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DVC... for sale by owner (FSBO)?

Discussion in 'Purchasing DVC' started by MoreTravels, Jun 16, 2013.

  1. MoreTravels

    MoreTravels Mouseketeer

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    The typical commission for a DVC resale is 10-15%. And they don't do too much.. unlike a real house, the agent does not need to drive you, show you the property, etc. They wait at their office with 800# and here comes the 10% cut for a few minutes of conversation. Also, if you are a non-US resident, like Canadian or British, you also lose another 10% on FIRPTA tax.

    In other words, you lose 25% just from fees and taxes when you don't need your DVC ownership anymore. This is not counting depreciation, etc.

    So why is there no FSBO section allowed here or most DVC forums? Is it because of the banner ad conflict of interest? Or is it a Disney DVC rule?

    If it is simply advertiser conflict of interest, maybe I should go register a domain and DIY. :scratchin
     
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  3. ptlohmysoul

    ptlohmysoul Mouseketeer

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    If you do, please let me know the site. :) There is a dvc by owner site, but it doesn't appear functional.
     
  4. JimMIA

    JimMIA A little Miami humor...

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    The typical resale commission is 10%, not 15%.

    And while that may sound high compared to residential brokerage commissions, keep in mind that the sales amounts are small -- $10,000-$20,000, rather than $300,000 or more. So the actual commission paid is far, far less. So much less that there are only a few real estate brokers who will mess with timeshares.

    I'm not an expert on sales by owners from other countries, but I don't think FIRPTA works the way you think it does. I believe it is simply a withholding from your proceeds and is eventually remitted to you if there is no gain on the sale. With anyone's timeshare, it's unlikely there would be any gain on a resale. Possibly someone else can clarify that for both of us.

    As far as the DIS rules, yes it is against DIS posting policy to offer anything for sale -- with the exception of renting reservations on the DIS DVC Rent/Trade board. The DIS chooses not to become a marketplace, and that is certainly their right.

    There are other timeshare-oriented sites -- TUG and Redweek, in particular -- where direct advertising and owner-to-buyer sales are permitted...but not here. And of course, there is a huge Internet marketplace including eBay and Craigslist, among other commercial venues.

    You could set up your own site if you like, although I think you would find yourself in competition with several well-established operators who have been doing business successfully for years. That doesn't mean you won't be successful, of course.
     
  5. JimMIA

    JimMIA A little Miami humor...

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    Also, there is no "conflict of interest." :rolleyes:

    The DIS simply chooses not to become a marketplace. In order to bring the DIS to us free of charge, they accept advertising. In fact, YOU are one of their advertisers. That is hardly a new concept on the Web, and is not a conflict.

    DIS advertisers do NOT sell here on the DIS (with the exception mentioned above...which you use). They sell/advertise on their own websites, whether they happen to be State Farm Insurance, Google, or The Timeshare Store.
     
  6. MoreTravels

    MoreTravels Mouseketeer

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    FIRPTA tax is difficult to get refunded. You essentially have to apply for a SSN/TaxID and file an American tax return as a Canadian / foreign owner. If your tax return show a capital loss instead of gain, you may get a tax refund. When you do that, you open a complete can of worms because you just subject yourself to the American tax rules now.

    For Americans, there is no big deal. IRS already knows about you and tax filing is no big deal. But I don't think many foreigners would appreciate having a file at IRS, given what have we heard these days on American citizen privacy and IRS pursuit of taxation.

    I also find it very annoying that no broker has mentioned to non-American buyers about their tax consequence at the time of DVC buying. I did not know about it until many years later when I was inquiring about a potential sale. I can safely bet that over half of non-American buyers do not know about it and will be surprised later.
     
  7. Dean

    Dean DIS Veteran<br><a href="http://www.wdwinfo.com/dis

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    There are many sites including ebay, TUG and redweeks where you can list. Typically legit FSBO contracts come in under the same contract sold through a broker so you'd really not saving much. Plus, legally you might still be responsible for the tax. It is not the brokers or salesperson's job to know about or explain such tax implications.
     
  8. bighoo93

    bighoo93 Mouseketeer

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    I'm not a big fan of the commission paid as a percent of sale price for real estate anyway. There really isn't any more time or effort in selling a 200k house vs. a 400k house, but you pay twice as much for the same service. However, this is just the accepted industry standard, so it survives. All the more for timeshare sales. Doesn't make sense to me to pay someone twice as much to list and sell my 200 points as my 100 points. But if that is what everyone is doing, you're kind of stuck.
     
  9. JimMIA

    JimMIA A little Miami humor...

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    Whenever we consider purchasing real estate or getting involved in any business transaction anywhere, we owe it to ourselves to understand the legal and tax environment. That environment is fundamental to making any kind of rational decision. How do you make a decision without researching and understanding that stuff?

