How much less would you offer on a stripped contract?

buy24me

Mouseketeer
Joined
Mar 7, 2007
Not sure if this is the way I want to go, but it seems like I am having a hard time finding what I am looking for unless it's a stripped contract. But then again, I am not in a rush right now. So my question is, if you were to buy a stripped contract, how much less would you offer?
 
A stripped contract is much less interesting for buyers, since most of them want to use their points as soon as possible.
Moreover I think that Disney is less likely to use ROFR on a stripped contract. I've read that they cannot refill the points and should wait a few year before reselling it.

This means that you can lower the price aggressively. Look at the ROFR thread, find the medium price for a loaded contract for your resort ad subtract at least 10$ if it has not current year points, 20$ if it has not next year points.
The worst can happen is that the seller will answer with a counter-offer. But you can get a pleasant surprise, like I did on mine. I was expecting a counter offer and instead the seller accepted :cool1:
 
Remember that stripped contracts are usually priced accordingly, so you may not get what you're looking for. Now, if it's priced the same as a loaded contract right next to it....

MG
 
I would determine how much less you are getting, point-wise or years-wise and reduce the price you'd be willing to pay by at least that same percentage, or more, as compared to the cost of a non-stripped contract. For example, if the resort has 20 years left as part of DVC, but you are getting 2 years less use, it should be 2/20 or 10% less in cost than one offering the full years' usage.
 


The owner should pay all the annual fees for the points they have already used. So if they used the 2013 points, they should plan to pay the 2013 dues which may need to be estimated. I wouldn't adjust the price per point because they haven't changed much in the past year or two unless you buy directly from Disney.
 
The owner should pay all the annual fees for the points they have already used. So if they used the 2013 points, they should plan to pay the 2013 dues which may need to be estimated. I wouldn't adjust the price per point because they haven't changed much in the past year or two unless you buy directly from Disney.

I'm not sure I'm understanding you correctly. Are you suggesting that you should pay the same price per point for a stripped contract as you would a loaded one?
 
I'm not sure I'm understanding you correctly. Are you suggesting that you should pay the same price per point for a stripped contract as you would a loaded one?

I think what the person is saying is that if the contract is stripped, you need to make sure that you aren't paying the maintenance fees on points that have already been used (borrowed) by the current owner. I'm guessing that Disney doesn't require the person to pay the MFs on borrowed points (which is odd, but okay).

For example, I'm looking at the Timeshare Store that is advertising a 160 point contract at $79/point. BUT, the current owner has already borrowed 151 points for a trip that apparently doesn't end until 5/10/12 (because you cannot close until 5/11/12).

So, is the $79 point actually the real price? It is if you multiply $79 x 160 points = the asking price of $12,640. But, since you don't get to use your 160 points until March 2014, you are really paying more if you have to pay the 2013 maintenance fees for 160 points (even though you only get 9 points). You're paying $676.80 for 9 points of use in 2013.
 


I would avoid all stripped contracts all together. You said yourself your not in a hurry. Just wait it out and you will get a loaded contract. Be patient on the buying side.
 
I think what the person is saying is that if the contract is stripped, you need to make sure that you aren't paying the maintenance fees on points that have already been used (borrowed) by the current owner. I'm guessing that Disney doesn't require the person to pay the MFs on borrowed points (which is odd, but okay).

For example, I'm looking at the Timeshare Store that is advertising a 160 point contract at $79/point. BUT, the current owner has already borrowed 151 points for a trip that apparently doesn't end until 5/10/12 (because you cannot close until 5/11/12).

So, is the $79 point actually the real price? It is if you multiply $79 x 160 points = the asking price of $12,640. But, since you don't get to use your 160 points until March 2014, you are really paying more if you have to pay the 2013 maintenance fees for 160 points (even though you only get 9 points). You're paying $676.80 for 9 points of use in 2013.

That much I understood. I would assume that people would not pay maintenance fees for points they can't use. What I would like clarified are the comments on price per point on a stripped contract. It sounded to me like they said they would not adjust the price downward for one.
 
