buying DVC through Foreclosure

[Melissa Fernandez]

Just wondering if anyone has purchased a DVC contract through foreclosure and what your experience with the process was?

 

[disneynutz]

Last I read, Disney snatches them up.

Bill

 

[Melissa Fernandez]

Last I read, Disney snatches them up.

Bill

Thanks Bill

There were 4 contracts sold at auction on March 1, 2017 and Disney only got 1 of them, the other 3 went to Third Party buyers. I had heard the same as you that Disney pretty much gets them all.

 

[crisi]

I think Disney still gets ROFR. So the ones snapped up at auction Disney may end up with yet.

 

[Melissa Fernandez]

I think Disney still gets ROFR. So the ones snapped up at auction Disney may end up with yet.

Crisi, from what I read, because Disney has the opportunity to bid on them at auction they don't have the right of ROFR. The auction is considered their ROFR.

 

[wdrl]

I think Disney still gets ROFR. So the ones snapped up at auction Disney may end up with yet.

Crisi, from what I read, because Disney has the opportunity to bid on them at auction they don't have the right of ROFR. The auction is considered their ROFR.

Melissa Fernandez is correct. Deeds processed through judicial ordered auctions are not subject to ROFR.

Third parties occasionally win bids on judicial auctions, but the prices paid by third parties seem to exceed the prices paid by Disney on ROFRed resale transactions.

 

[Melissa Fernandez]

Melissa Fernandez is correct. Deeds processed through judicial ordered auctions are not subject to ROFR.

Third parties occasionally win bids on judicial auctions, but the prices paid by third parties seem to exceed the prices paid by Disney on ROFRed resale transactions.

WDRL - does that include closing costs and dues to be paid on points for the current year? I just saw someone win the auction for about $69/pt on a SSR contract for 160 pts. I know they have to pay some administrative fees to the court, but even if that brings them up to about $70/pt that is still pretty good.

Just wondering if it makes sense to buy a contract off foreclosure or if there are any issues that I haven't been able to find through my research online. I was wondering if there was anyone that has gone through the process?

 

[wdrl]

WDRL - does that include closing costs and dues to be paid on points for the current year? I just saw someone win the auction for about $69/pt on a SSR contract for 160 pts. I know they have to pay some administrative fees to the court, but even if that brings them up to about $70/pt that is still pretty good.

Just wondering if it makes sense to buy a contract off foreclosure or if there are any issues that I haven't been able to find through my research online. I was wondering if there was anyone that has gone through the process?

There are some advantages to acquiring deeds via the foreclosure process, but you have to be aware of what you are getting into. You definitely have to do your homework and be aware of the phrase "caveat emptor" when bidding. There are a few people that regularly participate in auctions but they seem to be approaching it as a business; they acquire deeds and then flip them for a profit on the resale market. For the average person, trying to find a good deal on the foreclosure market is not impossible, but will take a lot of work.

Here are four articles I wrote about the foreclosure process on DVC deeds. They may answer some of your questions. The articles are about a year to a year and a half old, but they are still valid.

Buying DVC deeds at public foreclosure auctions

Disney now bypassing judicial system on some foreclosures

More bidders participating in DVC public foreclosure auctions

Winning a DVC deed via public foreclosure auction

The last article is about one person's experiences winning a deed at auction. You might find her experiences helpful in trying to figure out what might happen during the typical auction process.

Let me know if you have any questions.

 

[frank808]

Another point that could happen is like the article by joy says she paid 2015 and 2016 dues. If it is past the 2015 use year you are paying late dues for no points. Also another problem could be the foreclosed owner borrowed points from a future use year and stripped the contract. Then at settlmemt with disney, you would be paying 2 years worth of dues and no points until the next year. In 2015 you could borrow 2016 points for a ressie and strip the contract till 2017. So those costs must be taken into account also. That $85 point contract could cost you $108 per point if its stripped ($85 plus closing $3 plus 2015&2016 points $20=$108). Might get a better price than resale or you could pay more than resale.

Just adding to the conversation as no one has mentioned this. Also the articles posted by wdrl makes no mention of it. Just another point not discussed.

 

[Melissa Fernandez]

Another point that could happen is like the article by joy says she paid 2015 and 2016 dues. If it is past the 2015 use year you are paying late dues for no points. Also another problem could be the foreclosed owner borrowed points from a future use year and stripped the contract. Then at settlmemt with disney, you would be paying 2 years worth of dues and no points until the next year. In 2015 you could borrow 2016 points for a ressie and strip the contract till 2017. So those costs must be taken into account also. That $85 point contract could cost you $108 per point if its stripped ($85 plus closing $3 plus 2015&2016 points $20=$108). Might get a better price than resale or you could pay more than resale.

Just adding to the conversation as no one has mentioned this. Also the articles posted by wdrl makes no mention of it. Just another point not discussed.

Thanks Frank808 that is a great point and definitely worth considering in the price.

 

[Wakey]

I rear an article about a guy buying dozens as a business, but he said it was a lot harder now with more people bidding. Also $69 isn't that great for a 160 point SSR contract if it's stripped, if it's loaded it's decent though.

