Buy Direct from DVC or Buy Resale

DVC Mike

DIS Veteran
DIS Lifetime Sponsor
Joined
Aug 25, 2007
Buy direct from DVC or buy Resale?

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Most people who first hear about DVC hear directly from Disney, and may not even be aware that there is an active resale market where DVC contracts may be purchased - just like you can purchase a new or used home.

Are direct and resale purchasers treated the same?

With a few exceptions, once the resale purchase is complete, new members receive the same benefits— including ID cards, website access, discounts, customer service, and travel assistance—provided with purchases directly from Disney.

Restrictions on points purchased via resale

However, there are a few restrictions on the usage of points purchased via the resale market.

DVC announced a policy that limits access to certain Member Getaways exchanges for Ownership Interests purchased on the secondary market (also known as the resale market). Under the policy, Members who purchase from anyone other than Disney Vacation Development, Inc., on or after March 21, 2011, will not be eligible to use those Vacation Points to make reservations for the following two collections:

  • "Disney Collection" - Disney Resort Hotels, Disney Cruise Line, Adventures by Disney
  • "Concierge Collection" - a prestigious portfolio of resorts and hotels
Points purchased via the resale market will instead be valid only for reservations at:

  • Disney Vacation Club resorts
  • Exchanges through RCI
  • Club Cordial
  • Club Intrawest
That said, Members who purchased on the secondary market prior to March 21, 2011, may use those Vacation Points for all Member Getaways.

Bear in mind, however, that you get the most "bang for the buck" using your points to stay at DVC resorts, so many view these options that were removed from resale purchasers as a poor use of DVC points and therefore no great loss. Also bear in mind that these programs are not guaranteed to be around and may be discontinued by DVC in the future.


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Bottom line: If you are willing to pay more, buying direct is easier, less stressful, faster, and requires less patience than buying resale.


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Bottom line: If you are willing to be patient and wait for the right contract to come along, like negotiating a deal, can deal with the anxiety of waiting to hear you pass ROFR, and then wait until you're finally in the system, buying resale will save you a lot of money than buying direct.

"Stripped" and "loaded" contracts

You may hear of "stripped" or "loaded" contracts for sale on the resale market. Broadly, the following terminology is used:
  • Fully loaded: All prior UY points banked, all current UY points available, none borrowed from next UY
  • Loaded: All current UY points available, none borrowed from next UY
  • Stripped: No current UY points available, some points coming from next UY
  • Fully Stripped: No current UY points available, and no points coming in the next UY
Obviously, a loaded contract is more desirable to most people than a stripped contract.

Fees when buying resale

The seller pays the commission to the broker, which is typically 10% of the sales price, as well as an Estoppel fee (~$50) and ROFR fee (~$20).

The buyer typically pays the closing costs. Closing costs generally include everything involved to legally transfer the property from the seller to the buyer, including items such as recording the new deed and the title insurance policy. A title search is conducted by the title company to be sure that the title is free and clear, and a title insurance policy is issued to insure the same.

As to who pays annual dues, it is completely negotiable. Most resale brokers will say the buyer is responsible for paying the annual dues on any points they get. Most buyers shouldn’t pay annual dues on banked points from a prior year.


ROFR - 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.

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Disney doesn't disclose the criteria used to determine whether they will exercise ROFR on a DVC resale package, but the price per point is definitely a critical factor. A contract in which the sales price is below the average market value is particularly prone to being purchased by Disney via ROFR.

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Falling victim to Disney's ROFR isn't the end of the world; it just sets you back about 30 days (the length of Disney's typical review process), and forces you to pursue a different listing. To avoid this kind of delay, make more competitive offers.

Which Resale Broker should I Use?

Similar to a realtor, the broker's role is to bring buyers and sellers together. All broker fees and commission are typically paid by the seller. I strongly recommend that you work with a broker who is thoroughly experienced in selling DVC contracts. There are several reputable companies out there that list DVC contracts.

How long does it take when buying resale?

Once you have found a resale listing you like, you make an offer on it. Once the price is accepted by the seller, a contract is sent to you for your signature.

After both the buyer and seller sign and return the necessary documents, everything is sent to DVC for ROFR. Disney can take up to 30 days to review the contract and make a decision whether to exercise their Right of First Refusal. Disney generally makes their decision in less than 3 weeks.

Once Disney waives ROFR, the title company will do a title search on the property, order a title insurance policy and request an estoppel report from Disney. The estoppel report is what the title company uses to put together the final closing documents. When the closing documents are ready, the title company will send them to both buyer and seller. They need to be returned along with the final funds due from the buyer.

Once the closing is completed (it can take up to 8 weeks), the title company sends the purchase information to DVC and it then takes Disney 7 to 10 days to put you into their system as the owner of the contract.

It is at that point that you can call Member Services and make your first reservation.

Of course, with all the back and forth, there is ample opportunity for further delays. On the other hand, sometimes the process can take less time.

Owning multiple Use Years or just one?

If you're already a DVC member and are looking to add-on more points, consider whether you want to add-on points with the same Use Year you already have, or with a different Use Year.

When purchasing additional points via the resale market, you can easily purchase a contract with a different Use Year. If you’re buying an add-on direct from Disney, you will most likely be given no choice but to get the same Use Year you already have – unless you buy the minimum points that a first time purchaser is required to buy-in, in which case you can ask for a different use year.

If you buy the same use year (and the deeds have the exact same names on them), all your contracts can be setup to be treated as one for purpose of reserving, banking and borrowing. If you have separate use years, the two contracts remain separate for all purposes and when you reserve using both you reserve some nights using one contract and other nights using the other and link the two. Or, you can transfer points from one contract to another, but there are limitations.

Having multiple contracts with different Use Years can offer added flexibility in some cases, but certain limitations in other cases, and is just harder to manage. Having the same Use Year on all of your contracts is much easier to manage, as there is less to keep track of and less chance for mistakes.

The main advantage of multiple UY’s is if you go different times of the year you can potentially chose which account to use for a given trip giving a certain amount of protection from cancelation and banking issues. But having multiple contracts with different Use Years does create more accounting, is more complicated and difficult (but not impossible) to make a single reservation from both contracts.

So, some people ask why you should make life harder than it needs to be and recommend sticking with just one UY.

If you were adding on to the same resort, many people recommend you keep the same use year. If you are buying a new home resort, then a different use year isn't too hard to manage.



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DVC Resale. Disney Vacation Club resale. DVC Resale Market. DVC Resale Listings. Buying DVC Resale. DVC Timeshare Sales. Resales DVC. The Timeshare Store. DVC Buying Guide. DVC Resale restrictions. DVC resale broker. Timeshare broker.
 

chalee94

DIS Veteran
Joined
Aug 14, 2006
Buy direct from DVC or buy Resale?

I also like to point out to newbies that if they decide to sell their DVC contract later, DVC will not buy back their contract. Resale will be their only option...so you might as well get comfortable with it now...

Restrictions on points purchased via resale

...Points purchased via the resale market will instead be valid only for reservations at:

  • Disney Vacation Club resorts
To be extra clear, this includes Aulani in Hawaii, HHI in South Carolina, VGC in California as well as all of the DVC resorts at WDW (subject to availability.)

Purchasing direct from DVC: Fast. Easy. Convenient

there are also one-time-only-at-purchase perks like the guides accessing DVC-owned inventory to get the new purchaser a reservation that might otherwise be inaccessible. or allowing the new purchaser to bank pts past the stated banking deadline at purchase (i.e. if you buy directly late in your Use Year - say buying an Oct UY contract in Aug/Sept).
 
  • DVC Doctor

    Member since 2001
    DVC Gold
    Joined
    Mar 19, 2014
    Great intro. I advise buy resale, but if everyone did that, there would be very little inventory left and the prices will dramatically increase.
     

    wdrl

    DIS Veteran
    Joined
    May 15, 2009
    Disney has up to 30 days to review the contract and decide whether they will exercise ROFR, but it usually takes less time than that.
    I suggest changing the wording of this sentence. Disney is not limited to 30 days to decide whether to exercise ROFR. Instead, Disney must be given at least 30 days before the buyer and seller can schedule the closing on the transaction.
     

    zavandor

    DIS Veteran
    Joined
    Jul 22, 2011
    Great summary!
    I would also add something about the possibility that DVC might change rules in the future and restrict more resale points. It's a (very-ish) small risk that one should be aware of.
     

    coastalhh

    Mouseketeer
    Joined
    Aug 27, 2014
    I thought if you bought resale, you could only stay at your home resort?
    And you can exchange and stay at rci resorts. It's basically only cruises you can't use points. Which make no sense to anyway because it cost the same to use cash as to book a cruise with your yearly fees
     
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    MsTessP

    Mouseketeer
    Joined
    Dec 13, 2011
    Actually in many cases you come out better financially if you rent your points (currently $11-$14/pt) then use that cash to pay for your cruise. So, in reality, not only can resale members use their points by converting them to cash by renting, but they actually end up getting a better deal. This is why many direct members are now going this route rather than directly using their points. They find that they save even more by taking advantage of travel agent onboard credits, early booking discounts, no $95 DVC exchange fee, and much less of a hassle if they need to cancel.
     

    carissa1970

    DIS Veteran
    Joined
    Feb 23, 2013
    I was told today as I was speaking to someone about adding points through DVC that some changes were coming this week regarding restrictions on resales. I am very curious, as we have been shopping around.
     

