DVC resale changes coming!?!

[luckyman_apd]

IMO, the restrictions have benefited a subset of the DVC membership as well as Disney. By limiting the number of points that are used to cruise or stay at one of the other options in the Disney Collection, the Concierge Collection and the Adventurer's Collection, the actual point cost to use those options will be less for those who qualify to use them.

As many know, DVC must send DVC resort rooms to CRO/DRC to rent for cash to pay for these options. To do this, Disney has had to significantly discount the rack rate for these rooms and many of them end up unused. That means the number of points required to use the options must be high enough to absorb all of the discounts and empty rooms (plus the "commission" to CRO/DRC to act as a TA for DVC). Disney dealt with the problem in part by limiting the number of points that may be used to cruise.

With the restrictions, fewer points are chasing those options so Disney doesn't have to send as many rooms to CRO/DRC and should not have to discount those they do send as much). For the direct purchasers who want to use points for those options, the resale restrictions will help keep the point costs lower than they might otherwise have to be.

Also, AFAIK, once the "breakage cap" is reached, - Disney gets to keep the extra $$ for itself (extra profit). Too many discounts due to too many rooms in the supply chain to pay for non-DVC options means less profit for Disney, too. For lots of reasons, Disney wants to keep room rates high.

I actually think this reason was more of a driving factor for the restrictions than was the extra "lift" it may have given the sales group. YMMV.

That makes sense, and it sounds like a win/win for many. As a resale buyer, I understood those restrictions, and whether they were a good use of points or not, it's not why I wanted to buy. I bought for the ability to book at WDW resorts....no more no less. That's what I got, and I saved a bunch of $ in the process.

 

[geraghty]

As a resale buyer, I understood those restrictions, and whether they were a good use of points or not, it's not why I wanted to buy. I bought for the ability to book at WDW resorts....no more no less. That's what I got, and I saved a bunch of $ in the process.

I agree. I bought at BLT because we wanted to stay at BLT, but we only bought enough points to go once a year or once every other year in a larger room. We will eventually stay at other wdw resorts and do not care about point useage for cruises or non disney accomodations. The money we saved buying resale will more than pay for a cruise.

 

[niroc]

ROFR just gives disney the chance to step in and take the lowball deal, but it won't force a value-minded buyer to offer more money.

But it does. When I bought my resale and I offered a counter offer to the seller my broker told me that my offer can only be so low because if it was any lower it would not pass ROFR. This protects all direct buyers because their point value can only go so low before Disney takes the "lowball deal".

I think we are actually in agreement but we are just looking at it from different sides.

Like I said in a previous post I am only playing devil's advocate. I was not one of those impulse buyers that I see so frequently described here, and it seems like they are the majority of the direct buyers from what I read. I did my homework and research and for my family the resale route was definitely the best option. We bought at BLT because that is where we want to stay. I have no interest in reselling, and going back to the OP with the rumors of new restrictions they would not bother me. Even if I was not grandfathered in and I was forced to only stay at BLT I would not be upset because that is where I wanted to stay in the first place.

Thanks everyone for the fun debate and the education lesson because I did learn a lot more about DVD then I knew prior to my first post.

 

[tjkraz]

When I bought my resale and I offered a counter offer to the seller my broker told me that my offer can only be so low because if it was any lower it would not pass ROFR. This protects all direct buyers because their point value can only go so low before Disney takes the "lowball deal".

Fear of ROFR doesn't set market prices. The market sets market prices.

Four years ago the going rate for BWV and VWL points was in the neighborhood of $85 per point. Over time emerged far more sellers than buyers...and none of those buyers were willing to pay $85 per point. Today the market price has fallen into the mid $60s.

DVC made no effort to prop-up the $85 price point. As lower and lower offers were submitted, DVC lowered their own ROFR targets. They allowed the market to adjust itself, and positioned themselves to grab only the deepest discounts.

In your specific situation, all you received from your broker was an opinion. And bear in mind that the broker is compensated based upon a percentage of the final sale price so they do have a vested interest in encouraging a higher offer.

