Buying stripped resale contract with close date far in future

[harv0033]

Hi gang,

We are considering bidding on a resale contract that is very stripped (no pts in 2016, 2017, very little in 2018). Also sellers cannot close until December 2017. I take it this means they have a vacation late this year that they have borrowed 2018 points for.

We are in no hurry as far as timeline - and we could live with the stripped contract. However the long wait to close gives me pause. I presume we would sign a contract with each other now, and go through ROFR. Assuming that goes smoothly, we would then have ~6 months or so to wait until close.

What could go wrong during this time? Could the sellers back out at the end and leave us with nothing (and several months where we could have bid on other resales?). What if in the interim we come across a much better resale contract that we would rather have?

I guess I'm wondering if others have gone down this path, what was their experience, etc. What are the legal factors at play once we have a signed contract and have passed ROFR?

 

[disneynutz]

Your terms are written in the contract that you sign, I would ask the broker, it's their job.

Bill

 

[KAT4DISNEY]

The sellers can always back out until they sign the final paperwork. They would have penalties with the broker and you would get your deposit back but that is all. Nothing extra for your time unless something was included for it in the contract.

 

[Orsino]

Personally, I look at "cannot close until X" as meaning don't bother offering until a month or two before X. Just keep looking, something better might come along between now and then. And I doubt anyone will be very eager to snatch up a stripped contract that can't even close. Maybe, I would consider offering well below asking to get a good price, but the price would have to be very good to commit to such a contract.

 

[harv0033]

Personally, I look at "cannot close until X" as meaning don't bother offering until a month or two before X. Just keep looking, something better might come along between now and then. And I doubt anyone will be very eager to snatch up a stripped contract that can't even close. Maybe, I would consider offering well below asking to get a good price, but the price would have to be very good to commit to such a contract.

This is pretty much my thoughts as well.

Thanks to all for comments thus far.

I did chat with broker as well, and the answer is what you would expect: I back out, I lose escrow....seller backs out, I get $ back and could pursue legal action if I really wanted to (cant imagine that would be worth the effort).

 

[Matty B13]

We had to wait for a month on our first contract before closing, it wasn't to big a deal since it only added about 20 days to the whole closing process. But..... It was a fully loaded contract with a full year of banked points in the contract, so it was worth waiting for it. In this case with no banked, current, or 2018 points I would hold off and keep looking for the contract with the right UY and points you want. I don't think this contract is going anywhere, except to an uniformed buyer.

 

[harv0033]

We had to wait for a month on our first contract before closing, it wasn't to big a deal since it only added about 20 days to the whole closing process. But..... It was a fully loaded contract with a full year of banked points in the contract, so it was worth waiting for it. In this case with no banked, current, or 2018 points I would hold off and keep looking for the contract with the right UY and points you want. I don't think this contract is going anywhere, except to an uniformed buyer.

Thanks. Agreed. They are asking $95, our target is more in the $90 range....I thought if we could get this one for $80 it would be enticing, but I cant imagine someone dropping their asking price that much.

 

[Matty B13]

I have been watching the resale market for over a year now, and come to the conclusion that if your a patient and wait a month or two the perfect resale contract will come up for sale for the resort you want with the UY and points you want. Pricing can fluctuate quite a bit though, but depending on how long you are going to hold on to the contract for, a $5 or $10 per point difference won't matter much over a 20-50 year contract length. Getting the best price per point isn't the biggest factor a lot of times.

 

[miTnosnhoJ]

Disney can exercise ROFR any time prior to closing. They will not waive ROFR until a closing date is set and it is within 30 days. It is a fallacy that Disney must exercise ROFR within 30 days of submission. They go by projected closing date.

 

[CarolMN]

Hi gang,

We are considering bidding on a resale contract that is very stripped (no pts in 2016, 2017, very little in 2018). Also sellers cannot close until December 2017. I take it this means they have a vacation late this year that they have borrowed 2018 points for.

We are in no hurry as far as timeline - and we could live with the stripped contract. However the long wait to close gives me pause. I presume we would sign a contract with each other now, and go through ROFR. Assuming that goes smoothly, we would then have ~6 months or so to wait until close.

