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Location vs Price?

Discussion in 'Purchasing DVC' started by Docmom, Apr 6, 2013.

  1. bisney

    bisney New Member

    @ docmom

    Thanks! But until we get through ROFR, we're cautiously optimistic. I would highly recommend the Timeshare Store, they have been great to work with.

    @ Tim/Doug

    The current resale restrictions had no impact on our decision to buy/price. If however, they were stricter (e.g. - limiting where you can stay to your home resort, etc), then that would definitely be factored into DVC's appeal and it's value to us. To tell you the truth it was the recent sales/ROFR activity that drove our price. We chose what we felt was the lowest amount per point that we felt had a good chance of getting through the ROFR based on recent (last two weeks) worth of activity per information provided by two different brokers. We isolated our ideal use year and amount of points plus/minus a month and 15 points and found that there was only 1 listing available and luckily for us they accepted our price. Now it's a waiting game.

    @ Deb

    Oh I agree completely that the home resort is very important. Luckily, DVC provides so many fantastic options that we'd be quite content anywhere. Like I was saying, if in the future there was one particular resort that we felt like we HAD to stay in order to be happy, we would buy there but for us that's not the case. Our thought was "buy at the most economical place where we wouldn't mind staying" so that if our waitlist doesn't work out, we'd be more than happy. Some people love staying at one place and that's great for them... for us, we like trying out different places which makes SSR's low dues and low PP buy-in very appealing.
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  3. Apps

    Apps New Member

    I believe it had to have some effect on resale or it affected direct sales. I say this because now people are more hesitant to go resale as they are afraid more restrictions may be coming. Imagine if no restrictions had ever been placed on resale. The net effect would be that everyone would go to the resale market and wouldn't care about direct because they would provide the exact same benefit. The threat of restrictions had to have some effect on the market be it lower resale or higher direct pricing.
  4. Missyrose

    Missyrose New Member

    I think you're missing one important way Disney gains points to sell. Every month Disney gets back thousands of points from people who simply want to walk away from their contracts because of financial issues and also via foreclosure on people who have stopped making their loan payments. This category of contracts far outnumbers how many contracts Disney gets back via ROFR ( and more importantly for Disney, these contracts cost them nothing to reacquire).
  5. tjkraz

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

    As long as there is a market, they will continue to build new.

    Bay Lake Tower was publicly acknowledged to have cost $140M to build. It represents about 5.6 million points. If you do the math, that's about $25 per point to build.

    It makes no sense for DVC to actively pursue ROFRs at $50-60 per point and sell for $130 when they can build for $25 and sell for $165. If land were at a premium, that would be a different story. But WDW still has plenty of room to add new DVC villa rooms.

    There are limits to the foresight consumers will display. Many other timeshares are practically unsellable immediately after purchase. You could go on eBay now and find dozens of listings from people just looking to get a couple hundred bucks--while ridding themselves of the dues obligation--for a timeshare that cost them $10K+.

    Regarding the house analogy, look within a couple miles of your own house and I bet you'll find properties which have been on the market forever yet nobody is biting. Buying that house right next the railroad tracks seemed like a good idea to someone. :confused3

    But I do agree it would not be wise for Disney to act too recklessly. Only time will tell how far they are willing to push the envelope.

    Direct buyers only. They won't even allow cash payment for the Member Cruise unless some points are owned which were purchased direct or resale prior to March 2011.
  6. DougEMG

    DougEMG New Member

  7. Docmom

    Docmom New Member

    Wow! I didn't realize they were getting that many that were either being foreclosed or given back to Disney. Guess it makes sense in a bad economy. That's one reason I wouldn't want to finance. I think you could at least pay a chunk of your annual maintenance dues via renting your points if things got bad as an individual. But if the economy tanked really bad, especially worldwide, then even that would be difficult. We can't know the future but certainly something else to think about.
  8. Novakm

    Novakm New Member


    I think that the reason that DVC does not do anything about the resale or renter problem is because there is no problem!

    The DVC business model is to sell new timeshares, and maintainence. In order to be able to justify thier exhorbitant margins, they need to be able to be competitive with other timeshare operators. That means matching the features others offer, like the ability to rent, and also doing what they can to keep resale values the best in the industry. It's the same as Hondas costing more new because they are worth more old.

    Does resale affect what they can sell direct? Probably not as much as you would expect. I would guess that the vast majority who buy resale would not buy direct if resale was not available. I know I wouldn't. Not because direct is a bad deal, but because its not that big a priority for me. They need to walk the fine line of being able to persuade the direct buyers not to go resale, while not making it so bad that they affect resale values. This can be done with the long process, the fear of dealing with an unknown realtor, and now the fear of future restrictions. These should be enough to discourage a direct buyer from going resale in most cases. I'd compare it to buying a dress at Walmart vs the same dress at a boutique. Walmart shoppers would not pay boutique prices, and boutique shoppers would not put up with the Walmart shopping experience, even if it does save some money.

