PURCHASE DIRECT FROM DISNEY OR RESALE?
Most potential buyers are first aware of DVC while staying at a Disney Resort or while in a Disney Theme Park. DVC has done a wonderful job or promoting their product directly to those already staying at a Disney Resort or visiting a Disney Theme Park. The kiosks in the resorts and Theme Parks are there to offer some general information about the program, but mostly to invite guests to take a tour at the Sales Center from a DVC Vacation Guide where they will be treated to lemonade, cookies, ice cream and will be shown a Disney production about DVC and all of the vacation options available.
Most will not even be aware that there is also a resale market where existing members have decided to part with their DVC ownership in whole or just in part. Just as purchasing a new/used automobile or home, DVC contracts are also available for sale.
The reasons for a member deciding to sell are many. For some, they have fallen on financial difficulties and must sell to keep their home. Others have just found they were not using their membership the way they originally believed. Their loss can be your gain as these resale purchases will usually be more economical than a purchase directly from Disney.
However, there are some differences.
Direct purchase vs Resale purchase
For almost 20 years, those buying through resale received the exact same product and access to the exact same programs and benefits as those who purchased directly through Disney.
March 21, 2011 Restrictions for Resale Purchases
Beginning on March 21, 2011, DVC made some changes to the way purchasers were treated after becoming members by purchasing a contract via the resale market. Those purchasing since March, 2011 were still DVC members and received all perks and benefits as all other members. However, they were not allowed to use their points for the Disney, Concierge and Adventure Collection travel options which included using DVC Points for non-DVC options like a
Disney Cruise, staying at non-DVC Disney resorts.
Resale members could still use the World Passport Collection to exchange to other timeshare resorts and still had full access to all DVC Resorts based on availability.
Many members did not regard this as a loss at all as they still had access to DVC Resorts (which was the reason most purchase in the first place) and also access to all benefits afforded to DVC Members (Theme Park admission discounts, dining discounts, shopping discounts, special Member events, etc.)
All of these benefits are incidental to DVC membership and may be modified or removed at any time. They are not guaranteed in any way and over the years have been changed or removed many times. They are used as a marketing tool by Disney Vacation Development (DVD) the developer and sales arm of the DVC program and they also pay for these ‘extra’ programs – they are not part of DVC Member Maintenance Fees.
These incidental benefits were still included with resale purchases after March, 2011.
April 4, 2016 Restrictions on Resale Purchases
On April 4, 2016, DVC made the following announcement:
“Effective April 4, 2016, Members who do not purchase their ownership interest directly from Disney Vacation Club will not have access to other Membership Extras, such as exclusive Member experiences and discounts.”
This now means that those purchasing a DVC contract except directly through Disney will not have access to any Member Perks or ‘Extras’. Those members are still DVC Members and will be able to use their DVC points at their Home Resort and at other DVC Resorts but will not have the ability to receive any Member discounts or ‘Extra’ programs.
The announcement went on to reassure all current Members with the following:
“Please know that as a current Disney Vacation Club Member (regardless of when or where you bought your membership), your access to Disney Differences and these additional Membership Extras will not be affected by this policy change.”
Comparison of Direct vs Resale
Direct purchasers are able to buy the number of points they would like, choose their own Use Year and divide their purchase into smaller contracts if desired.
Direct Purchases will come with all points in the current Use Year and another allotment of points when the next Use Year begins.
Direct Purchase will be very fast. New Members are often in the DVC System and able to use their points within 24 hours.
Maintenance Fees for the current year will be pro-rated based on the date of purchase.
DVC offers financing (not reported to credit agencies but usually with higher rates than available personally).
Payment may be made with a credit card to benefit from Rewards associated with your card.
Direct Purchases will come with all points in the current Use Year and another allotment of points when the next Use Year begins.
All direct purchases will include access to ALL programs within DVC and ALL current ‘Member Extras’. There are no restrictions on the use of these points or on the Membership.
Direct Purchase costs will generally be more.
Direct Purchase will have a minium points requirement for first-time purchasers.
Resale purchases will typically be at much lower cost than a direct purchase.
Unlike Direct Purchase, resale purchases may be made for fewer than the minimum required with a Direct purchase. The number of points, Resort and Use Year in a resale contract cannot be changed.
Resale financing is not as easy as with a Direct purchase, but may be available at a lower rate.
The Resale process will take longer due to Right-of-First-Refusal (ROFR) and delays incurred along the way. Six weeks or longer is not unusual for a resale closing and then another 2 weeks to gain access to use the points. If DVC exercises ROFR the process will need to start again with a different resale contract.
Resale contracts will come with whatever points remain and not necessarily with a full complement of points included. This should be evident before beginning the process however.
Resale purchases no longer come with access to the Disney Travel Program (
DCL, non-DVC Disney Resorts, Adventures by Disney), or Concierge Collection. ‘Member Extras’ – discounts on passes, dining, shopping, Member events, etc, - are no longer offered to those purchasing via resale.
Points Available in Resale Contracts
When reviewing Resale listings, you should pay attention to the number of points held in the contract. This will be disclosed as part of the listing in two ways. The first will identify the number of points you will be purchasing and the second will identify the number of points actually remaining in the contract available for your use after closing.
A contract may come with all banked points from the prior Use Year, all points available from the current Use Year and all points available in the next Use Year. This is typically described as ‘Fully Loaded’
A contract with all points remaining in the current Use Year and all points still available in the next Use Year is described as ‘Loaded’.
A contract listing with no banked points, no current points and no points in the following Use Year is described as ‘Fully Stripped’. Be aware that you should include this information in your offer since you will be the one paying the Maintenance Fees for the next calendar year whether there are points available to use or not.
A contract listing with no banked points, no current points and only some of the points in the next Use Year has been ‘Stripped’ and again consideration should be made in any offer.
ROFR – Disney’s Right of First Refusal
When buying resale, one of the potential pitfalls to try to avoid is making an offer that will cause Disney to exercise its Right of First Refusal (ROFR).
If you find a contract you like and you and the seller agree on a purchase price, the agreement to sell the points is submitted to DVC for review. If the price is too low, Disney will step in and exercise their ROFR, which means DVC will purchase the property themselves at the terms agreed upon by the seller and the original buyer. DVC then becomes the buyer. The seller instead gets its money from Disney and the buyer loses the contract.
If DVC exercises ROFR, the original buyer can’t come back and make a higher offer. There is no second chance; the resale contract is lost to Disney. There is no financial hardship on the potential buyer — they will receive a refund on any down-payment that may have been part of the deal. But the buyer will have to go back to square-one and try to find another deal.
Disney must be given up to 30 days to review the contract and decide whether they will exercise ROFR, but it usually takes less time than that.
Typical Fees included with Resale Purchase
All aspects of a resale purchase are negotiable between the parties involved.
Buyers will generally pay all closing costs which will include aspects required to transfer legal title to the contract from seller to buyer. This could include recording of the deed in the buyer’s name, title search and title insurance policy (if ordered by the buyer). Maintenance fees are not usually pro-rated in resale purchases, but can be a negotiated item between parties.
When a resale broker has been used, any commission will be paid by the seller from the sale proceeds. The seller will also pay the fees for ROFR and Estoppel.
ROFR – Right of First Refusal
With all resale purchases, Disney has reserved the right to review all accepted contracts before closing can occur. They have up to 30 days for this process. DVD will have the opportunity to purchase the contract under the same terms already agreed upon. Should ROFR be exercised by DVD, the seller will still receive the same price already agreed to, but the buyer will be left with nothing after their deposit has been refunded. They will need to begin the process all over again.
From an early Public Offering Statement regarding ROFR:
