As you approach, then enter retirement, salespeople for offbeat investments from annuities to Zambian coffee plantations will try to pitch you their products. They know you have been accumulating savings and are contemplating major life changes.
They also hope that after decades of working hard and playing by the rules, you're harboring a Kramdenesque longing to be part of a quick big score.
My Uncle Walter started a successful insurance agency and put three kids through college. He also once bought a special knife because a neighbor told him it would cut through a penny. He's the ideal target for a time-share sales presentation.
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Time-share property is a place that you own (or have the right to use) in conjunction with other people and that each owner occupies for a particular length of time every year. The concept dates to a French ski-resort developer named Paul Doumier, who began offering travelers the chance to buy rather than rent hotel rooms in the mid-1960s. Time shares were first sold in the U.S. in Hawaii in 1969.
They've really taken off in recent years, as aging baby boomers and empty nesters have sought to acquire second homes and vacation spots, even if they have to do it on a part-time basis, and to shift their assets from stocks to real estate. More than 4 million households owned stakes in time shares in 2005, according to the American Resort Development Association.
Despite choppiness in the overall real-estate market, that number was up 5% from 2004. The average age of recent buyers? Fifty-two.
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Part of the appeal of time shares is the burgeoning market for exchanging vacations. If you buy one week of a time share at a Colorado resort, you can travel there annually or trade your days for a week in the California desert, the Canary Islands or New York City. Further, time shares are usually condominiums, which can make them much cheaper to stay in for multigenerational families than blocks of hotel rooms. And you can often leave your time share to your heirs.
But for a product that's been around for 40 years and is perfectly legal, the time-share business is remarkably rife with slimy sales tactics. You don't see too many TV commercials or magazine ads for time shares. Instead, developers are still in the habit, acquired in the early days of the business, of making unsolicited offers of "free" gifts and "no obligation" vacations to travelers willing to attend sales presentations.
You've probably received these offers in your mailbox, and you may have gotten them from "off-property consultants" who set up booths in hotels and troll high-traffic vacation areas such as Cancun, Mexico, beaches and the Las Vegas Strip. In the bad old days, travelers who said yes to these solicitations found the gifts were frequently awful (a new toaster), the presentations were long and stressful, and all too often, the developers were financially shady.
A cleaner industry -- somewhatIn recent years sales practices have improved, thanks to state laws and industry self-regulation. But outright fraud still exists, and most of it is aimed at retirees. Missouri, for example, just shut down a group of time-share operators for taking a total of $1.8 million from about 40 residents ages 64 to 86 without telling them they'd bear sole responsibility for managing their Cancun condos.
In addition, many time-share buyers are surprised by a host of issues: unexpected fees, problems trading weeks and disappointment in the quality or location of their properties. All of which goes back to the transparency of the original transaction. This is a business where Lisa Ann Schreier, the author of "Timeshare Vacations for Dummies," still felt in 2005 that she needed to advise: "Don't buy any time share if you're offered alcohol prior to or while signing anything."