BWV Analysis 2: Electric Boogalo

[dmunsil]

Further proof that I have no life.

Before I leave behind Boardwalk Villas for now, I thought I'd do April 2013, which had the highest ROFR rate for this resort in the last 6 months, and one of the highest rates of any resort for the whole period. I did the same analysis as I did for January, but in January there were no ROFRs and the total sales were lower.

Since folks were interested, I gathered Use Years as I went through the deeds. I don't actually see any pattern to the use years that were ROFRed or not, but I present the data for your enjoyment.

I also calculated the average price per point that the sale group and ROFR group went for. They're not far apart. Interestingly enough, the ROFR group had way more listings where the seller took a huge bath. I don't know why that would be interesting to Disney. And of course I don't have any data about how many points were left on the contract and whether the seller or buyer paid for closing, MFs, etc.

I think the data below just reinforces my belief that DVC is not a good investment, even though it's a perfectly fine purchase. I do not expect my contract to go up in price. On the other hand I expect that in ten years it will be worth something more than zero, which is more than most people can expect of their timeshares.

Instead of separating out resales, I just put an asterisk (*) at the end of rows where the seller bought their contract resale.

Third-party Sales for April 2013

Points  UY   Yr    Purch Price  Sale Price  Purch PPP  Sale PPP  Profit (loss)
350     Apr  2003  $29,400      $23,800     $84.00     $68.00    $ (5,600) 
150     Mar  1998  $ 9,500      $ 9,000     $63.33     $60.00    $   (500) 
222     Jun  1999  $14,500      $13,600     $65.32     $61.26    $   (900) 
210     Oct  1999  $13,200      $13,900     $62.86     $66.19    $    700  
200     Jun  2008  $17,000      $12,000     $85.00     $60.00    $ (5,000) *
150     Sep  1999  $ 9,800      $ 9,800     $65.33     $65.33    $      0  
210     Aug  2012  $12,800      $12,000     $60.95     $57.14    $   (800) *
170     Sep  2000  $11,100      $ 9,700     $65.29     $57.06    $ (1,400)  
 50     Sep  2000  $ 3,400      $ 3,800     $68.00     $76.00    $    400   
380     Jun  1998  $23,900      $21,000     $62.89     $55.26    $ (2,900)  
150     Dec  2001  $10,100      $10,200     $67.33     $68.00    $    100   
 50     Oct  2000  $ 3,300      $ 3,700     $66.00     $74.00    $    400   
200     Mar  2003  $16,800      $11,000     $84.00     $55.00    $ (5,800)  
150     Apr  1999  $ 9,800      $ 8,300     $65.33     $55.33    $ (1,500)  
350     Feb  2006  $32,200      $22,800     $92.00     $65.14    $ (9,400)  
230     Feb  1997  $14,500      $12,000     $63.04     $52.17    $ (2,500)  
150     Oct  2000  $ 9,800      $ 9,500     $65.33     $63.33    $   (300) 
100     Apr  1998  $ 6,300      $ 6,900     $63.00     $69.00    $    600   
150     Aug  2012  $ 7,800      $ 9,300     $52.00     $62.00    $  1,500  *
 50     Mar  2003  $ 4,200      $ 3,700     $84.00     $74.00    $   (500) 
100     Sep  2004  $ 8,400      $ 7,200     $84.00     $72.00    $ (1,200)  
100     Sep  2003  $ 8,400      $ 7,000     $84.00     $70.00    $ (1,400)  
 40     Aug  2011  $ 3,200      $ 2,200     $80.00     $55.00    $ (1,000) *
210     Feb  1997  $13,200      $13,000     $62.86     $61.90    $   (200) 
200     Dec  1999  $13,000      $13,000     $65.00     $65.00    $      0   
--------------------------------------------------------------------------
                                  Average Sales Price: $63.53

