Despite suspicions that any secondary market in resort time-shares would be dominated overwhelmingly by would-be sellers --wanting "out from under" their impulse purchases--there are more potential buyers out there than sellers.
That is the surprising conclusion from a survey of mail and telephone responses to a Feb. 24 real estate section story in The Times reporting on the first nationwide auction of these "slices of time." The auction was held three weeks earlier in the Los Angeles Convention Center and sponsored by Marina del Rey-based MDR Telecom.
In the first eight days following publication of the Times' story, according to Mario Collura, president of the sponsoring realty firm, 63 telephone calls and 438 letters from 17 states and Canada reached his office seeking details on the next auction scheduled for late July.
"About 60% of the letters which we've received are from prospective and highly qualified buyers," Collura said. "These include attorneys, doctors, CPAs and other professional people, and they are looking forward to our July auction and the chance to buy vacation home use."
About 10% of the responses were from sellers definitely interested in listing their time-shares with Collura and the other 30% were from potential sellers seeking further information.
Average Price $3,600
In a final tally of the results of the February auction, according to Collura, "75 time-share intervals were sold by auction and by mail-in bid and the average paid price was $3,600. Additionally, we have backup offers on a number of time-shares.
"Results seem to indicate," he added, "that time-sharing is alive and well when the price is right."
At a time when the nationwide average price for a one-week time-share is being offered by developers at $7,000, a full 90% of those trading properties at the February auction did so at prices at least 50% under the developers' offering price.
"Our auction resulted in 75 happy buyers and 75 happy sellers, and that's a positive consumer reaction," Collura added."
From a would-be seller at the July auction: "In response to the excellent article on your operation which appeared in yesterday's (Feb. 24) Los Angeles Times, I would very much appreciate receiving information on your next auction. . . . I am a time-share owner interested in selling." And from a would-be buyer: "The Los Angeles Times provided a very interesting article on your approach to the secondary market for time-share condominiums. Please send me your catalogue when developed for the July auction. For a better perspective of what was available (at your first auction) and their 'real' market value I would appreciate a catalogue (of the earlier auction)."
Submit Minimum Bid
As in MDR Telecom's February sale, sellers listing their time-shares for the July auction, must also submit a minimum bid no greater than 50% of the developer's price (although the near-even balance between would-be buyers and would-be sellers interested in the upcoming auction suggests that such deep discounts may be short-lived), must pay an up-front, non-refundable fee equal to 5% of their minimum bid to finance the advance catalogue of offerings and pay a 15% sales commission if the offering is successful.
Further information is available for both buyers and sellers from MDR Telecom, 13464 Washington Blvd., Marina del Rey, CA 90292.
In spite of the popularity of the time-share concept--up from 100,000 units a year in 1976 to 600,000 last year--the field has long been plagued by the virtual non-existence of a secondary market, an absence largely explaining the sharp discounts characterizing Collura's February auction.
"What this indicates to me," Collura added, "is that the marketing costs of new time-shares are very high and are being passed along to the buyers of new time-shares, but not to the buyers of resales at auction."