Member Dues as a cost factor in resale

[BeachClub2014]

So I am in the process of re-purchasing an interest in DVC. Used to be a member, sold all my points, now am coming back "Home". In trying to negotiate a re-sale deal I have had several "owners" (or their agent) refuse to budge on the 2015 member dues. The earliest a contract could close now is in June, that means the current owner will have had the benefits of membership for at least 6-months. Why would a buyer subsidize that? That is especially true if the UY doesn't begin until the later months of the calendar year.

Am I crazy here or do others just like paying for something they aren't getting?

 

[CMNJ]

Usually whoever is getting the use of the current use year's points is who pays the dues on them (or so I have gathered for the brokers I talked to when we were in the market in the fall). Obviously many people have negotiated the seller paying them or 1/2 the cost but ultimately the seller didn't really have "the benefit of membership" for the current use year if they didn't use the current use year's point allotment-the dues are charged to cover the cost of the upkeep and taxes on the property for the upcoming year so if the previous owner hasn't actually used their points for 2015 I can see where people want to be reimbursed. Plus if the contract will still close during the banking window then the new owner can actually use the points in 2015 use year or 2016.

So I am in the process of re-purchasing an interest in DVC. Used to be a member, sold all my points, now am coming back "Home". In trying to negotiate a re-sale deal I have had several "owners" (or their agent) refuse to budge on the 2015 member dues. The earliest a contract could close now is in June, that means the current owner will have had the benefits of membership for at least 6-months. Why would a buyer subsidize that? That is especially true if the UY doesn't begin until the later months of the calendar year.

Am I crazy here or do others just like paying for something they aren't getting?

 

[BeachClub2014]

ultimately the seller didn't really have "the benefit of membership" for the current use year if they didn't use the current use year's point allotment-the dues are charged to cover the cost of the upkeep and taxes on the property for the upcoming year so if the previous owner hasn't actually used their points for 2015 I can see where people want to be reimbursed.

See, this is the part I still grapple with. The owner did have the benefit of ownership and was entitled to all of the use of "benefits of membership' from January 1 thru the closing date. If they choose not to use that benefit of membership then that's their decision.

Just seems odd to me that many people are so accepting of this as a "given"...........

 

[Minniesgal]

See, this is the part I still grapple with. The owner did have the benefit of ownership and was entitled to all of the use of "benefits of membership' from January 1 thru the closing date. If they choose not to use that benefit of membership then that's their decision.

Just seems odd to me that many people are so accepting of this as a "given"...........

Personally I think if the points haven't been used then it is reasonable to expect the buyer to pay the MFs on them. If the points have been used the seller should pay.

It is a sellers market just now so I can understand sellers not budging as they know another offer will come along soon.

 

[CMNJ]

See, this is the part I still grapple with. The owner did have the benefit of ownership and was entitled to all of the use of "benefits of membership' from January 1 thru the closing date. If they choose not to use that benefit of membership then that's their decision.

Just seems odd to me that many people are so accepting of this as a "given"...........

I understand what you are saying (no one wants to pay more than they have to) but I would suspect that if the norm became for seller's to not get reimbursed MF for current use year even more contracts would be put up for sale totally stripped (rental market is very healthy right now and owner's can make 11-$13 per point)
Also agree with the PP-seems like if is a seller's market right now

 

[BeachClub2014]

Oh I get that people believe it to be a seller's market. Totally understand that. But DVC is a totally discretionary purchase and therefore should be driven more by the buyers, than the sellers.

Let me put it another way, when you buy a house you only pay a pro-rated portion of the property taxes as you only owned it for a portion of the year. Heck, even DVC pro-rates the dues when you buy direct.

 

[nalajms]

But DVC is a totally discretionary purchase and therefore should be driven more by the buyers, than the sellers.

I think because it is a discretionary "luxury" purchase, it's therefore driven by the seller. ie how badly the seller wants to unload their DVC. Similar example would be diamonds and luxury cars. You can go to the dealership and offer them 20k for that 70k BMW, they won't budge even if there's 100 of them on the lot. Even during the recession, a 1 carat Tiffany engagement ring was still 5 figures on ebay! I remember thinking I'll pickup some jewelry for cheap....You really can't compare it to a house, maybe a vacation home.

 

[vicki_c]

The benefits of membership are using the points. If the points aren't used, I would expect to pay MFs for the year. If some are used, a pro-rated amount.

 

[Friendlyadvice2]

There's three major cost components to a resale purchase: price per point, MF, and closing costs; all of which are negotiable. I'm not sure why you're hung up on a seller not budging on MF. If you've done the proper research then you know where you need to be from a total price perspective. If you can't get the seller to agree to that total price by negotiating any combination of those three components then move on. Its business, not personal. Also, the ROFR thread will give you a great indicator of what current market conditions are and who is paying MF.

