Time-Share Depreciation Is Big Financial Drawback : Real estate: Some properties have gone down in value as much as 50%-75% in a matter of weeks. Bargain hunters pay as little as one-fourth retail price for resales.

Time-shares may be a great way for vacationers to save money--allowing them to forgo high-priced hotel rooms--but they may be less of a bargain in other ways.

A big problem with time-shares as an investment is their rapid depreciation--sometimes as much as 50% to 75% in just a matter of weeks. This is largely because time-share companies drastically mark up the prices of new offerings to pay for sales and marketing costs.

Glen Ivy Financial Group, for instance, spent about $45 million on marketing and sales last year--between one-third and one-half of its revenue.

That comes out to about $1,700 per time-share, says Alexander Auerbach, a Glen Ivy spokesman.

“The company specifically tells people they should not be bought as an investment and, if sold on the secondary market, there is a likelihood they will be sold at a lower price,” he says.

Occasionally, a time-share does appreciate in value if the units are sold out and are in an area where few other resorts are open.

Tri West, a Marina del Rey broker specializing in time-share properties, reports that as many as 500,000 resale time-shares have been on the market in recent years.

“We’re only moving about 10% to 15% of the inventory we are getting,” said Mario Collura, a Tri West broker.

Tri West organizes an auction about once a year and sells time shares for about 25% of the original purchase price.

Resale buyers get most of the same benefits--such as the use of all the resort’s facilities--as those buying directly from a time-share company, Collura said.

David Kreitlow, an Orange County personnel consultant, bought a Glen Ivy time-share in 1987 for about $10,000. He never used the unit, and eventually sold it for $3,400.

“I feel burned on it,” Kreitlow said. “It was an expensive lesson.”

David Matheson, a spokesman for the American Resort and Residential Development Assn., a Washington-based trade group, said some time-share companies don’t acknowledge the existence of a resale market. Glen Ivy, however, does mention the resale market in its buyer’s document.

Time-share companies, Matheson said, “wouldn’t be in business very long if they were telling everyone to buy resale.”

Before You Buy a Time Share

* Ask to visit the time-share resort you are considering buying.

* Ask for the names of some owners at the company’s resorts you can contact for references.

* Check the availability of time-share resale units by looking at newspaper classified ads or contacting a broker. The prices of time-share resale units often are much lower than new offerings.

* Ask about costs such as maintenance fees, furniture leases, etc.

* Be wary of claims by salespeople that time shares are good investments; like new cars, many depreciate practically overnight.

* Read all documents carefully before signing.

* Review financial statements--with an accountant, if necessary--of the resort unit you are considering buying.

* Ask how long it typically takes to get a reservation during the peak season or when you are most likely to take a vacation.

* Don’t be swayed by high-pressure sales tactics such as promises of immediate discounts.

* Be sure you have an option to cancel your contract within the three-day period allowed by California law, except on some projects in Mexico.

Sources: Deputy Real Estate Commissioner Chris Neely and American Resort & Residential Development Assn.