That much I understood. I would assume that people would not pay maintenance fees for points they can't use. What I would like clarified are the comments on price per point on a stripped contract. It sounded to me like they said they would not adjust the price downward for one.
I can't answer your question, but I will say the price adjustment for a stripped contract is usually already built into the asking price. Of course, the asking price is always negotiable as well.
As far as paying for fees on points already used (or refunding fees paid for points not used), at least in the contracts I have sold the resale broker helped us figure that out and it was squared up at closing.

MG
 
I can't answer your question, but I will say the price adjustment for a stripped contract is usually already built into the asking price. Of course, the asking price is always negotiable as well.
As far as paying for fees on points already used (or refunding fees paid for points not used), at least in the contracts I have sold the resale broker helped us figure that out and it was squared up at closing.

MG

Exactly.
 
A stripped contract may or may not be priced accordingly, often they really aren't. However, it's not difficult to adjust value between different contracts. Here are a few possible adjustments and caveats.

  • Ignore borrowed points or banked points expiring in the current UY in the price, only look at them as a bonus. Same for reservation points.
  • Deduct a reasonable amount for points that are missing from the current or future UY. $10-12 a point is a reasonable adjustment but assumes you'd be paying the main fees on those points (or most of it) which is often the case, if the seller is paying the dues on those points (see below) then adjust accordingly.
  • One might also deduct around $1 a point for each month between the buy in date and the start of the UY.
  • Realize that almost everyone overpays in the area of maint fees for a resale. Maint fees are paid up front so if you pay any, you're reimbursing the seller, not paying it to DVC. They are charged on a calendar year basis. that means that when you pay your dues in Jan on an August UY, you're actually paying for 7 months of the present UY and 5 months of the upcoming UY. Put another way, if there were no points available until August, you would have overpaid by 7/12 of that years fees if you paid the entire amount.
  • Adjust for the number of points using the price per point and adjust if necessary, for any additional factors.
  • Ultimately you need to look at the overall package and how it fits for you. Don't micromanage too much on these issues. For example, don't sweat it if you overpay on the dues but get a great deal overall.

ETA: For small contracts you need to consider the closing costs carefully. Often, if you can find a private seller willing to work with you, you'll be far better off and can save as much as $400 on closing and often some additional savings due to the fact there are no commissions. Even if a private seller has a contract listed with a broker, the listings are generally non exclusive and thus there would still be no commissions if you found them privately.
 
Remember that stripped contracts are usually priced accordingly, so you may not get what you're looking for. Now, if it's priced the same as a loaded contract right next to it....

MG

I made an offer on a stripped contract at SSR where the sellers said they wouldn't negotiate less than $65 because that was how much they owed. It was a September contract where they had borrowed all the 2012 points already. I think more time needs to pass for some sellers to accept reality.

Bruce
 
The majority of stripped contracts I have seen do not reflect IMO that big of a discount. If a loaded contract with banked points is priced 5.00 more then a stripped contract with no points coming until 2013 say a Oct UY, it means we are still in 2011 UY and no points for 1 1/2 years.

I bought a fully loaded contract with banked , current year and next year points coming 6 months after we closed. I paid 59.00 PP closing costs but did not pay MF on 2009 or 2010 points. I rented 2009 points out brought PP down to 49.00 PP - then I booked a room for friends charged them 5.00PP with 2010 which brought in another 400.00 and PP to 45.00. We used the other points which was over 200 available to us for our stay in Feb. The contracted was originally listed at 65.00PP so with negotiation and doing the math we were able to creatively get the PP down by 20.00 I do not see stripped contracts even 10.00 lower for the majority! I personally do not look at stripped contracts I am saving my money because I feel prices will go down and if I cannot use the points right away why shell out the money now - if stripped contracts were priced 20.00 PP less I may consider it.
 
IMO, subtracting $10 pp is unrealistic when figuring the price of a stripped contract. Using round numbers, a point costs $100 and can be used 50 times. That's about $2 per point, per year. That would be a starting point for me. I think the reality may be a bit more than that, but I read earlier $18?? That seems way too much.
Now, I am disregarding the issue of fees on those points, as the buyer should only pay for fees on the points they can use.

MG
 
I made an offer on a stripped contract at SSR where the sellers said they wouldn't negotiate less than $65 because that was how much they owed. It was a September contract where they had borrowed all the 2012 points already. I think more time needs to pass for some sellers to accept reality.

