ROFR & Sales Dec '12-Jun '13

[dmunsil]

The deeds are up-to-date on the OCC web site, so here are the latest stats updated for June 2013. The posts with sale and ROFR prices per point will be coming shortly. The short version is that prices are going up across the board. Every resort's average resale prices went up by $2-$5 per point, as did the ROFR prices for the resorts where there were ROFRs.

New sales activity went way up, as expected, because of VGF. All the other resorts had lower sales except BWV, probably because the guides were occupied with VGF sales.

ROFR rate went up for VWL, BCV, BWV, and OKW. In the case of VWL, Disney took almost half the contracts!

Note to mods: I'm posting this here because I think it's useful for people contemplating a purchase. Some of these sale/ROFR data posts got moved to DVC-Mouscellaneous, and I'm not sure if it's because it's a better place for this data or because the thread veered off topic. If I should be posting them in Mousecellaneous, PM me and I'll put future posts of this type there.

Third-party Sales                                                       
        Dec-12  Jan-13  Feb-13  Mar-13  Apr-13  May-13  Jun-13
BLT     24      29      30      27      34      35      26
VWL     13      9       14      25      18      16      9
BWV     28      26      28      39      25      25      21
BCV     8       18      17      24      15      14      24
OKW     12      22      21      32      30      28      37
SSR     61      78      51      87      65      104     80
AKV     29      23      30      26      35      52      40
------------------------------------------------------------
Total   175     205     191     260     222     274     237
                                                        
ROFR exercises                                                  
        Dec-12  Jan-13  Feb-13  Mar-13  Apr-13  May-13  Jun-13
BLT     0       0       0       4       10      4       2
VWL     0       0       0       5       4       3       8
BWV     0       0       0       0       16      9       9
BCV     0       0       0       1       1       3       7
OKW     28      10      8       8       20      7       14
SSR     1       0       0       8       17      5       0
AKV     0       0       0       1       0       2       0
------------------------------------------------------------
Total   29      10      8       27      68      33      40
                                                        
ROFR Rate                                                       
        Dec-12  Jan-13  Feb-13  Mar-13  Apr-13  May-13  Jun-13
BLT     0%      0%      0%      13%     23%     10%     7%
VWL     0%      0%      0%      17%     18%     16%     47%
BWV     0%      0%      0%      0%      39%     26%     30%
BCV     0%      0%      0%      4%      6%      18%     23%
OKW     70%     31%     28%     20%     40%     20%     27%
SSR     2%      0%      0%      8%      21%     5%      0%
AKV     0%      0%      0%      4%      0%      4%      0%
------------------------------------------------------------
Overall 14%     5%      4%      9%      23%     11%     14%
                                                        
Foreclosure/Bankruptcy/Trade-in                                                 
        Dec-12  Jan-13  Feb-13  Mar-13  Apr-13  May-13  Jun-13
BLT     28      28      8       34      15      6       15
VWL     1       4       0       2       0       0       1
BWV     0       0       2       4       1       1       2
BCV     2       3       4       5       0       1       3
OKW     0       1       1       2       1       0       0
SSR     56      84      27      100     22      25      25
AKV     32      42      18      59      25      20      21
------------------------------------------------------------
Total   119     162     60      206     64      53      67
                                                        
Gratuitous transfers                                                    
        Dec-12  Jan-13  Feb-13  Mar-13  Apr-13  May-13  Jun-13
BLT     12      3       20      11      15      16      6
VWL     7       5       22      7       9       12      8
BWV     13      14      19      14      21      10      17
BCV     7       6       16      6       13      17      9
OKW     28      23      44      28      31      51      28
SSR     27      19      56      31      30      49      29
AKV     10      6       15      11      9       10      7
------------------------------------------------------------
Total   104     76      192     108     128     165     104
                                                        
New Sales                                                       
        Dec-12  Jan-13  Feb-13  Mar-13  Apr-13  May-13  Jun-13
BLT     115     223     170     144     153     58      28
VWL     19      45      42      15      32      11      3
BWV     38      76      143     155     53      26      29
BCV     31      46      26      11      17      10      0
OKW     47      48      42      58      36      53      9
SSR     170     188     113     112     89      117     51
AKV     443     627     421     452     916     804     721
VGF     0       0       0       0       0       0       675
------------------------------------------------------------
Total   863     1253    957     947     1296    1079    1516

 

[NoleFan]

Wow, thanks for continuing to compile all this great info.!!

 

[JustTinking]

Yikes!! The carnage continues on the ROFR side. Let me know when it's safe to go back in the water!!

 

[NoleFan]

Yikes!! The carnage continues on the ROFR side. Let me know when it's safe to go back in the water!!