    MsTessP

    Mouseketeer
    Joined
    Dec 13, 2011
    I was told today as I was speaking to someone about adding points through DVC that some changes were coming this week regarding restrictions on resales. I am very curious, as we have been shopping around.
    The "guides" are salespeople who wish to get a sale. Most DVC salespeople do not resort to half-truths and lies, but unfortunately we have seen many people here over several years report that they were told by their "guides" that there are new restrictions coming. ALL of these reports have been untrue. Just to give a little perspective - the one time they did add "restrictions" (use of points for cruises, ABD, etc), they made the announcement months ahead of the time they would go into effect. In that case, everyone who had purchased resale before that date was grandfathered in. Also, there are many aspects of DVC that would be illegal to restrict just to some owners. Most of us here are still assured that savings upward of 50%+ on our purchase is well worth any potential restriction.
     

    JimMIA

    There's more to life than mice...
    Joined
    Feb 16, 2005
    I was told today as I was speaking to someone about adding points through DVC that some changes were coming this week regarding restrictions on resales. I am very curious, as we have been shopping around.
    My "guide" once told me that she had just been called to a "special meeting" THAT MORNING, and from that date forward, ALL resale contracts would be ROFR'd. She was lying, of course. DVC timeshare sales people don't usually tell outright lies -- but she did, and so did the person you were talking to.

    My suggestion is that you avoid that salesperson like the plague, because you can't trust anything they say.

    Never forget that a DVC "guide" is a timeshare salesperson. Their interest is not doing what is best for YOU; their interest is providing income for themselves.
     

    JimMIA

    There's more to life than mice...
    Joined
    Feb 16, 2005
    Fees when buying resale
    The buyer typically pays the closing costs. Closing costs generally include everything involved to legally transfer the property from the seller to the buyer, including items such as recording the new deed and the title insurance policy. A title search is conducted by the title company to be sure that the title is free and clear, and a title insurance policy is issued to insure the same.

    As to who pays annual dues, it is completely negotiable. Most resale brokers will say the buyer is responsible for paying the annual dues on any points they get. Most buyers shouldn’t pay annual dues on banked points from a prior year.
    EVERYTHING in a resale is negotiable, and it's important to remember that. Although closing costs are often paid by the buyer, I've seen many, many transactions on the ROFR thread where the seller paid closing costs, or the seller and buyer agreed to split closing costs in some way.

    I've purchased three times and have NEVER paid a penny for current-year points still available in a contract, or for banked points. However, EVERYTHING is negotiable, and if you get some points "free" you may be paying $1-2 per point more in the sales price.

    Rather than focusing on details like closing costs, dues, etc, I think both parties are better off looking at the overall numbers of the transaction. The details are not important -- what's important is the bottom line the buyer is actually paying and the seller is actually receiving in net proceeds.
     

    DVC Mike

    DIS Veteran
    DIS Lifetime Sponsor
    Joined
    Aug 25, 2007
    Rather than focusing on details like closing costs, dues, etc, I think both parties are better off looking at the overall numbers of the transaction. The details are not important -- what's important is the bottom line the buyer is actually paying and the seller is actually receiving in net proceeds.
    I agree!
     

    JWG

    DIS Veteran
    Joined
    Oct 14, 2004
    Shocked at a recent attempt to buy resale. I observe and watch the ROFR thread here fairly closely when I'm ready to purchase resale - it gives me an idea of what I should expect to pay. I was shocked 1) To see a BLT contract priced as high as it was with the seller and 2) that it sold rather quickly at an amount at or close to that price as it was well above the average prices I'm seeing in the ROFR thread.

    Now, I fully understand that the ROFR thread here is a very small percentage of the actual resale transactions that occur. Also, that buyers here are likely better bargain hunters and/or negotiators with resale purchases than maybe others. And, while I didn't expect them to accept wihtout a counter I was shocked at the outcome. Prices are either escalating very quickly (as in the past few weeks) or this seller got extremely lucky.

    Either way, we missed out on a contract to add-on :(
     

    Jim Oakman

    Kylo Oak
    Joined
    Dec 30, 2015
    im in the situation where a spur of the moment trip in a few months might force me to go with Direct DVC, but reading this thread it won't be the worst thing ever.
     

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