 

[BeachClub2014]

I think because it is a discretionary "luxury" purchase, it's therefore driven by the seller. ie how badly the seller wants to unload their DVC. Similar example would be diamonds and luxury cars. You can go to the dealership and offer them 20k for that 70k BMW, they won't budge even if there's 100 of them on the lot. Even during the recession, a 1 carat Tiffany engagement ring was still 5 figures on ebay! I remember thinking I'll pickup some jewelry for cheap....You really can't compare it to a house, maybe a vacation home.

Totally get the analogy here. Different seller's have different motivations, needs and wishes. Some people HAVE to sell for a variety of reasons. Nobody HAS to buy DVC. That's what I mean by a DVC purchase should be more buyer-centric than seller-centric. Buyer's get what we traditionally accept. If you find the right jilted ex-girlfriend, you may just get a heck of a deal on that 1-carat Tiffany engagement ring.

 

[hopeful4fl]

Agree 100% with Friendlyadvice2.
This is a real estate transaction and everything is negotiable. You have to understand "total cost" and decide whether it is a good deal, rather than try to get a break on one component. If one party is not negotiating on one aspect, see if there is another component that you can get a break on to get to your price point.

 

[BeachClub2014]

There's three major cost components to a resale purchase: price per point, MF, and closing costs; all of which are negotiable. I'm not sure why you're hung up on a seller not budging on MF. If you've done the proper research then you know where you need to be from a total price perspective.

Sorry if I offended you or upset you in some way. I am not "hung up" on anything, I just asked a question. I have done my research, and with the exception of the last two years, have been a member since 2000.

 

[supersnoop]

Oh I get that people believe it to be a seller's market. Totally understand that. But DVC is a totally discretionary purchase and therefore should be driven more by the buyers, than the sellers.

Let me put it another way, when you buy a house you only pay a pro-rated portion of the property taxes as you only owned it for a portion of the year. Heck, even DVC pro-rates the dues when you buy direct.

Dues are charged based on points, not time. If you're getting the points, you pay the dues. Obviously everything is negotiable, but not everyone negotiates.

 

[BeachClub2014]

Agree 100% with Friendlyadvice2.
This is a real estate transaction and everything is negotiable. You have to understand "total cost" and decide whether it is a good deal, rather than try to get a break on one component. If one party is not negotiating on one aspect, see if there is another component that you can get a break on to get to your price point.

I absolutely agree with you here, that's my point entirely. It just seems odd to me that several brokers/sellers I have been dealing with are very dogmatic when it comes to the dues, refusing to budge at all but were willing to move a lot on the asking price and closing.

 

[BeachClub2014]

Dues are charged based on points, not time. If you're getting the points, you pay the dues. Obviously everything is negotiable, but not everyone negotiates.

But that's just not true. Dues are formulated and paid by the calendar year, which is a function of time. The price you pay is based upon the amount of your ownership interest throughout a year, not when you "get" the points.

 

[CMNJ]

Oh I get that people believe it to be a seller's market. Totally understand that. But DVC is a totally discretionary purchase and therefore should be driven more by the buyers, than the sellers.

Let me put it another way, when you buy a house you only pay a pro-rated portion of the property taxes as you only owned it for a portion of the year. Heck, even DVC pro-rates the dues when you buy direct.

The difference with a house analogy is that often the seller lived there during that time and therefore did "benefit" from being the owner for a portion of the year-that is not the case if the DVC owner didn't use their points.
I do find it interesting that you say they are willing to negotiate closing costs and price per point but not MF

 

[supersnoop]

But that's just not true. Dues are formulated and paid by the calendar year, which is a function of time. The price you pay is based upon the amount of your ownership interest throughout a year, not when you "get" the points.

Nope, that's not true. Dues are collected by calendar year, but formulated by points.

 

[pangyal]

But that's just not true. Dues are formulated and paid by the calendar year, which is a function of time. The price you pay is based upon the amount of your ownership interest throughout a year, not when you "get" the points.

The way I see it, let's say a contract has a June use year. While it's true that the owner has had six months to use the points, and let's assume s/he didn't, that still gives me as a buyer a full twelve months to use those points- not just the six months remaining in the year. Therefore, I would think it only fair that I pay the MF on those points.

 

[BeachClub2014]

Dues are collected by calendar year, but formulated by points.

That is exactly the point I am making. When you use points is totally irrelevant to the dues. If you bank a years worth of points into the next use year, you don't get to defer paying the dues. And if you borrow points into a current use year from the future year you don't pay more. You could never actually "use" the points and still have to pay the annual dues because you owned them.

 

[BeachClub2014]

The way I see it, let's say a contract has a June use year. While it's true that the owner has had six months to use the points, and let's assume s/he didn't, that still gives me as a buyer a full twelve months to use those points- not just the six months remaining in the year. Therefore, I would think it only fair that I pay the MF on those points.

Except when the points are first purchased the MF are prorated from the date of ownership. The only correlation between the "points", which is the DVC way of representing percentage of ownership, is factoring the amount to be paid, not when to pay them. Otherwise, the MF due dates would be directly tied to your use year.

And the MF are for membership in DVC as a whole, including your resort maintenance, etc. But there are many other benefits of DVC membership that are not tied to the number of points you own or use in any given year.