Bruce

Those people are crazy. SSR goes for around $50 per point. That's what I paid this summer. For a stripped contact I'd offer at least 20% less than the lowest thing that has passed ROFR. At least $10 less. You need to wake them up. Remember it is business and they can say no. Take the approach that you don't care if they say no and you will be fine. There are lots of contracts out there. For sure don't pay what it costs for a non stripped contract. Unless you've got money to burn :rotfl2: don't worry about being "fair" that is for them to decide. Make an offer.
 
IMO, subtracting $10 pp is unrealistic when figuring the price of a stripped contract. Using round numbers, a point costs $100 and can be used 50 times. That's about $2 per point, per year. That would be a starting point for me. I think the reality may be a bit more than that, but I read earlier $18?? That seems way too much.
Now, I am disregarding the issue of fees on those points, as the buyer should only pay for fees on the points they can use.

MG

I see your point and clearly there are a lot of ways to look at the pricing of points. One thing to consider, however, is that if you buy a contract with previous year's points, you can rent out those points for an average of $10 each. Usually in these cases the mf for past years are not reimbursed whereas current year mf usually are. So (assuming a BWV contract) the 2011 points have an average value of $10 each and the 2012 points have an average value of about $4.38 [$10 rental - $5.62 mf]. That's not using the pricing metric that is used to calculate long term cost of points, it's simply taking into consideration their cash value.

So by that logic, it would stand to reason that if a sample contract at BWV that had 100 2011 points and 100 2012 points were priced at $60 pp, you could rent out all of those points and have a net cost of $45.62 [$60 out of pocket cost + 2012 mf - $20 in rental income from 2011 and 2012 points].

By that logic, a comparable stripped contract (no 2011 or 2012 points) should be priced at $45.62 (assuming mf for 2012 are not reimbursed). From what I've seen, stripped contract listings do not adhere to this logic and are, therefore, a lesser value than buying a loaded contract.
 
Those people are crazy. SSR goes for around $50 per point. That's what I paid this summer. For a stripped contact I'd offer at least 20% less than the lowest thing that has passed ROFR. At least $10 less. You need to wake them up. Remember it is business and they can say no. Take the approach that you don't care if they say no and you will be fine. There are lots of contracts out there. For sure don't pay what it costs for a non stripped contract. Unless you've got money to burn :rotfl2: don't worry about being "fair" that is for them to decide. Make an offer.
Than again, if you are not willing to pay a fair price, you may never buy a contract. Of course you could get lucky and find someone in a bad situation (if you can call that lucky..).
We had a low ball offer for one of our contracts and I just chuckled. First, nobody in their right mind would have accepted their offer, and if they did it likely would not make it through rofr.
Getting a good deal is great, but you must be reasonable.

MG
 
I see your point and clearly there are a lot of ways to look at the pricing of points. One thing to consider, however, is that if you buy a contract with previous year's points, you can rent out those points for an average of $10 each. Usually in these cases the mf for past years are not reimbursed whereas current year mf usually are. So (assuming a BWV contract) the 2011 points have an average value of $10 each and the 2012 points have an average value of about $4.38 [$10 rental - $5.62 mf]. That's not using the pricing metric that is used to calculate long term cost of points, it's simply taking into consideration their cash value.

So by that logic, it would stand to reason that if a sample contract at BWV that had 100 2011 points and 100 2012 points were priced at $60 pp, you could rent out all of those points and have a net cost of $45.62 [$60 out of pocket cost + 2012 mf - $20 in rental income from 2011 and 2012 points].

By that logic, a comparable stripped contract (no 2011 or 2012 points) should be priced at $45.62 (assuming mf for 2012 are not reimbursed). From what I've seen, stripped contract listings do not adhere to this logic and are, therefore, a lesser value than buying a loaded contract.
On my way out so this is brief..
Your scenario assumes your time, risk, and pita to rent isn't worth anything.
Some scenarios assume that if you wait 6 months to sell, your price should increase by $12 pp because now you have current UY points. In reality, you have always had the same number of points left on your contract.

MG
 
My sense is that the market generally under-values loaded contracts, and over-values stripped ones.
 

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