ROFRs for April 2013

Points  UY   Yr    Purch Price  Sale Price  Purch PPP  Sale PPP  Profit (loss)
270     Feb  2003  $22,700      $16,200     $84.07     $60.00    $ (6,500) 
240     Dec  2000  $15,600      $15,200     $65.00     $63.33    $   (400) 
200     Dec  2000  $13,400      $11,000     $67.00     $55.00    $ (2,400) 
300     Dec  2008  $29,400      $18,000     $98.00     $60.00    $(11,400) 
150     Sep  1999  $ 9,800      $ 9,000     $65.33     $60.00    $   (800) 
200     Mar  2003  $16,800      $11,500     $84.00     $57.50    $ (5,300) 
150     Mar  1998  $ 9,500      $ 8,300     $63.33     $55.33    $ (1,200) 
306     Feb  1998  $19,300      $20,900     $63.07     $68.30    $  1,600  
300     Jun  1998  $18,900      $18,600     $63.00     $62.00    $   (300) 
150     Sep  2000  $ 9,800      $10,200     $65.33     $68.00    $    400  
150     Jun  2008  $12,000      $ 9,800     $80.00     $65.33    $ (2,200) *
270     Aug  1998  $17,000      $15,700     $62.96     $58.15    $ (1,300) 
150     Jun  2000  $10,100      $ 9,900     $67.33     $66.00    $   (200) 
150     Apr  1998  $ 9,500      $10,400     $63.33     $69.33    $    900  
200     Aug  2000  $13,000      $11,800     $65.00     $59.00    $ (1,200) 
--------------------------------------------------------------------------
                                  Average Sales Price: $61.82

For what it's worth, in January the average sale price was $61.77.

The difference in price between ROFRed and Waived contracts isn't huge. I note that no contract smaller than 150 points was ROFRed. Maybe Disney prefers not to hassle with small contracts. But then they let go some choice large contracts like that 380 point contract that went for $55/point. Wacky.

I must say, this chart really suggests that you should not count on the value of your contract going up. The people who made money made very little. In fact once you add in the broker commissions, everyone lost money. They did get to enjoy years of Disney vacations, though. Again: bad investment, good purchase.

As someone pointed out, there might have been incentives that are not accounted for in the sales price. I don't know that it would change the overall results that much.

And all of the caveats that JimMIA pointed out apply. We're comparing people who bought direct a long time ago to people who bought resale relatively recently. It's not enough data to draw any firm conclusions about.

Some interesting contracts I want to point out, which I've mentioned previously in other posts:

All four of the contracts below were sold by the same couple within days of each other. Why did Disney ROFR just the one contract but not the others? Price? Size of contract? Your guess is as good as mine.

Sold:
 50     Sep  2000  $ 3,400      $ 3,800     $68.00     $76.00    $    400   
100     Sep  2004  $ 8,400      $ 7,200     $84.00     $72.00    $ (1,200)  
100     Sep  2003  $ 8,400      $ 7,000     $84.00     $70.00    $ (1,400)  

ROFRed:
150     Sep  2000  $ 9,800      $10,200     $65.33     $68.00    $    400

These two contracts were bought originally by the same couple in 2000, but then they sold the second to a different couple in 2008, and then both were ROFRed on the same day. The two couples live in different cities. Coincidence?

ROFRed:
150     Jun  2000  $10,100      $ 9,900     $67.33     $66.00    $   (200) 
150     Jun  2008  $12,000      $ 9,800     $80.00     $65.33    $ (2,200) *

Anyway, more food for discussion. Enjoy!

 

[Dean]

All four of the contracts below were sold by the same couple within days of each other. Why did Disney ROFR just the one contract but not the others? Price? Size of contract? Your guess is as good as mine.

I can't speak to the reason here but historically they've took one and not another more to keep people guessing than anything else. They've never used ROFR mainly as a direct income method.

 

[gpts@disney]

Very interesting data. Thanks for providing the analysis! I would imagine that when / if you update the BWV data for May, we will see an increase in sales prices...

 

[dbs1228]

I had 2 BWV contracts taken 1st in March 222 55.00PP the 2nd taken mid April 200 Oct UY 65.00PP neither are listed in your analysis???

 

[dmunsil]

I can't speak to the reason here but historically they've took one and not another more to keep people guessing than anything else. They've never used ROFR mainly as a direct income method.

That's a good point: if their ROFR algorithm was known, it would be less effective. For example, if they set a floor and said, "Any price lower than this will be ROFRed" then no one would ever make a lower offer, and Disney would never be able to pick up anything cheap. They have to let some cheap contracts through in order to keep people making lowball offers in the future.

 

[dmunsil]

I had 2 BWV contracts taken 1st in March 222 55.00PP the 2nd taken mid April 200 Oct UY 65.00PP neither are listed in your analysis???