& the prices keep going, up, up, up ! Sellers market for sure.

 

[ELMC]

One thing that I think is important to note is that the data shows up in the month that the deed was recorded. Frequently this is one or two months after the disappointed would-be buyer is informed that their contract has been taken by ROFR. So although it looks like April was the big month for ROFR activity, that is actually a reflection of DVD's activity in February and March.

 

[twinsouvenirs]

Fascinating!!! It's shocking how much of the FC/BNKY action is at SSR and BLT--I wonder if the defaulted contracts simply get weeded out early and since these are newer properties they have the highest rate of people letting them go?

 

[twinsouvenirs]

Yikes!! The carnage continues on the ROFR side. Let me know when it's safe to go back in the water!!

Yeah, this puts me in no hurry on my resale contract hunt. I might just wait till the furor dies down since we don't really need the points for our first DVC member vacay in February '14.

 

[JustTinking]

One thing that I think is important to note is that the data shows up in the month that the deed was recorded. Frequently this is one or two months after the disappointed would-be buyer is informed that their contract has been taken by ROFR. So although it looks like April was the big month for ROFR activity, that is actually a reflection of DVD's activity in February and March.

So, does that coincide with the Disney price increase and everyone jumping on the waitlist? And Disney then trying to fill their waitlist?

 

[ELMC]

Fascinating!!! It's shocking how much of the FC/BNKY action is at SSR and BLT--I wonder if the defaulted contracts simply get weeded out early and since these are newer properties they have the highest rate of people letting them go?

SSR, BLT and AKV are the most recent direct offerings and have had incredibly high price points compared to the other resorts when they were offered direct. Depending on when you purchased, all three of them have the potential for significant and instant depreciation of cash value. Combine that with the fact that most DVC purchases are impulse buys (many of which are financed) and are rarely researched, and you have a high foreclosure rate. If someone is going to have significant buyer's remorse it's going to be within the first few years.

But more importantly, now you know why we talk so much about making informed choices, the potential pitfalls of buying direct, the safer option of resale, etc. People may think we are being condescending, but there are 600 people this calendar year alone that probably could have benefited from that advice. Hopefully this sheds some light on why we say some of the things we do.

 

[ELMC]

So, does that coincide with the Disney price increase and everyone jumping on the waitlist? And Disney then trying to fill their waitlist?

For the most part, yes, the two happened in the same general time frame. Many of the ROFRs came in February, but my best explanation of that is that DVD knew what was coming down the pike and was getting ready.

Nobody really knows the inner workings of DVD and more specifically the wait list. But a logical timeline that can be constructed is that DVD announced price increases across the board, buyers moved in droves to get in before the impending price increase, DVD ran out of inventory at many resorts, which forced them to put buyers on a wait list and increase their ROFR activity to fill the wait lists.

In my mind this is an oversimplification, as there is simply I lot I don't understand with regards to DVD's ROFR policy. For example, why would DVD ROFR a contract at $68 only to sell it at $115 (the profit margin is not nearly as good as one might think)? But in absence of a better explanation, it's the one I'm going with.

 

[JustTinking]

For the most part, yes, the two happened in the same general time frame. Many of the ROFRs came in February, but my best explanation of that is that DVD knew what was coming down the pike and was getting ready.

Nobody really knows the inner workings of DVD and more specifically the wait list. But a logical timeline that can be constructed is that DVD announced price increases across the board, buyers moved in droves to get in before the impending price increase, DVD ran out of inventory at many resorts, which forced them to put buyers on a wait list and increase their ROFR activity to fill the wait lists.

In my mind this is an oversimplification, as there is simply I lot I don't understand with regards to DVD's ROFR policy. For example, why would DVD ROFR a contract at $68 only to sell it at $115 (the profit margin is not nearly as good as one might think)? But in absence of a better explanation, it's the one I'm going with.

Hmmm....$68 to $115 with little to no work sounds like a good spread....a deal I would take without looking twice. But I'm not a finance wizard. Am I missing something?

 

[JustTinking]

Yeah, this puts me in no hurry on my resale contract hunt. I might just wait till the furor dies down since we don't really need the points for our first DVC member vacay in February '14.

Yes, I'm with you! Now is a good time to learn patience.

 

[ELMC]

Hmmm....$68 to $115 with little to no work sounds like a good spread....a deal I would take without looking twice. But I'm not a finance wizard. Am I missing something?

Typically timeshare costs are in the 25-40% range. So a BWV point that sells for $115 probably cost DVC somewhere around $35. In this case, they are paying $68...the profit margin is much less than usual. Put another way, they could have sold that buyer AKV which has a much higher profit margin, which is why guides typically refer to the older resorts as "sold out" when we really know that means that the initial offering sold out and they are still available (albeit with a wait list).