What could go wrong during this time? Could the sellers back out at the end and leave us with nothing (and several months where we could have bid on other resales?). What if in the interim we come across a much better resale contract that we would rather have?

I guess I'm wondering if others have gone down this path, what was their experience, etc. What are the legal factors at play once we have a signed contract and have passed ROFR?

FWIW, I wouldn't waste my time on this one. By the time you reduce the list price to account for missing the 2016, 2017,& 2018 points, the offer will be so low that Disney would be hard pressed to let it go. Plus there's not much of an upside to tie up a deposit until 2108 waiting to find out if you get it or not. There has to be a better contract out there for you. JMHO. YMMV.

 

[KAT4DISNEY]

Disney can exercise ROFR any time prior to closing. They will not waive ROFR until a closing date is set and it is within 30 days. It is a fallacy that Disney must exercise ROFR within 30 days of submission. They go by projected closing date.

Once they pass on ROFR though it is final and even with extended closing I've never read of an instance that they didn't response within 30 days of it being submitted.

 

[TexasChick123]

Hi gang,

We are considering bidding on a resale contract that is very stripped (no pts in 2016, 2017, very little in 2018). Also sellers cannot close until December 2017. I take it this means they have a vacation late this year that they have borrowed 2018 points for.

We are in no hurry as far as timeline - and we could live with the stripped contract. However the long wait to close gives me pause. I presume we would sign a contract with each other now, and go through ROFR. Assuming that goes smoothly, we would then have ~6 months or so to wait until close.

What could go wrong during this time? Could the sellers back out at the end and leave us with nothing (and several months where we could have bid on other resales?). What if in the interim we come across a much better resale contract that we would rather have?

I guess I'm wondering if others have gone down this path, what was their experience, etc. What are the legal factors at play once we have a signed contract and have passed ROFR?

Don't do it. Keep looking for a better contract with more points and a reasonable closing date. As others have said, the owner could back out. You're not going to sue them if they do, so I would keep looking.

 

[Nie0214]

Once they pass on ROFR though it is final and even with extended closing I've never read of an instance that they didn't response within 30 days of it being submitted.

We have a delayed closing... sent to ROFR on like 2/28, passed around 3/11 (can't remember the dates off the top of my head), and our closing date is 6/29. We liked it, gave us more time to get cash on hand and it was the contract we wanted.

BUT before I signed the contract, I researched the comptroller website and saw that the seller appears to be a professional reseller or DVC flipper of some sort (and a realtor, too) because there were a lot of transactions! That made me feel more comfortable with the wait.

 

[TexasChick123]

We have a delayed closing... sent to ROFR on like 2/28, passed around 3/11 (can't remember the dates off the top of my head), and our closing date is 6/29. We liked it, gave us more time to get cash on hand and it was the contract we wanted.

BUT before I signed the contract, I researched the comptroller website and saw that the seller appears to be a professional reseller or DVC flipper of some sort (and a realtor, too) because there were a lot of transactions! That made me feel more comfortable with the wait.

I think a month or two is fine as well, but 7 month delayed closing with a completely stripped 2017 and mostly stripped 2018 sounds like a bad deal to me. That's just my opinion though. Considering that this contract can't close until December, I would wait because the resale market really picks up at the end of the year with a lot more contracts for sale.

 

[harv0033]

Thanks to all for their thoughts. Going to pass for now and see what else pops up in next few months....

 

[Matty B13]

I'm sure a contract at the same resort and UY and points will come up fairly quickly, just sign up for all the email lists at all the major resale companies.

 

[LAX]

Thanks to all for their thoughts. Going to pass for now and see what else pops up in next fee months....

I think you made the right call. Think about it. Would you be willing to lock up a good chunk of your cash in an 8-month CD that pays 0.1% (that's right, 1/10 of 1%)? You are probably better off putting your money under the mattress and waiting for the next promo. My point is unless you get a screaming deal (stripped contracts are often not), there is no point in locking yourself up in that contract. I realize no one can predict the future, but there is a better chance you will find better a contract in the next few months than not.

LAX