My assumption is that neither one was recorded in April. There's some delay between Disney exercising their ROFR option and the actual deed being recorded, both because of delays in generating the deed and in getting the seller to sign it, and then in working it through Disney's recording process and getting it to Orange County.

 

[dmunsil]

I had 2 BWV contracts taken 1st in March 222 55.00PP the 2nd taken mid April 200 Oct UY 65.00PP neither are listed in your analysis???

The first one was recorded May 20th, and the second on May 21st. Which is interesting, because they were signed immediately, one in late March and one in mid-April. So the delay is on Disney's end. Perhaps they were so bogged down preparing for the VGF onslaught that they fell behind on filing their ROFR deed transfers. Or maybe they delay intentionally so people like us can't learn anything about their current ROFR strategy.

I think I'll go gather the actual ROFR date from the April recorded deeds. I wonder if they were actually ROFRed over a longer period and just filed in a clump, making it look like the rate was spiking.

 

[ELMC]

Great analysis and some fun reading. One variable that I think is missing is the number of points in the contract at the time of sale. That greatly alters the "true" value of the contract. I think if you account for that variable you will see a greater difference in price between the average ROFR sale price and the average "pass" sale price.

 

[dbs1228]

The first one was recorded May 20th, and the second on May 21st. Which is interesting, because they were signed immediately, one in late March and one in mid-April. So the delay is on Disney's end. Perhaps they were so bogged down preparing for the VGF onslaught that they fell behind on filing their ROFR deed transfers. Or maybe they delay intentionally so people like us can't learn anything about their current ROFR strategy.

I think I'll go gather the actual ROFR date from the April recorded deeds. I wonder if they were actually ROFRed over a longer period and just filed in a clump, making it look like the rate was spiking.

Thank you - you may be right they may hold them? There was a 3rd identical contract ROFR'd 200 pnt Oct UY that was taken the same time as mine (same sellers) it is strange that those contracts were taken almost 1 month apart yet recorded 1 day apart. I guess we will never know!

 

[goneviral]

What blows me away in looking at this data is that a 170 point contract sold for $57.06 PP a couple of months ago. There is a similar albeit loaded contract listed on one of the recommended sites for $84 PP. That's 47.2% growth in a couple of months. Is the DVC market ordinarily this unstable in terms of price fluctuation?

 

[Dean]

What blows me away in looking at this data is that a 170 point contract sold for $57.06 PP a couple of months ago. There is a similar albeit loaded contract listed on one of the recommended sites for $84 PP. That's 47.2% growth in a couple of months. Is the DVC market ordinarily this unstable in terms of price fluctuation?

Prices seem to have taken an uptick but this is more representative of the difference between asking and acceptance than anything else.

Let me thrown in another wrinkle or 2. ROFR only has an effect when it's active, otherwise it's market forces which don't work well for timeshares generally (though better for DVC than most). A few known lowball sales can really have a big effect on all other sales. Some of the resale companies refuse to accept contracts for sale that are price too low in their opinion. I'll further add that I think the DVC specialty type brokers have had a larger influence on DVC prices than any other single factor historically.

 

[dmunsil]

What blows me away in looking at this data is that a 170 point contract sold for $57.06 PP a couple of months ago. There is a similar albeit loaded contract listed on one of the recommended sites for $84 PP. That's 47.2% growth in a couple of months. Is the DVC market ordinarily this unstable in terms of price fluctuation?

Well, you're cherry picking one of the lowest actual sale prices and comparing it to one of the highest asking prices about 4 months later (since those prices recorded in April were actually negotiated around February). I don't know that that tells you very much.

Even if the median price at a particular time is $75, let's say, there will be sellers that will list at $85 and settle for $82. And of course we don't know anything about how stripped or loaded these various contracts were. A stripped contract is probably worth about $6-8 less per year's worth of points missing; that's a lot. In practice, it doesn't seem like people actually discount the stripped contracts that much or raise the prices of the loaded contracts that much, but I would guess it makes at least some difference to the realized price.

 

[goneviral]

Well, you're cherry picking one of the lowest actual sale prices and comparing it to one of the highest asking prices about 4 months later (since those prices recorded in April were actually negotiated around February). I don't know that that tells you very much.

I had actually done all of the calcs for the information posted earlier for BWV. I just wasn't going to go into that sort of detail since that example gets the point across. April data had an average of $63.52 while May was a touch under $67 per the data in that thread.