One other thing to consider is that at $68, DVD is making $47 in "profit" on that sale. But out of that $47 they still need to pay commissions, marketing fees, overhead, salaries, etc. When it comes down to it, ROFRing contracts at that level doesn't make anywhere near the amount of money that selling actively marketed resorts does. But, as is the case with ROFR and the inner workings of DVD, I am sure that there is something else at work that I know nothing about. But what I do know is that the profit just isn't there at these levels.

 

[jsolar]

Hello. I'm very new to DVC. What is ROFC?

 

[Kidanifan08]

Hello. I'm very new to DVC. What is ROFC?

ROFR = Right Of First Refusal

When a DVC member decides to sell their contract, DVC has the first option to purchase the contract once there is an offer on the table. They generally take up to 30 days before making a final decision. It is a way for DVC to take ownership of points to then re-sell as a direct sale. This is the process during the purchase of a resale contract that generally takes the longest.

There has been a fair amount of ROFR activity recently on some of the older sold out resorts, presumably to fulfill waitlists for those resorts.

 

[jsolar]

ROFR = Right Of First Refusal

When a DVC member decides to sell their contract, DVC has the first option to purchase the contract once there is an offer on the table. They generally take up to 30 days before making a final decision. It is a way for DVC to take ownership of points to then re-sell as a direct sale. This is the process during the purchase of a resale contract that generally takes the longest.

There has been a fair amount of ROFR activity recently on some of the older sold out resorts, presumably to fulfill waitlists for those resorts.

Thanks!!
We were on a cruise and went to the presentation.
Now we are in the market. I'm trying to learn all that I can.

 

[VrBchJ]

Hello. I'm very new to DVC. What is ROFC?

It's ROFR. Right of first refusal. DVD has the opportunity to buy back any contract that's sold. If the price of the contract is too low they may buy it to keep the prices level. Or if they have a lot of buyers on the wait list for a particular property they may pick up contracts to fill those wait lists.

 

[Disneybuckeye]

Wow! Glad I bought my VWL contract last fall. I am sure at $66 per point it would have been taken. Thanks for compiling.

 

[JustTinking]

Typically timeshare costs are in the 25-40% range. So a BWV point that sells for $115 probably cost DVC somewhere around $35. In this case, they are paying $68...the profit margin is much less than usual. Put another way, they could have sold that buyer AKV which has a much higher profit margin, which is why guides typically refer to the older resorts as "sold out" when we really know that means that the initial offering sold out and they are still available (albeit with a wait list).

One other thing to consider is that at $68, DVD is making $47 in "profit" on that sale. But out of that $47 they still need to pay commissions, marketing fees, overhead, salaries, etc. When it comes down to it, ROFRing contracts at that level doesn't make anywhere near the amount of money that selling actively marketed resorts does. But, as is the case with ROFR and the inner workings of DVD, I am sure that there is something else at work that I know nothing about. But what I do know is that the profit just isn't there at these levels.

Okay, that's interesting. I see your point that the guides want to push the new properties because there is more profit in that for Disney. Wonder if the guide's commission is any different, selling new vs. older properties.

But like any business, keeping the customers you have is much less costly than finding new customers. So if an existing customer wants to add on, rather than buy a new resort, ROFR is one of the avenues that Disney has to get the point inventory to keep that customer happy. Disney cannot afford to say they are no longer selling a given resort, when there is a healthy resale market that will take that customer's business. The existence of waitlists says there is enough profit in add-ons to make it worthwhile.

 

[ELMC]

Okay, that's interesting. I see your point that the guides want to push the new properties because there is more profit in that for Disney. Wonder if the guide's commission is any different, selling new vs. older properties.

But like any business, keeping the customers you have is much less costly than finding new customers. So if an existing customer wants to add on, rather than buy a new resort, ROFR is one of the avenues that Disney has to get the point inventory to keep that customer happy. Disney cannot afford to say they are no longer selling a given resort, when there is a healthy resale market that will take that customer's business. The existence of waitlists says there is enough profit in add-ons to make it worthwhile.

My understanding is that the salespeople make a higher commission for the actively marketed resorts, but I may be wrong about that. And while I agree with your point about the cost of finding new customers, DVD's main objective with regards to add ons is to sell the existing resorts (for the reasons I mentioned before). The percentage of prospective buyers that knows about the resale market is very, very small. As for the wait lists, I view them more as a necessary evil and not necessarily a profit center for DVD. If you read the threads here, you will find that the "guides" are less than forthcoming about providing information to wait list customers. They want you to buy currently marketed resorts, anything else they treat as a bit of an annoyance.