    Other timeshares allow renting, so DVC allows it. They have to in order to compete. They only need to prevent single owners from getting o large a share that they can start to dictate things like maintainence standards.

    So that's why it's no problem for DVC. Now lets talk about why its no problem for you. Lets assume that the resale market dries up, and renting is not allowed. Imagine all the people who end up having financial problems. The factory closes down. The stock market crashes. CALPERS invests in Stockton and pensioners lose money. Lets further assume that these DVC owners can't rent their points, and can't find a buyer either. The first thing they do is stop paying MF. So your MF goes up to make up the difference. DVC can't get the contract by ROFER, because there is no offer, and they can't just take the ownership. They have to start legal proceedings. This costs money. Guess what? Your MF goes up again to pay legal costs.

    So there is a clear benefit to you, the person who will never sell and never run into hard times. A healthy rental and resale market keeps your MF from going out of control.

    So what is the downside for you? Do renters cost you money? No, the renter is responsible for any damage they cause. Do they reduce availability, not any more than if the owner was staying. Does resale reduce your investment? No, it increases its value.

    So why does renting and resale bother you?
  9. ELMC

    ELMC New Member

    I hate to break it to you, but the value of your direct points and my restricted resale points are the same. If you define value in terms of use, they will get us the same stays at the same resorts with the same booking windows. (Mathematically speaking, the other uses of points carry a negative value, so that does not apply here). If you define value as cash value, we will both be selling our contracts on the resale market and they will be treated exactly the same. In my opinion, DVD did you a disservice by limiting your exit options and restricting resale points.
  10. Apps

    Apps New Member

    I think we are saying the same thing. I bought resale. I'm just saying even direct owners should not wish restriction of points due to possible negative effects on resale.

  11. ELMC

    ELMC New Member

    Ok, I thought I might have been misinterpreting what you were saying, but I wasn't sure. Thanks for clarifying. :)
  12. Deb & Bill

    Deb & Bill DVC-Trivia Contest, Apr-2006: Honorable Mention

    Those perks you lose by buying resale could be gone tomorrow. There is no guarantee that DVC would continue to offer those for points. All you are really entitled to, whether you buy resale or direct, is staying at a DVC resort.
  13. disneynutz

    disneynutz <br><img src="http://www.wdwinfo.com/dis-sponsor/i

    Disney really showed their true colors when they restricted resales. Our family used to be like most families thinking that there was a Disney difference but making a huge profit seems to take center stage.

    :earsboy: Bill
  14. tjkraz

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

    DVC does reclaim some points via foreclosures but it's not nearly enough to support everyday sales. It's enough that they can meet the trickle of requests for small add-ons at older properties--but not close to the 150K - 200K points they sell in a typical month.

    The restrictions have been sufficient to persuade some buyers to purchase direct instead of resale. But the real question is whether that change has been enough to shift resale prices. IMO, it's doubtful that has occurred.

    Across all of the resale vendors there are several hundred contracts for sale at any given time. The volume of resale business lost to direct sales because of the restrictions is probably not sufficient to shift pricing upward.

    The flaw in your logic is thinking that buyers are equally aware of the ability to purchase resale. By-and-large, those who are aware of resale choose that path.

    Some who are aware of resale will still buy direct. Often it's buyers who want the quick and easy transaction or those looking for a very small contract (hard to find resale.)

    The vast majority of DVC's direct business these days comes from people who simply are not aware of the resale option. They stop by a DVC booth during their trip...end up taking a tour...and sign on the dotted line before even leaving Walt Disney World.

    Occasionally a buyer will bring up resale and these restrictions give the salesperson an angle to sway them back to the direct purchase. But again, I doubt these numbers are sufficient to have negatively impacted resale pricing.
  15. tjkraz

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

    As I illustrated in my prior post, it really depends upon what you value more.

    Remember the saying "a bird in the hand is worth two in the bush?"

    Imagine a new policy that only direct buyers--plus those who had purchased resale before a certain date--would receive 25% discounts on all park tickets.

    Could the policy hurt resale values? Yes. However, over the next 10 or 20 or 50 years, each eligible owner could save tens-of-thousands of dollars on park admission.

    Imagine that the booking windows are changed. Resale buyers keep the current 11/7 months. Direct buyers--and grandfathered resale buyers--receive a new 11/9 window. They can begin booking non-home resorts two months before the ineligible resale owners.

    Again resale proceeds could be lower if the owner ever has to sell. But meanwhile the owner potentially has decades of increased booking success at 7 months.

    Those are just fictional scenarios. The very real situation we have now is lower competition for availability on Disney Cruises, Grand Californian hotel rooms, Disneyland Hotel room and so on, because a growing population of members are excluded from those options.

