Ah yes. The SUPER STRIPPED contract.

[John Purcell]

So I get the email from my broker (who I adore!). We have a very healthy relationship and nice rapport. He offers me a pre offer (before it goes live): It is SSR (which is a dime/dozen these days, am I right?).

It’s a Dec use year, meh ok. But come December 2023 0 points coming. $85/pp

2024 250 (full use) coming. I told him that I would offer $3000 less because at an 8% interest rate to carry a dead weight contract it would cost me that much.

I did offer $73 on the contract as a fair market offer. If it were $100 and had a Feb use and current / banked points, I feel $85 would be fair, and I would not pay to carry an unused contract.

Between the risk of sitting for 18 months to use, and carry cost…. I want to ask if I am a jerk? Reddit AITA?

 

[brinkley07]

It's business not personal, so why are you a jerk? You offered what you felt it was worth, and the seller can accept or move on. Now, if you're feeling guilty that you lowballed like you did, then that's another story.

 

[John Purcell]

It's business not personal, so why are you a jerk? You offered what you felt it was worth, and the seller can accept or move on. Now, if you're feeling guilty that you lowballed like you did, then that's another story.

. I am over-rationalizing where I am. I bet there are many people on this site that do t care. They’ll happily pay $85, and wait… wait….. I felt a need to bid, I enjoy my broker but now feel guilt about how maybe he’ll get bad karma with lowball offers, but I rationalized the price…. Okay I truly am crazy…..

 

[brinkley07]

. I am over-rationalizing where I am. I bet there are many people on this site that do t care. They’ll happily pay $85, and wait… wait….. I felt a need to bid, I enjoy my broker but now feel guilt about how maybe he’ll get bad karma with lowball offers, but I rationalized the price…. Okay I truly am crazy…..

If he's really a good broker he understands fiduciary responsibility, and he'll take care of his seller. You do what's best for you! Hopefully, you'll get a bite from the seller. Never know...

 

[John Purcell]

So I get the email from my broker (who I adore!). We have a very healthy relationship and nice rapport. He offers me a pre offer (before it goes live): It is SSR (which is a dime/dozen these days, am I right?).

It’s a Dec use year, meh ok. But come December 2023 0 points coming. $85/pp

2024 250 (full use) coming. I told him that I would offer $3000 less because at an 8% interest rate to carry a dead weight contract it would cost me that much.

I did offer $73 on the contract as a fair market offer. If it were $100 and had a Feb use and current / banked points, I feel $85 would be fair, and I would not pay to carry an unused contract.

Between the risk of sitting for 18 months to use, and carry cost…. I want to ask if I am a jerk? Reddit AITA?

I guess the question is….. Stripped contract, super stripped contracts, does it become MORE about the money. They’re probably transferring those points out….

 

[Doberge]

I rationalized the price….

I'd do the same to reason with the broker, less so in any hope to convince the seller but only to say "hey, broker, here's what I think is a fair offer and why." Making an offer and explaining it is more likely to keep you in broker's mind in future pre-listings, compared to ignoring or continuing to not offer or offer low balls without reasoning.

 

[astromickey]

So I get the email from my broker (who I adore!). We have a very healthy relationship and nice rapport. He offers me a pre offer (before it goes live): It is SSR (which is a dime/dozen these days, am I right?).

It’s a Dec use year, meh ok. But come December 2023 0 points coming. $85/pp

2024 250 (full use) coming. I told him that I would offer $3000 less because at an 8% interest rate to carry a dead weight contract it would cost me that much.

I did offer $73 on the contract as a fair market offer. If it were $100 and had a Feb use and current / banked points, I feel $85 would be fair, and I would not pay to carry an unused contract.

Between the risk of sitting for 18 months to use, and carry cost…. I want to ask if I am a jerk? Reddit AITA?

With today's market and what I've seen contracts go for, I think that's very reasonable. And like what you said, you'll have no use for a while.

Recently found a seller willing to do $88pp for a 150pt SSR contract - but with full '23 points and over half of '22 points.

 

[john7994]

If the broker continues to provide you off-listing specials - you'll have your answer ...

 

[AstroBlasters]

Seems very logical to me.

 

[AnnaKristoff2013]

Stripped contracts are way overvalued.

 

[ocdb8r1]

Not a jerk. Aside from the "carrying cost" you describe, why gamble on a contract now with zero use until 2024? With the state of the market, number of listings and downward trend, what motivation does anyone have to buy a contract today with no immediate use? The only reason would be to gamble that prices have hit (near) bottom....but that only makes sense if there is a lack of options to pick something up in the trough now....and for SSR there certainly is not!

 

[sethschroeder]

2024 250 (full use) coming. I told him that I would offer $3000 less because at an 8% interest rate to carry a dead weight contract it would cost me that much.

This makes little sense to me. The points have a price but what interest rates are has zero connection to any of this from my view. You are seemingly treating this like an investment return instead of a consumable which DVC points essentially are.

With the state of the market, number of listings and downward trend, what motivation does anyone have to buy a contract today with no immediate use?

I agree with this. Thing is while you get to the same answer I am not sure the math to get there was exactly in line with what I would be looking at.

I would view the loss of 250-500 points as $15/point. I would be offering $3750-$7500 less than what I would view as fair for a contract with points available.

I likely would pass just because points on the contract typically are so undervalued when sold. Not sure what it is today but I think I remember loaded contracts in the past were only like an extra $5-$10/point more which is a great deal to get a bunch more points.

 

[ocdb8r1]

This makes little sense to me. The points have a price but what interest rates are has zero connection to any of this from my view. You are seemingly treating this like an investment return instead of a consumable which DVC points essentially are.



