How Timeshares Work

Timeshare prices can vary tremendously based on share size, location and time of year, not to mention all the variables that affect any other real-estate value, ­such as condition of the property and the market for timeshares at the time. A new (or retail) timeshare usually sells in the neighborhood of $10,000, although that can vary by thousands of dollars in either direction. Purchasing a used timeshare can be significantly cheaper, with prices as low as $1,500.

The initial purchase price is not the only cost to consider, however. All timeshare resorts charge share owners annual fees for maintenance, utilities and taxes. Annual fees in the $300 to $400 range are typical, although larger shares or peak-season shares can have higher annual fees, often more than $1,000 every year. These fees are due whether the share owner uses the property or not. Resorts can increase the fees each year -- the initial fees at the time you buy are not locked in. However, some timeshare contracts include a specific clause that limits future fee increases. Sometimes, the annual fee does not cover property taxes, so share owners would then be responsible for those costs, as well.

Timeshare resorts will also tack on extra real-estate fees when the share is sold, such as a transfer fee and a recording fee. If the resort decides to make a major improvement to the property, or it has to make major repairs, it might be able to assess a large fee to the shareowners to cover the costs. Check the terms of your timeshare contract carefully to see if the resort could hit you with a large, unexpected assessment fee in the future.

Another hidden cost that is easily forgotten is the cost of travel. Owning a timeshare is useless if you can't afford to get to it. Flying to Mexico or Florida or Colorado every year could grow very costly.

Next, we'll learn how to get the most out of a timeshare.