Jonathan Gibbs Timeshare News : The Root of Today's Timeshare Crisis

Well informed timeshare advice by Jonathan Gibbs; timeshare consultant and advisor to thousands of timeshare owners. Joanthan Gibbs provides timeshare relief to owners by giving them information and options. (An Interview) End Quote

(1888PressRelease) March 04, 2009 - An interview with Jonathan Gibbs on Timeshares. Jonathan Gibbs Timeshare Consult has been helping people get out of unwanted Timeshares, Timeshare Mortgages and campground contracts since2005. Jonathan Gibbs’ experience in accessing an accurate climate for timeshare sales, maintenance fees and the future of the industry is unparallel; coming from personal interaction with thousands of timeshare owners face-to-face in more than 30 different states over the last few years. Jonathan Gibbs refers to his time with thousands of timeshare owners as a detailed market survey so accurate, he is confident that he can forecast specific market details in this industry for the next 5 years including; total sales, resale pricing and even the specific maintenance fee increase for a 1000 different resorts in the United States. “This is not simply a survey of a few hundred owners in a few well know destinations. We have been tracking maintenance fee escalations for 5 years, assessments and the decline in resale pricing on more than 1000 different properties over a 5 year period,” reports Jonathan Gibbs.

Jonathan explains that the biggest problem is the nature of the fee simple interest style of ownership which most timeshares are deeded as. “The deed is not the same as the deeds we own our homes with. We do not “own” the timeshare the same way. In most cases, even if a person owned 52 weeks at the same resort, they still would not be able to paint the condo unit, change the furniture or any permanent fixtures attached to the outside or inside of the properties. The “rights” that the timeshare owner has is basically the right to “use” the property during a specific interval of time. Even when the mortgage is paid off, there is still no intrinsic value to those rights since the timeshare owner must continue to pay annual fees for usage whether the unit is used or not. This explains why if a timeshare owner with no mortgage tried to get a “home equity” loan on a $30,000 timeshare, the bank won’t not even grant them a $500 loan. That’s because the ownership (deeded though it may be) has no value to the bank, or banking world for that matter. A bank will loan the developer money against their interest in the resort, because the developer has a different type of ownership,” explained Jonathan Gibbs. Jonathan went onto give specific examples of timeshare resorts which were sold by the developers, the developers made a nice profit on the increased value of the physical real estate but the “timeshare owners” received nothing. In several of Jonathan’s recent examples, the timeshare owners had their interest (and yearly maintenance fee obligation) transferred to another resort. Thus leaving the developers with profit from their 10 year ownership and the timeshare owner with a cash loss from their original purchase and now a liability position as the responsible owner of another annual maintenance fee contract.

Bottom line, the only value to a timeshare is how much someone is willing to pay to use it. As long as the maintenance fees are low, the ownership may have some marketable value. This value has to be compared with the cost of staying in equal accommodations. For example: 10 years ago, if the maintenance fee for a Hawaii 2 bedroom timeshare was $200 per year and the cost of renting a room of equal amenities was $100/night there would be a $500 value per year (if used every single year) to the property. Still not worth a $15,000 sales price as it would take more than 30 years to break even if the maintenance fees never went up. Here’s the problem. Today the fees to that property are $900 for the week, (again, whether it’s used or not), and the cost to renting out a similar unit through the many modern day options online can range from $50-200 /night. This leaves no value in the ownership since the small benefit of savings, IF there is one, can be easily outweighed by a missed usage year or a mandatory assessment for repairs that must be paid by the timeshare owner.

Now you have a situation where there is no commercial value to the banking community, no consumer value to the retail community, only perceived value by many of the owners.

“There is a huge void between the reality of timeshare ownership and today’s’ market place,” reports Jonathan Gibbs. “Because of the extreme often brain washing “hard sell” of the Timeshare Sales pitch over the years and the grossly inflated sales prices,” owners have been convinced to adopt the idea of an inflated value in order to justify the huge expense that was most often paid off slowing over 7-10 years at 18% interest. Only later, when the timeshare owner tries to sell the property do they end up discovering the truth of their purchase. It’s original value was a fraction of what they spent, and it’s current value may be less than zero.

What does the future hold? Unless the developers begin to lower the annual dues, which is highly unlikely, the industry is headed for massive meltdown. Of course, as usual the timeshare owners will be left holding the bag.

For more information on timeshare value we recommend this ABC video with Financial Advisor Dave Ramsey and Timeshare Market Analysis www.timeshareresalesreport.com .

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