The example I used is glaring because the actual dollar difference for a decent Boardwalk listing right now is $84 for a 170 point contract, which would be $14,280. The price I mentioned for a transaction, $57.06, would be a $9,700.20 expense (not including closing et al). That represents a difference of $4579.80 (!) after only a couple of months.

Even if we use the May average of $67, a 170 point contract jumped from $11,390 to $14,280, nearly a $3k increase. As someone new to the process, I am astounded that there has been this sort of price fluctuation in such a short period, which is why I asked. Yes, there are always contributing factors such as point usage but a totally stripped contract for BWV is still listing for $83 PP right now at one of the linked sites.

I am simply curious if this is a rare turn of events or if the current quarter has been unusual.

 

[goneviral]

Prices seem to have taken an uptick but this is more representative of the difference between asking and acceptance than anything else.

Let me thrown in another wrinkle or 2. ROFR only has an effect when it's active, otherwise it's market forces which don't work well for timeshares generally (though better for DVC than most). A few known lowball sales can really have a big effect on all other sales. Some of the resale companies refuse to accept contracts for sale that are price too low in their opinion. I'll further add that I think the DVC specialty type brokers have had a larger influence on DVC prices than any other single factor historically.

Since I'm new to this, I am curious about one aspect that you address above. If a listing is a certain price per point, how close to that number is the ordinary compromise? I don't know if it's like houses where the wiggle room is less or cars where the "asking price" is a sucker play.

 

[dmunsil]

Even if we use the May average of $67, a 170 point contract jumped from $11,390 to $14,280, nearly a $3k increase. As someone new to the process, I am astounded that there has been this sort of price fluctuation in such a short period, which is why I asked. Yes, there are always contributing factors such as point usage but a totally stripped contract for BWV is still listing for $83 PP right now at one of the linked sites.

Again, you're comparing an average actual sale price, to a high listing price. They aren't comparable. A more valid comparison would be from the high sale price recorded in May, which was $83 per point. By that comparison, it looks like the market hasn't moved much at all.

In fact, I think the market has moved up somewhat in the last few months. I wouldn't be surprised if the median price recorded in June goes up another few dollars, maybe above 70. But it's not going to be 83 or anything close to it.

The stripped contract listed for $83 is just fishing. Maybe they'll actually get $83. Maybe it'll sit for a while and then they'll get $75. Maybe it'll sit a long while and they'll settle for $70. It all depends on if someone really wants it badly or not.

And the short answer to your original question is that yes, the market can move around quite a bit, especially when Disney does a lot of ROFR exercises. Suddenly there are a bunch of motivated buyers chasing even fewer contracts, and the price inevitably goes up. It's a thinly traded market, so swings are not uncommon.

 

[goneviral]

Again, you're comparing an average actual sale price, to a high listing price. They aren't comparable.

This statement is exactly why I asked right above about asking price in terms of absolutes.

A more valid comparison would be from the high sale price recorded in May, which was $83 per point. By that comparison, it looks like the market hasn't moved much at all.

But you lose me here. Why do you believe the market hasn't moved any if the data collated indicates an average of $63.52 to $67 then you mention a sale at $83? I don't follow that line of thinking.

In fact, I think the market has moved up somewhat in the last few months. I wouldn't be surprised if the median price recorded in June goes up another few dollars, maybe above 70. But it's not going to be 83 or anything close to it.

I believe that and yet all I can evaluate at the moment are listed prices. The only three listings at TSS quote $83, $85 and $85. All of those are larger contracts (175 points being the smallest), none of which has more than 5 points currently available. At an apparently unsponsored site, five of six contracts currently available list for 80+ PP. The only one that doesn't is $78 for a large-ish, somewhat stripped contract.

That is exactly why I have been wondering about the negotiating power a buyer has with these offers.

To wit, there is a BLT listing I like with 150 points annually. It is listed at $96 PP. I have no idea what a "fair" offer would be. Is there a link or a thread that provides guidelines for how negotiations work?

And the short answer to your original question is that yes, the market can move around quite a bit, especially when Disney does a lot of ROFR exercises. Suddenly there are a bunch of motivated buyers chasing even fewer contracts, and the price inevitably goes up. It's a thinly traded market, so swings are not uncommon.

Great! That is very useful information as I attempt to understand the underlining economics of this market.

 

[nalajms]

To wit, there is a BLT listing I like with 150 points annually. It is listed at $96 PP. I have no idea what a "fair" offer would be. Is there a link or a thread that provides guidelines for how negotiations work?