I agree with this. Thing is while you get to the same answer I am not sure the math to get there was exactly in line with what I would be looking at.

I would view the loss of 250-500 points as $15/point. I would be offering $3750-$7500 less than what I would view as fair for a contract with points available.

I likely would pass just because points on the contract typically are so undervalued when sold. Not sure what it is today but I think I remember loaded contracts in the past were only like an extra $5-$10/point more which is a great deal to get a bunch more points.

I totally agree with this math - but I think beyond the pure points loss, there is a time value to money (which I think is what John was saying in his original post. Not only do you lose the points (with the value you ascribed) you have to pony up the full sale price today for a contract with no use until 2024. He valued that year at $3k (agree I don't have clarity on the math of that, but I understand the logic/principle).

What I was trying to articulate is that there is a third "cost" to be considered - the risk of the inherent value of the contract also dropping over the next year. This is always a risk, but offset by the "immediate use" you would get from a contract that's not stripped. In this case I'd build it into my offer on top of the above (value of points and time value of money).

Bottom line, I think stripped contracts are a total no-go in the current environment (absent a massive discount).

 

[MFMont]

I don't understand why buyers are afraid to offend or brokers are offended. Its a business transaction pure and simple. I am in the process of searching out several contracts and I have a very specific set of parameters to follow. I made an offer on a contract with a broker that I had worked with in the past. I get back some touchy feely response of how I offended the buyer and wasted their valuable time. What time? It takes roughly 23 seconds to look at an offer and type "no" if you are so inclined. In reality it was likely the broker that was offended and who's time was wasted. Sorry, that is your job, stop wasting extra time by making it personal. Either way it is certainly not accomplishing anything. I have not suddenly decided to spend $10 more per point by this diatribe.

OP: Stop worrying about what people think and do what is best for you always. I assure you, you will be happier for it.

PS: I am so glad that most of the back and forth can be done without direct contact. 15 years ago, buying contracts was so much more of a tedious process with to many feelings discussed LOL.

 

[Matty B13]

Some brokers got into the flipping of contracts during the last couple of years, so they have a vested interest in keeping the prices high, especially if they stripped the contracts and rented the points. Zillow started doing this with real-estate and ended up firing the whole department because it ended up costing the company a lot of money since they were buying housing at inflated rates and then couldn't sell the properties.

 

[MFMont]

Some brokers got into the flipping of contracts during the last couple of years, so they have a vested interest in keeping the prices high, especially if they stripped the contracts and rented the points. Zillow started doing this with real-estate and ended up firing the whole department because it ended up costing the company a lot of money since they were buying housing at inflated rates and then couldn't sell the properties.

As a fiduciary, I would think that this would be a huge conflict of interest. I am surprised that is not breaking any codes of ethics.

 

[Sandisw]

As a fiduciary, I would think that this would be a huge conflict of interest. I am surprised that is not breaking any codes of ethics.

Brokers are simple transaction brokers for resale, so not sure why they would be prohibited from buying and selling any contracts.

 

[Matty B13]

Brokers are simple transaction brokers for resale, so not sure why they would be prohibited from buying and selling any contracts.

I'm sure most Brokers do everything "above board", no sense getting your licensed revoked for a DVC contract.

 

[WAstateDVCDaddy]

I understand using the cost of money to calculate what you’re willing to pay, but honestly, I don’t think it’s necessarily the right approach if you’re also trying to offer a fair offer (and not lowball).

If your credit were bad, and you had to pay 15% interest, would an offer of $5800 less than asking have been reasonable? I think the criteria for your offer is just not necessarily relevant to making a “reasonable” offer from the seller/broker’s view.

As sethschroeder suggested - I think the value of the stripped points is a better test of what a “fair” offer is. There is a definite value to the points, which the current owner has realized, either through direct use, or through renting out. The fact that they’ve benefitted, and you don’t, is a better ruler for measuring value. Not to say that since you could rent them at $20/pt, you should directly deduct $5000, but somewhere between direct renting and through a rental company’s rates is a good value.

There’s also the dues consideration. I’m assuming dues will be fully paid, but if not, that would impact my offer.

I agree with others - the prices for stripped contracts are usually crazy. At the same time, loaded contracts are often undervalued. Adjusting the market price of the contract to offset the used points shouldn’t be an issue at all for your broker.

 

[MFMont]

I understand using the cost of money to calculate what you’re willing to pay, but honestly, I don’t think it’s necessarily the right approach if you’re also trying to offer a fair offer (and not lowball).

If your credit were bad, and you had to pay 15% interest, would an offer of $5800 less than asking have been reasonable? I think the criteria for your offer is just not necessarily relevant to making a “reasonable” offer from the seller/broker’s view.

As sethschroeder suggested - I think the value of the stripped points is a better test of what a “fair” offer is. There is a definite value to the points, which the current owner has realized, either through direct use, or through renting out. The fact that they’ve benefitted, and you don’t, is a better ruler for measuring value. Not to say that since you could rent them at $20/pt, you should directly deduct $5000, but somewhere between direct renting and through a rental company’s rates is a good value.

There’s also the dues consideration. I’m assuming dues will be fully paid, but if not, that would impact my offer.

I agree with others - the prices for stripped contracts are usually crazy. At the same time, loaded contracts are often undervalued. Adjusting the market price of the contract to offset the used points shouldn’t be an issue at all for your broker.

What is a "fair" offer, and why should it even matter? We are in a very complex economy right now. Your idea of a lowball offer might be next months market price. $3 below this months "lowball" offer and next months market price might be where ROFR kicks in on mass. A "fair" offer is abstract. Why should you concern yourself with it?