Transferring Trendwest Credits

I cam across this eBay auction, which is another offer for sale of credits.

We purchased the 6,000 holiday credits for $11,400 (that equals $1.90 per credit) in early 2002, and I am prepared to sell these for a starting price of $8,700. Just think $8,700 to pay for a lifetime of holidays – it pays for itself in a few short years.

This offer also comes with current annual membership to Interval International which offers additional reduced holiday options around the world. You can choose not to renew this membership if you wish.

The transfer process involves signing contracts by both the seller and purchases in the presence of a “Justice of the Peace”, and the process takes around 2 weeks to complete and costs $200.00 which I will cover myself.

The transfer process as described in the Disclosure Statement has several conditions:

• A fee of $200, which may change in future
• The credits must be "fully paid" before transfer
• The recipient must agree to all conditions as per the original holder
• Trendwest has the right to refuse transfers
  

It then goes on to state:

There is a limited market for the resale f issued Holiday Credits. Owners should generally not expect to recover the amount they originally paid for their Holiday Credits nor should they expect that over time the resale price will remain stable or increase relative to the price they originally paid.

This can be seen by the fact that the eBay auction mentioned above has credits originally purchased for $1.90 in 2002 and they are willing to sell for $1.45 in 2005 -- and don't forget that new units are now $2.08/unit when purchased from Trendwest.

They owners are willing to sell for $2,700 less than their purchase price, representing a cost of $900/year since purchase, plus maintenance of $386/year -- that means they've paid around $1,300/year for their holiday credits. This is about normal, since a week of holiday would cost that much normally (around $200/night).

Using a cost base of $11,400 in 2002 and a loss in "value" of $900/year suggests a membership value of $11,400 divided by $900 = 12 years.

So, while the Trendwest offer may state that it is for a renewable 80-year period, the true value of your investment is only 12 years. After that, don't expect to be able to extract much further resale value from the investment.

Is it worth it? That's what you need to decide before purchasing into the unit trust.