The "Anyone made it through (...) ROFR recently?" Thread gives you an idea of the lower price per points being accepted. I think page 162 is still the compiled data page. However, at the end of the day, it's how much you're willing to pay and what the seller's willing to accept.

I agree with you, the price has moved up. To assume that many buyers negotiate on contracts is unrealistic, unless you assume all buyers are lurking on this site. But at the same time, May closing data is not reflective of current selling prices either. Even just looking at page 162 for those that passed in April/May, it seems like the average price per point is higher in the 70s.

 

[Dean]

Since I'm new to this, I am curious about one aspect that you address above. If a listing is a certain price per point, how close to that number is the ordinary compromise? I don't know if it's like houses where the wiggle room is less or cars where the "asking price" is a sucker play.

It depends, the numbers area all over the place. I've bought timeshares offering 10% of what they were asking and I've paid asking price without negotiating because it was that good of a deal. I've also lost a couple of valuable purchases just by offering 10% less than asking as a starting point. For DVC I'd say that it's closer the car example overall though.

 

[dmunsil]

Why do you believe the market hasn't moved any if the data collated indicates an average of $63.52 to $67 then you mention a sale at $83? I don't follow that line of thinking.

I don't believe the "market hasn't moved." I was pointing out that you're looking at the most expensive BWV listings available right now, and in May the highest sale price was essentially the same price as those listings. So if you think those listings represent the high side of the market (and I do), then the market hasn't moved much between May (or really, early April when they actually negotiated that price) and today. In fact, you can't draw that conclusion from just those data points. Today, all you see are $80+ contracts. Tomorrow, one might pop up listed at $72.

But again, you can't compare listed prices with sale prices. Some people pay full asking price, but lots of people negotiate something lower.

That is exactly why I have been wondering about the negotiating power a buyer has with these offers.

To wit, there is a BLT listing I like with 150 points annually. It is listed at $96 PP. I have no idea what a "fair" offer would be. Is there a link or a thread that provides guidelines for how negotiations work?

It's exactly like negotiating anything high priced. Cars, boats, property. You can offer anything you want. If you come in too low, the worst that happens is they won't accept, and perhaps someone else gets it because they offered more. There's no other downside, really. Maybe if you really lowball the price they assume you're not serious. But I've never heard of someone not being willing to look at a higher offer because they were insulted by the first one. Maybe it happens, but most people just want to sell for a reasonable price.

As to the BLT listing at $96, that's a pretty reasonable price right now. Maybe even low, depending on how stripped or loaded it is. If it's loaded, I'd worry about it getting ROFRed at that price. There are many folks who'd offer the asking price for that contract, if it fit what they needed. But there's no reason you can't offer $90. Heck, you could offer $80. You can offer $1 if you want. But if they accepted a super-low offer, it would almost certainly get ROFRed, so unless you're playing the "keep submitting lowballs until Disney lets one through" game, you might as well offer on the high side of the market.

There are people out there (some on this board, I'm sure) who routinely and regularly offer low prices on pretty much everything, as long as they have some cash to spend. They then rent out the points, or hold the contracts for a while and then sell them for a profit (often both). Those people can afford to be really patient. They're not planning to book a trip with the contracts they're making offers on.

So ask yourself if you want a contract soon, or if you want to get the lowest price. If you want a contract soon, look for one you like and make an offer. Make it a high-ish offer, based on all the price data around here, so it's likely to make it through ROFR. If none of the contracts looks good to you, wait until one does look good and then pounce on it. TSS lists about 120-150 contracts a month between all the different resorts, so you shouldn't have to wait forever.

If you want to get the lowest price, start making offers. Pitch low. Prepare for stuff to get ROFRed. Be patient. Don't get hung up on a specific contract.

It's just business.

 

[dmunsil]

And one other thing: for your mental health, if you just want to own some DVC and aren't looking to be a part-time timeshare broker, focus your attention on how much you're saving relative to Disney rather than how much more you paid than some other guy.

Right now, you can easily get BLT for $110. That's the high range; it's not likely to get ROFRed. That's about 35% off what Disney is charging ($165). That's a good deal! If you decided to just pay that, you still got a deal! Don't spend all your time worrying about whether someone else got something roughly similar for $82. They probably had seven contracts ROFRed to get that one screaming deal.

That said, first see if they'll take $100.