Ultimately it was well within your rights to make any offer. Of course, the broker could have advised the seller to hold out for more money, too, but that's the seller's choice to make. We'll never know if your original offer would have passed, but the DVC resale landscape is littered with buyers who are more than willing to test the limits of ROFR.

 

[chalee94]

But it does. When I bought my resale and I offered a counter offer to the seller my broker told me that my offer can only be so low because if it was any lower it would not pass ROFR. This protects all direct buyers because their point value can only go so low before Disney takes the "lowball deal".

I think we are actually in agreement but we are just looking at it from different sides.

i think ROFR might encourage some buyers to increase their bid a couple of dollars and pay $68 per pt instead of $65 per pt, so we are in agreement there. ROFR can have a tiny affect on prices.

but if i think $65 per pt is what the DVC contract is worth to me and DVC seems to be ROFRing most everything under $85 per pt, i'll either risk the lowball offer or drop out of the bidding completely and stick to renting (and as a DVC owner, if you have no offers, you cannot sell.)

ROFR did not protect any buyers a few years ago. DVC almost completely dropped out of the ROFR business because they were never using ROFR to protect DVC owners, they were using it to benefit themselves...and when major uncertainty hit, they didn't want to be stuck with potentially unsaleable inventory.

if you put any faith in ROFR "protecting your investment", you are likely to wind up disappointed...

 

[Greysword]

Just to add to the discussion, price isn't the only driving factor in choose direct vs resale. Location and point availability also play important factors, I think.

For instance, I feel our direct purchases played out in both of these categories. Mind you, we bought our points before the bottom dropped; however, the same ideas still stand under certain conditions. Since we live on the West coast now, we tend to spend time at Disneyland Resort (DLR) as much as WDW. To that end, we seem to burning our SSR points for friends to stay at the DLR hotels annually, mainly due to VGC being so small. As such, it makes us happy we did purchase direct.

Secondly, we bought SSR a year or so after it opened, and we selected it over the other options due to the expiration date being longer. This may be a draw for the newer resorts coming online over the next 10 years (or so).

Lastly, we bought our BLT and VGC points pretty soon after those properties came on the market as aspirational buys. I always loved the CR, and DW always went to DLR as a kid, so we had a personal trigger to buy there as soon as we could. I'm sure both the GF and Poly will have aspirational buyers regardless of the price point, just to get in as soon as possible. Even if those buyers are on this board and pretty savvy .

While I agree these reasons are small in comparison to the larger body of DVC owners (present and future), they do hold some weight depending on location and aspiration.

As a side note, I'm glad we own direct, as we paid (what we considered) a fair price for what we anticipated receiving. In addition, our points seem to be a bit more value (as Carol pointed out), which is always nice. If we decide to add to our VGC total, I will likely purchase direct again, due to the scarcity of available contracts, but an expansion at BLT will probably be via resale, since we already have a pool of direct SSR points to use at DLR (or on a cruise).

 

[disneynutz]

Being early direct buyers also may qualify the buyer as a founder. BLT founders got their name on a fountain tile and AKV founders got their name on a robe displayed in the library at Kidani.

Bill

 

[Dean]

But it does. When I bought my resale and I offered a counter offer to the seller my broker told me that my offer can only be so low because if it was any lower it would not pass ROFR. This protects all direct buyers because their point value can only go so low before Disney takes the "lowball deal".

I think we are actually in agreement but we are just looking at it from different sides.

Like I said in a previous post I am only playing devil's advocate. I was not one of those impulse buyers that I see so frequently described here, and it seems like they are the majority of the direct buyers from what I read. I did my homework and research and for my family the resale route was definitely the best option. We bought at BLT because that is where we want to stay. I have no interest in reselling, and going back to the OP with the rumors of new restrictions they would not bother me. Even if I was not grandfathered in and I was forced to only stay at BLT I would not be upset because that is where I wanted to stay in the first place.

Thanks everyone for the fun debate and the education lesson because I did learn a lot more about DVD then I knew prior to my first post.

