A little help...newbie here

[momimouse27]

Oh, heavens, I'm so confused!

I've just received my DVC materials in the mail, I've watched the DVD. I thought I knew all there was to know, but I come here and start reading and now I'm even more confused!

What the heck is ROFR?! From the outside looking in, it sounds like Disney can just come and take your contract away after you've paid thousands of dollars for it. I know that cant be right. I've read some of the stuff in the info threads above but I don't understand any of it because I don't know what ROFR stands for

Help!

 

[Shelly F - Ohio]

Right Of First Refusal (ROFR). Before a resale purchase can be completed the transaction must be presented to Disney for them to ROFR. ROFR means Disney must give consent or refusal of a purchase.

As a Buyer, you may not like this now but you will when it is time for you to sell. The purpose of Disney's ROFR is to control the value of their property so that it remains in step with current values. When there is an accepted offer and a signed contract with a good faith deposit in escrow with a licensed and bonded title company, we immediately forward all contracts to the Disney Review Board. Disney will do an analysis of the terms of the contract and decide if they wish to step in as the Buyer. The criteria Disney uses for ROFR is not public information but one important factor for exercising the ROFR would be if Disney feels the selling price, including who pays closing costs and maintenance and taxes below the target price they have established.

 

[chalee94]

What the heck is ROFR?! From the outside looking in, it sounds like Disney can just come and take your contract away after you've paid thousands of dollars for it.

ROFR means disney can step into the buyer's shoes in a legal sense. if you negotiate a great deal, disney has the right (before the deal is closed) to take a look at it and decide if they like it well enough to take it away from you.

so if they ROFR a contract, they accept all of the contract terms and pay the seller what you would have paid as the buyer. you would not lose any money as the original/intended buyer but you would have to start over again looking for a contract to buy...

 

[momimouse27]

Thank you so much! That clears up so much!

 

[chalee94]

As a Buyer, you may not like this now but you will when it is time for you to sell. The purpose of Disney's ROFR is to control the value of their property so that it remains in step with current values.

i disagree a bit.

the primary purpose of ROFR is to be a hassle and delay, such that resale buyers decide to pay extra to purchase directly from disney.

secondarily, ROFR allows disney to pick up inventory for direct sale at firesale prices from desperate sellers.

certainly if disney has direct buyers lined up, they might be willing to pay more for contracts through ROFR, but they do pick up a fair amount of inventory of older resort contracts through foreclosure.

also, back in the "great recession" when demand collapsed due to financial fears and unemployment and resale prices were down, disney dropped ROFR almost entirely (except for some BCV contracts IIRC) and let prices fall as low as they would (i believe Dean reported an OKW contract going for $25 per pt). so if you expect ROFR to prop up resale prices for the benefit of DVC sellers, you might be severely disappointed. disney is just doing what is best for disney.

 

[momimouse27]

So, chalee, it's my understanding that it would benefit you as a seller but could cause you problems if you are the buyer of a resale membership? Disney could come in while your negotiating contract terms and decide to buy it back, therefore forcing the buyer to look elsewhere. Is this right?

With some of the resale prices being what they are, what is the benefit of buying directly from Disney? Do you lose any benefits by buying resale? Some of the prices I've seen are phenomenal.

 

[Nicoleinwi]

With some of the resale prices being what they are, what is the benefit of buying directly from Disney? Do you lose any benefits by buying resale? Some of the prices I've seen are phenomenal.

We bought both our contracts on resale. What you lose out on is the ability to use your points to stay at other on-site Disney hotels. Like a moderate resort you could use your points to stay there, but from what I see it is a huge waste of points. You could stay at a DVC resort for far fewer points then a moderate. You also lose out on the ability to use points for Adventures by Disney or the Cruise. Neither of these mattered to me because the points were so high.

I also believe there is something about interest free financing if you go through Disney directly. Don't quote me on the interest free part, but I have read on a lot of places that people that finance usually go through Disney.

 

[disneynutz]

We bought both our contracts on resale. What you lose out on is the ability to use your points to stay at other on-site Disney hotels. Like a moderate resort you could use your points to stay there, but from what I see it is a huge waste of points. You could stay at a DVC resort for far fewer points then a moderate. You also lose out on the ability to use points for Adventures by Disney or the Cruise. Neither of these mattered to me because the points were so high.

I also believe there is something about interest free financing if you go through Disney directly. Don't quote me on the interest free part, but I have read on a lot of places that people that finance usually go through Disney.

You are partially correct, and I agree with chalee94. Disney adds delays to the ROFR, closing process, and has placed restrictions on where resale points can be used to get more people to buy direct.