    Every member would formulate their own opinion on such changes...some would like the changes others would not. You have to consider both the gains and the losses.

    You would be wrong to assume that all owners object to resale restrictions. It's entirely possible that the added benefits received as an eligible owner would outweigh any potential / perceived losses should the owner ever decide to sell.
  16. Apps

    Apps New Member

    I didn't realize the competition was so high for the DCL and DVC points for hotels that direct owners are now seeing large material benefits due to more resale owners. I assumed using points for non-DVC activity was uncommon. I realize that some buyers would prefer the additional perks over lower resale but I thought the majority of DVC direct buyers would want a higher resale value over the perks you mentioned. :) I don't plan to keep my DVC points forever so my assumptions may not reflect most DVC owners.
  17. DougEMG

    DougEMG New Member

  18. tjkraz

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

    Even more significantly, going by the textbook definition Disney itself is a point renter. They use DVD's own point holdings (unsold, foreclosed, etc.) to set-aside rooms which are rented to non-members at published cash rates.

    Disney is the biggest point renter of them all.

    It's not even worth considering the "they have to in order to compete" angle. Legally, I doubt that Disney could prohibit others from renting as long as they wish to engage in the same activity themselves.
  19. disneynutz

    disneynutz <br><img src="http://www.wdwinfo.com/dis-sponsor/i

    They transfer one time use points, get paid for the transfer which is against the rules and they do it multiple times per UY which also isn't allowed by the owners. Seems that the rules don't apply to Disney.

    I would guess that renting would be the same.

    :earsboy: Bill
  20. tjkraz

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

    Rules about no compensation for transfers may be on paper but they aren't enforced. Until they are enforced there's no reason to challenge.

    If Disney ever tried to put an end to point renting, they'd be sued in a hot minute.
  21. Lil' Grumpy

    Lil' Grumpy <font color=purple>Lil' Grumpy is really a Big Swe

    so sorry for the wrong impression.

    seldom i am posting my feelings unless i am trying to
    emphasis a personal experience/s.

    actually, i think both
    resales & renting , are beneficial to our ownership even
    though we have never used them. however, i have seen
    many problems over- "the misunderstandings"
    from their usage/and or reference to. i suspect there are some
    liking this confusion- so they go undetected.

    i like to see them doing more brain storming toward reaching/
    continuing- their potential profits. as an owner - i know
    what dvc "is" -based on our exchanges . but i also feel, to assure their
    "highest" profits, the co. need to look @ new rules & procedures
    aimed @ securing/ protecting their primary profit incomes. direct/resales/
    rci traders & professional renters make up the different groupings most
    belong to. all that is needed is action to enforce the current
    contacts....& tweak the perks, toward ranking all the groups
    above ,setting the marks by the incomes they can produce- now & into
    the future. i do think whatever side an owner is from-resales vs
    direct-has an influence. but which one has the most margins for
    profits is the wave of dvc future. direct owners should have this
    advantage because it isn't free.

    see? the other thread? how one is seeking the ways @ making
    dvc an investment- "tells me" it is being done. awhile back some
    were posting here too, "fishing" for new customers in order
    to expand their business. think about that...running their own
    business for profit- via using the dvc. they are not renting "left
    over" points or those collecting points to rent as a hobby.....
    but making a complete-living incomes. divided by the
    average owners trying for their vacation room & the number
    of "rooms" being taken as "to make a living"-has my attention.

    in general, i can see renting as a productive selling point
    & helps owners needing to on an off year. but reading here, i
    have seen some just owning a few dvc points as a "cover",
    while holding large rci trade ins- where they already have a
    groups of renters willing to pay & "keeping quiet". ( following
    them out to the logical conclusions. ) the dvc co. should
    be defining what makes "professional renting" and "check out"
    what some are doing within. i think the majority owners
    don't have the need to rent their points every year and would
    support restrictions to those doing so. also limiting the
    number of points owners could do so , to only do the
    studios for a week. see? just saying there are all kinds
    of policies that dvc could adopt.

    i also think all owners should "only" be able to rent @ their
    home resorts. did dvc build these resorts so they can
    be filled by renters? if others, buying up as many points as
    they can -from the cheapest resorts.....then "moving them"
    to the more expensive resorts, who are they hurting?
    the owners @ those resorts , and other owners just wanting
    to move. by adding this restriction , dvc places a dent in this
    personal business.

    what is the primary value to every dvc resort....the parks.
    and that gives dvc endless potential to manage these
    resources.....i see real values in using profits as their
    measuring tool.

    now if i was a dvc manger, i think owners owning @ more
    resorts /points where they are not utilizing them- based on how
    many vacations they are taking each year,...are costing
    the company profits, should be on their radar.

    sue for what? i don't ever remember dvc was selling with
    the purpose for renting as if you can make a business off

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