But it didn't for most. The last resale contract I bought was $4 a point below the then standard ROFR price and it went through. That was at a time when ROFR was very active. The price was low enough that one of the brokers really questioned it and actually called Disney to try to figure out why they let it go through. For the last few years ROFR has had NO effect, it's only recently for OKW that it's come into play at all. ROFR can also simply drive people away from resale also.

 

[niroc]

Fear of ROFR doesn't set market prices. The market sets market prices.

Four years ago the going rate for BWV and VWL points was in the neighborhood of $85 per point. Over time emerged far more sellers than buyers...and none of those buyers were willing to pay $85 per point. Today the market price has fallen into the mid $60s.

DVC made no effort to prop-up the $85 price point. As lower and lower offers were submitted, DVC lowered their own ROFR targets. They allowed the market to adjust itself, and positioned themselves to grab only the deepest discounts.

i think ROFR might encourage some buyers to increase their bid a couple of dollars and pay $68 per pt instead of $65 per pt, so we are in agreement there. ROFR can have a tiny affect on prices.

but if i think $65 per pt is what the DVC contract is worth to me and DVC seems to be ROFRing most everything under $85 per pt, i'll either risk the lowball offer or drop out of the bidding completely and stick to renting (and as a DVC owner, if you have no offers, you cannot sell.)

I agree with both of you here. ROFR won't dramatically effect market price. Like you said ROFR didn't help BWV go from $85 to $65 in just 4 years, the market did that. However, if the current value is $65 ROFR will, in theory, keep it close to that range (i.e. I wouldn't be able to get it for $45).

if you put any faith in ROFR "protecting your investment", you are likely to wind up disappointed...

I really hope you don't think I'm that naive. I think we all understand that the value of our contract goes down in value every year because it is one year closer to it becoming null and void. Buying into DVC is a negative investment. Actually let me correct myself. It should not even be considered an investment. All DVC boils down to is that you are prepaying on your hotel for x amount of years at a locked rate with some extra perks thrown in. And it is these "perks" that are the foundation of the restrictions. I completely understood that when I bought my resale at BLT I was just buying a place to stay on a vacation. I expect nothing more or nothing less.

 

[niroc]

ROFR can also simply drive people away from resale also.

I am not sure I understand how. Can you explain this further?

 

[DannysMom]

I agree with both of you here. ROFR won't dramatically effect market price. Like you said ROFR didn't help BWV go from $85 to $65 in just 4 years, the market did that. However, if the current value is $65 ROFR will, in theory, keep it close to that range (i.e. I wouldn't be able to be able to get it for $45).

But if you were both persistent and lucky,you might get it at $55/ pt.

Sent from my iPad using DISBoards App, please excuse any typos or autocorrects!

 

[DannysMom]

RE ROFR driving buyers to direct sales, I can hazard a guess at that. If you make resale purchase long enough (a month delay just to find out if you are permitted to buy something) and onerous enough (delay again getting the new resales member their membership info, so they can't make reservations for an additional 2-3 weeks) some folks will bail, say it is not worth it. And buy direct from Disney, so they can make their next reservation right away. Even if they have to finance to do so,

Sent from my iPad using DISBoards App, please excuse any typos or autocorrects!

 

[luckyman_apd]

Since ROFR has been discussed, any theories as to why OKW has had far more ROFR enacted than any other resorts?

 

[Dean]

I am not sure I understand how. Can you explain this further?

Because some will simply decide not to fool with the hassle and risk of resale. Of course when the difference was 15-20%, this was more likely than now. Some of those may go retail, some may simply not buy at all.

About the only thing that ROFR does do is prevent the fire sale, it really doesn't do that very well other than it means that Disney gets the fire sale but not the person that found the deal. There are companies that have ROFR that don't exercise it or only in very extreme circumstances, and it hasn't helped resale prices one bit (Marriott and Bluegreen come to mind).

ETA: ROFR was never about making money on the resale but driving buyers to retail. Even when active they'd buy one contract and let several more through at exactly the same cost and points accounting. It was about keeping buyers guessing more than anything else.