 

[Melissa Fernandez]

I rear an article about a guy buying dozens as a business, but he said it was a lot harder now with more people bidding. Also $69 isn't that great for a 160 point SSR contract if it's stripped, if it's loaded it's decent though.

Thanks Wakey. I thought $69 was a pretty good price for an SSR contract. I see stripped contracts (in the 150 - 175 point range) going for $75/point on resale sites.

 

[Wakey]

Thanks Wakey. I thought $69 was a pretty good price for an SSR contract. I see stripped contracts (in the 150 - 175 point range) going for $75/point on resale sites.

That's what they are listed for, not necessarily what they go for. I just bought a 160 SSR last month for $75 a point, Feb use year. 2016 was banked into 2017, so I immediately rented those points out for $1800 within 22 hours. That brought it down to $64 a point. If I wanted to rent out the 2017 points as well (thus stripping it, but I'd still have 2018s points) it's down to $53 a point. So for a stripped, $69 a point is certainly not worth the added hassle/ risk in my view. Cheers.

 

[Melissa Fernandez]

That's what they are listed for, not necessarily what they go for. I just bought a 160 SSR last month for $75 a point, Feb use year. 2016 was banked into 2017, so I immediately rented those points out for $1800 within 22 hours. That brought it down to $64 a point. If I wanted to rent out the 2017 points as well (thus stripping it, but I'd still have 2018s points) it's down to $53 a point. So for a stripped, $69 a point is certainly not worth the added hassle/ risk in my view. Cheers.

Thanks Wakey, I appreciate the breakdown. It really helps out. Do you happen to know if there is anyway to find out if the contract is stripped, or is that kind of the gamble of buying the contract on foreclosure?

 

[Wakey]

Thanks Wakey, I appreciate the breakdown. It really helps out. Do you happen to know if there is anyway to find out if the contract is stripped, or is that kind of the gamble of buying the contract on foreclosure?

Sorry I'm not sure if anyone has to check it first before putting it in auction for foreclosure. Everything I have read though I heard it's not worth the hassle now. I also heard Disney changed something on foreclosures, in their favour, not sure what now but you might be able to find a thread on it. Wdrl's articles above look comprehensive.

 

[frank808]

Thanks Wakey, I appreciate the breakdown. It really helps out. Do you happen to know if there is anyway to find out if the contract is stripped, or is that kind of the gamble of buying the contract on foreclosure?

No way to tell if the contract has points or is stripped. Only dvc has that info and they wont tell you anything untill after the contract is in your name. You only get to see whats in the public documents. Current, banked and borrowed points are not part of the deed.

 

[Wakey]

Given someone who is on their knees financially would have (if they had any sense) rented out the points to keep the wolf from the door, it looks like the safe bet is to assume there's no banked or current years' points at least. That's what I'd do if bidding. That means the price has to be very low to beat a fully loaded decent resale contract. Big advantage in no ROFR though.

 

[supersnoop]

Given someone who is on their knees financially would have (if they had any sense) rented out the points to keep the wolf from the door, it looks like the safe bet is to assume there's no banked or current years' points at least. That's what I'd do if bidding. That means the price has to be very low to beat a fully loaded decent resale contract. Big advantage in no ROFR though.

At the same time, if someone is behind on their dues, doesn't the contract get locked down to the point that they can't use it? If they're far enough behind, it could be a loaded contract.

 

[Wakey]

At the same time, if someone is behind on their dues, doesn't the contract get locked down to the point that they can't use it? If they're far enough behind, it could be a loaded contract.

I didn't know that. So yes that's a possibility.

 

[wdrl]

Given someone who is on their knees financially would have (if they had any sense) rented out the points to keep the wolf from the door, it looks like the safe bet is to assume there's no banked or current years' points at least. That's what I'd do if bidding. That means the price has to be very low to beat a fully loaded decent resale contract. Big advantage in no ROFR though.

At the same time, if someone is behind on their dues, doesn't the contract get locked down to the point that they can't use it? If they're far enough behind, it could be a loaded contract.

Supersnoop is correct that DVC blocks an owner from making reservations if their account is in arrears for nonpayment of mortgage and/or annual dues. Any pending reservations are cancelled, too. So most owners who are facing foreclosure don't gain anything by trying to rent out their points.

If anything, accounts facing foreclosure probably have a greater risk of points expiring and never being used before the foreclosure process has run its course. Here is an example: The owner has a February UY and receives their February 2016 UY points. The owner doesn't pay the 2016 annual dues and is blocked from using the points for the 2016 UY. The owner, who is essentially walking away from the deed, does not bank the 2016 points into the 2017 Use Year. Disney starts foreclosure proceedings in September 2016 and by March 2017 it is sold at auction. But by that time the 2016 points have expired and are no longer available to the winning bidder.

There is no way to tell how many points are available on a deed that is being foreclosed. The best you can do is make educated guesses. Its easy to determine the deed's Use Year, and the paper trail tell you when Disney started the foreclosure process. By knowing the banking and borrowing rules, you can estimate how far in advance the prior owner could have used the points from the deed. Its far from an exact guess, but it will give you an estimate of what to expect.