S. and overseas.