 

[thptrek]

I went the resale route as I could not justify BLT at $160 vs resale around $95. Yes the wait is killing me, yes I want to make my reservation now, yes it is more work but to me the extra costs of direct were just too much. My humble opinion only.

 

[Dean]

Since ROFR has been discussed, any theories as to why OKW has had far more ROFR enacted than any other resorts?

It likely has something to do with the 2057 extension but it's hard to know what. They can buy it back as 2042 points and resell the same points as 2057 points. Another issue is they could be trying to buy up enough points and units so that they can close part of the resort when 2042 hits but I think they'd still have to get a fair number of owners to switch their deeds to close buildings. Another possibility would be to use for housing like they did the THV. I wonder if they're going to target one 2042 resort at a time so they can offer extensions.

 

[luckyman_apd]

It likely has something to do with the 2057 extension but it's hard to know what. They can buy it back as 2042 points and resell the same points as 2057 points. Another issue is they could be trying to buy up enough points and units so that they can close part of the resort when 2042 hits but I think they'd still have to get a fair number of owners to switch their deeds to close buildings. Another possibility would be to use for housing like they did the THV. I wonder if they're going to target one 2042 resort at a time so they can offer extensions.

Obviously there is some reason for it, or they wouldn't do it. It doesn't make sense to me to buy up points...and hold them for the next 30 years while paying Dues on them. Reselling as 2057 points makes sense.....IF people are buying them and I have no idea who is buying what. But couldn't they just close most of the resort in 2042 when most people's points expire, and only keep open enough buildings to satisfy the amount of 2057 points out there? After all, numerous other resorts will be ending that year as well. Should be an exciting year as only SSR, AKV, BLT, GFV, and what remains of OKW will be open (plus any future resorts they build).

 

[niroc]

Because some will simply decide not to fool with the hassle and risk of resale. Of course when the difference was 15-20%, this was more likely than now. Some of those may go retail, some may simply not buy at all.

Maybe I am in the minority then.

I went the resale route as I could not justify BLT at $160 vs resale around $95. Yes the wait is killing me, yes I want to make my reservation now, yes it is more work but to me the extra costs of direct were just too much. My humble opinion only.

I couldn't agree with you more. I was willing to wait and I prepared myself that if I did not pass ROFR that I would be willing to do it all over again. I could not justify paying an extra $70/pt just so that I could take a cruise which by the way I couldn't do anyway because I wouldn't have enough points to do so. For me it was resale or not buying at all.

PS - Believe me though I counted down those 30 days for ROFR and then I was like a kid waiting for Christmas morning waiting to get my membership packet.

 

[Dean]

Obviously there is some reason for it, or they wouldn't do it. It doesn't make sense to me to buy up points...and hold them for the next 30 years while paying Dues on them. Reselling as 2057 points makes sense.....IF people are buying them and I have no idea who is buying what. But couldn't they just close most of the resort in 2042 when most people's points expire, and only keep open enough buildings to satisfy the amount of 2057 points out there? After all, numerous other resorts will be ending that year as well. Should be an exciting year as only SSR, AKV, BLT, GFV, and what remains of OKW will be open (plus any future resorts they build).

OKW is the only one currently with different ending dates. I'm certainly not an expert in this area and haven't formulated a definite opinion yet but my first impression is they've have trouble closing any building that still has points owned and my response was based, in part, on that assumption. As for exciting, it might be depressing if none of the other resorts are extended. And I'm not talking about those losing their DVC due to the RTU but those remaining who will almost certainly have a significant fee increase related to infrastructure and management or else a significant streamlining of services the last few years leading up to 2042. I'm optimistic that the other resorts will be extended but we'll see. Personally I think DVC has the perfect opportunity to sell off points by both extending the points sold but also extending the points the buyer already owns and possibly upgrading those with unqualified points as well.

If they feel they can legally close buildings, that gives them to opportunity to do so ahead of time by owning enough points. Then they could do whatever they wanted including raze them and put up a new resort if they chose. They could even use the same infrastructure if desired.

 

[Dean]

Maybe I am in the minority then.

If you let ROFR dictate your offering price within the last few years I'd say you're in a very small minority.