    Obviously laws and tax codes vary widely from one place to the next -- they vary widely within the US from state to state. I can't imagine entering into any business transaction without understanding the basic ground rules.

    That's just flying blind, which is downright foolish.
     
  10. JimMIA

    JimMIA A little Miami humor...

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    When I sold a couple of DVC contracts, I was well aware of TUG, Redweek, and other outlets offering a market for my contracts. Most of them charged little or nothing, some charged, but far less than the typical 10% commission charged by brokers.

    I chose to go with a broker (in my case, The Timeshare Store) because I thought my contracts would get much greater exposure to prospective buyers than other outlets. That exposure is what I was paying 10% for, not someone driving prospects from house to house like you have in residential sales.

    It worked out for me. I was very pleased with the quickness and the net result of my sales. I wouldn't do it any other way.

    But it's not the only way. Nobody is locked in to paying a broker commission.
     
  11. ELMC

    ELMC DIS Veteran

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    Sorry, but I don't think it's fair to put that on the brokers. Their job is to match buyer and seller as well as facilitate the transaction, period. Explaining the inner workings of DVC or potential tax consequences is beyond their area of expertise and responsibility. Really it's on the buyer to know about that. While I understand your frustration about the surprise tax, it's your fault, not anyone else's.
     
  12. Dean

    Dean DIS Veteran<br><a href="http://www.wdwinfo.com/dis

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    Almost like tipping. Of course then almost no one would be able to sell in all likelihood.
     
  13. iluvthsgam

    iluvthsgam Mouseketeer DVC Gold

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    I was the one who registered that domain name, because when browsing for a resale contract myself, I didn't find any location where owners could list their contracts for sale for themselves.

    I know its probably not a huge number of owners, but it didn't cost me anything but the domain name as I already have hosting.

    So http://dvcresalebyowner.com it is. Obviously there are no listings yet, but you can sign up to be notified if a listing does get posted. Its all free, and if it helps one person sell their membership and another get a good deal, its worth it.

    Any questions, let me know.
     
  14. twinsouvenirs

    twinsouvenirs Mother of Dragons :)

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    I just signed up :) Looking for bwk or SSr in the range of 100-200 pts in case anyone cares.
     
  15. E-P-C-O-T

    E-P-C-O-T DIS Veteran

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    Signing up too, great idea!!
     
  16. iluvthsgam

    iluvthsgam Mouseketeer DVC Gold

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    Thanks, if anyone has any feedback or suggestions, please let me know.
     
  17. tjkraz

    tjkraz <img src="http://www.wdwinfo.com/images/silver.jpg

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    Just a few random thoughts:

    1) Agree with the comment that a big part of what you're paying for with a broker is exposure.

    2) As a seller, you're also paying for the experience of the individuals involved. If you want to sell on your own, you need to understand how the ROFR process works, write your own contract, work with a title company, etc.

    It's a much more complicated process than selling an old TV on eBay.

    3) As a BUYER, there is absolutely no way I would go this route. The last thing I would want is to end up wasting my time with some stooge who has no idea what he is doing, and is only focused on saving a few hundred dollars commission.

    4) Also as a buyer, the appeal in buying direct from seller would be to save money. But Disney's ROFR makes that a difficult proposition in many cases.

    5) To the poster who created the website, I would strongly encourage you to fill that site with disclaimers regarding your role in the process before you go live. One bad transaction and a buyer could attempt to sue anyone / everyone involved in the process.

    And really, even if you're hit with a totally baseless lawsuit, you could run up thousands in legal fees just to get a dismissal.

    It's one thing if you're actually making money off of the site (advertising, listing fees, etc.) which could help offset any future expenses. I'd think long and hard about the potential drawbacks to operating the site as a free community service.
     
  18. tjkraz

    tjkraz <img src="http://www.wdwinfo.com/images/silver.jpg

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    Also, with regard to FIRPTA, I doubt that FSBO relieves that obligation.

    According to the IRS website:

    "In most cases, the transferee/buyer is the withholding agent. If you are the transferee/buyer you must find out if the transferor is a foreign person. If the transferor is a foreign person and you fail to withhold, you may be held liable for the tax."

    Another land mine for FSBO--buyer isn't aware of the need to withhold on a foreign transfer and could be forced to pay the tax himself.
     
  19. iluvthsgam

    iluvthsgam Mouseketeer DVC Gold

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    All very good points Tim - thank you, I appreciate your feedback. Certainly not for everyone. People will have different comfort levels and obviously don't expect it to be some huge marketplace - but it doesn't cost me anything and if helps a few people, great. As far as the disclaimers and liability - I'm working on that stuff now just have not had time to get it up there. Being so new, there probably won't be any listings on there just yet so I have time to get it on there.

    And I'm a litigation attorney at my day job, so hopefully if sued I won't run up that big of a bill ;)
     

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