Disney's finance charges are high and they love it when you finance your luxury purchase. Your rate depends on several factors including your credit rating.

Bill

 

[chalee94]

So, chalee, it's my understanding that it would benefit you as a seller

opinions vary, but i don't think there's much of a benefit to the seller. as a seller, you'd still need to find a buyer. for example, if disney tends to ROFR contracts below $75 per pt but no one is willing to offer you more than $50 per pt, then the $50 offer is your only option. disney will not make a direct offer on your contract or bid against a potential buyer...they just wait and decide whether to take the contract away from a bonafide buyer. and if the economy is tanking and disney starts having trouble getting rid of direct inventory, they won't have any interest in ROFRing what they cannot easily re-sell.

if i'm a buyer and i think your contract is only worth $50 per pt to me, i might push up my offer to $55 per pt if i think it would help me pass ROFR without much hassle. OTOH, if disney were reportedly ROFRing at $75 but i only valued the contract at $50 (and i were the only potential buyer), i would take my chances at $50 per pt and accept the risk of having to try again if disney took the contract.

which is to say that while ROFR might provide a slight bump in contract offer values, i don't think that it has that much of an effect. the primary driver is supply and demand. and if there is demand at disney's current direct prices, there will also be demand that drives up resale prices (regardless of ROFR).

but could cause you problems if you are the buyer of a resale membership? Disney could come in while your negotiating contract terms and decide to buy it back, therefore forcing the buyer to look elsewhere. Is this right?

right. it's a nuisance for the buyer. if a resale listing price is $110 and the direct price is $130, it's reasonable for some buyers to buy direct to avoid the delay of ROFR and risk of losing the contract and having to start over.

some economists would probably argue that if ROFR were not an issue, sellers could get better prices as the resale transaction would be faster and more comparable to a direct purchase in most ways.

With some of the resale prices being what they are, what is the benefit of buying directly from Disney? Do you lose any benefits by buying resale?

you lose the (extremely expensive) option of using pts outside the DVC system for disney cruises, disney hotels and adventures by disney tours.

but you can still rent your pts to pay for a cruise (for example) and come out ahead financially compared to direct purchasers who traded for a cruise.

resale buyers can also trade DVC pts for other timeshares through RCI (although that's not a great value either).

IMO, the only real benefit of a direct purchase is that you can get pts in your account almost immediately. (for a current owner who is looking for a small contract - say 30 or 40 pts - it might take a long time to find exactly what they want on the resale market, so direct might start looking like a better choice in that case).

 

[chalee94]

I also believe there is something about interest free financing if you go through Disney directly. Don't quote me on the interest free part, but I have read on a lot of places that people that finance usually go through Disney.

yeah, this is not the case. disney charges around 10-15% financing, depending on your credit history.

the issue is that many banks will not finance a timeshare (they have a nasty tendency to collapse in value - many sell for $1 on ebay although DVC has avoided that so far) so finding financing for a resale can be difficult for some.

 

[Nicoleinwi]

yeah, this is not the case. disney charges around 10-15% financing, depending on your credit history.

the issue is that many banks will not finance a timeshare (they have a nasty tendency to collapse in value - many sell for $1 on ebay although DVC has avoided that so far) so finding financing for a resale can be difficult for some.

Oh that makes sense then. I always wondered why people would say go through Disney if you need to finance. I figured they were getting 0% like a new car or something. 15% interest is horrible. No wonder everyone says, don't buy unless you could pay cash.

 

[DizBub]

I also believe there is something about interest free financing if you go through Disney directly. Don't quote me on the interest free part, but I have read on a lot of places that people that finance usually go through Disney.

You can purchase direct from Disney and put it on a Disney Visa. You do get 0% financing if you pay it off within 6 months.

I would not recommend you do this unless you can and will pay it off within the 6 months. In our case we did this 3 separate times. Got the reward points too.

Full disclosure: We actually did this with large down-payments ($5000) and arranged our own financing at a MUCH lower rate than Disney offered us.

 

[mcap2004]

Oh that makes sense then. I always wondered why people would say go through Disney if you need to finance. I figured they were getting 0% like a new car or something. 15% interest is horrible. No wonder everyone says, don't buy unless you could pay cash.

15%??!! That's mad crazy. I have read in other threads that ppl would finance by getting a personal loan with their credit union at a very low interest rate (with good credit, of course) then pay off their dvc and only worry about paying back the bank loan. Because 15% is waaay too much. Every one says if you can pay cash, then do it but everyone's financial situation is different, so you pay in whatever way suits you best.

 

[momimouse27]

In my packet they sent me sample price worksheets, one for BLT and one for VGF. Each one had a preferred and a premium rate. The preferred was %14.99 and the premium is %9.99.