Did Disney cut its own throat with new resale rule?

[boxer]

Wondering if Disney is cutting its OWN throat with this new resale rule--by basically giving their customers a product that now has limited value on the resale market? Basically, when you now pay $168/PP (or whatever it is now), you are basically 'stuck' with this product since there is now NO WAY you will get even close to that if you need to re-sell. They are now offering a product that loses a lot of its benefits once it is re-sold--which therefore limits the dollar value should you need to sell.

If someone bought for $168/PP and needs to sell due to an emergency, they are going to take a HUGE hit on resale. No one in their right mind would pay more than say $130/PP, when they can buy that property direct and get all the benefits (quick closing, no stripped points, membership extras, etc). So, anyone selling one of the newer properties (Poly, GF, etc) is going to have to price their re-sale so low that they will lose thousands.

While they think this new rule will help them, I really think it will hurt new purchases-- since they are trying to sell a product with a very limited resale market.

 

[davper]

But when you buy DVC, you are not looking at what you can sell it for down the road. You are expecting to hold onto it for the life of the contract.
Yes life happens. But I doubt that will affect new buyers decisions.

 

[robinb]

No one buys a timeshare thinking they will sell it. This may hurt the resale industry but it will not hurt Disney.

 

[Brian Noble]

Wondering if Disney is cutting its OWN throat with this new resale rule--by basically giving their customers a product that now has limited value on the resale market?

No. Many timeshares are worth 10% of their value on resale, or worse. It doesn't seem to matter, because timeshare is a product that is not bought, it is sold. Very few people wake up one morning and think: "Today I am going to sign a contract that obligates me forever to pay for a share of the operation and upkeep of a luxury vacation condo." Instead, most people who buy timeshares are on vacation, having the time of their lives, and are given the chance to bottle that vacation feeling forever "and lock in today's prices."

Then, for a variety of reasons, after spending as much or more as one would spend buying a new car, these folks do zero due diligence during their rescission period. What's more, most of them are generally happy with their purchases, and many will end up buying more.

 

[southerngirl528]

Interesting points, Boxer. As a longtime member with several contracts I do not think the resale market will take much of a hit at all. As for needing to sell because of an emergency, I can think of all sorts of big purchases where the item(s) lose huge value almost as soon as you take ownership.

It has been pretty remarkable that DVC has been such a strong product for so long that there are plenty of folks out there that were actually able to MAKE some money when they sold their DVC membership. That just does not happen in the TS world. NO ONE should ever buy a TS as a financial investment to retain its market value. TS just are not that type of product. The value is in its usage, saving big $ on accommodations.

Though unpopular, and I fully agree that a little advance notice would have been a nice thing to do, but DVC has always, always, always been a timeshare not a discount program. Contracts are clear. I've seen perks come and go over the years and wasn't happy with all the changes, but I still have what I bought.... a Disney timeshare. And I love that.

I think in many ways, it was DVC's benevolence that has caused the current uproar (though that will die down soon). It seems to me they would have been far better served, and certainly more fair to their retail owners, if they had made more restrictions on resales from the get-go. It really has not been fair that people buying at a huge discount got the same exact perks that a full price buyer gets. That person that paid more got nothing different for the first several years of DVC. Is that fair to those folks? I think not.

Disney could have pulled the plug on ALL resale buyers with these new rules but they did NOT. There are untold thousands of members who still will have access to full benefits though they did not pay the full price, all because DVC was kind enough to allow it.

 

[boxer]

Maybe I'm different (I deal with alot of real estate transactions though), but I always go into something with the thought process of 'what I can get if I need to get out of this'. And while I agree that most people buy without the thoughts to re-selling--I would argue the fact there is a VERY busy resale market now with thousands upon thousands of listings of people that thought just that. Problem is that resale market now has a decreased dollar value because of what DVC just pulled.

I just have a hard time thinking that people won't look to the fact that this product now has a very limited value in the event they NEED to sell.

 

[MaryLovesPoohBear]

People buy things all of the time without a thought of resale value. Or knowing that resale value is diminished.

Think about cars. People will buy a new car, and the minute they drive it off of the lot, or at least past the return date, the car's value has dropped considerably.

Same with a house. After closing, it often takes 5 years or more to be able to make up what you paid in closing.

Not much different now with DVC.

 

[southerngirl528]

Problem is that resale market now has a decreased dollar value because of what DVC just pulled.

Can you cite your source on that? I have not seen/heard any inkling of that.

 

[boxer]

If you look at the resale sites, I am surprised how many VGF, Poly, and Aluni listings there are.....so while they might not have 'planned' to sell, an educated buyer *should* be thinking about the product they purchased, and what it could sell for (if needed).

So what do you all think is the new threshold for those newer properties selling on the resale market? I'm thinking there is NO way I would pay any more than $120/PP for a newer property that you can still purchase from Disney--and get all the extras.

 

[tjkraz]

So, anyone selling one of the newer properties (Poly, GF, etc) is going to have to price their re-sale so low that they will lose thousands.

Grand Floridian is re-selling for $150 per point. DVC's direct price is $180.

Do you really think that a significant number of buyers will pay a $30 premium for the promise of mostly ambiguous perks & benefits? That's $7500 on a 250-point contract...plus the added wait time for DVC to actually obtain the VGF points.

A more sensible approach would be for the buyer to still purchase the bulk of their points resale, combined with 25-50 pts direct in order to secure the perks. That would have minimal impact on resale demand / pricing.

250 VGF points direct @ $180 each = $45,000
250 VGF points resale @ $150 each = $37,500
200 VGF points resale PLUS 50 points direct = $39,000

I know which option I would choose (assuming I even care about the "perks".)

Resorts in active sales may feel a greater pinch, but they usually are not available in great quantities. The Timeshare Store has exactly 3 listings for Poly right now. And besides, when buyers could save a few thousand dollars by combining a small direct purchase with a resale contract, you better better believe they'll do it.

 

[boxer]

Grand Floridian is re-selling for $150 per point. DVC's direct price is $180.

Do you really think that a significant number of buyers will pay a $30 premium for the promise of mostly ambiguous perks & benefits? That's $7500 on a 250-point contract...plus the added wait time for DVC to actually obtain the VGF points.

A more sensible approach would be for the buyer to still purchase the bulk of their points resale, combined with 25-50 pts direct in order to secure the perks. That would have minimal impact on resale demand / pricing.

250 VGF points direct @ $180 each = $45,000
250 VGF points resale @ $150 each = $37,500
200 VGF points resale PLUS 50 points direct = $39,000

I know which option I would choose (assuming I even care about the "perks".)

Resorts in active sales may feel a greater pinch, but they usually are not available in great quantities. The Timeshare Store has exactly 3 listings for Poly right now. And besides, when buyers could save a few thousand dollars by combining a small direct purchase with a resale contract, you better better believe they'll do it.

I agree with that line of thinking, by buying a smaller contract to get the perks. I know for me if my resale contract that I just bought (luckily in Jan!!) didn't have the AP pass, then I would have thought a little harder before purchasing.

So what do you think the newer properties drop to on the resale market--or do you think they drop at all?

 

[tjkraz]

So what do you all think is the new threshold for those newer properties selling on the resale market? I'm thinking there is NO way I would pay any more than $120/PP for a newer property that you can still purchase from Disney--and get all the extras.

So you wouldn't pay any more than $30,000 resale for 250 Poly points when DVC's price for the same thing is $38,750 (after incentives)?

I'd say you are exactly the sort of customer DVC wants walking through the door.

 

[tjkraz]

So what do you think the newer properties drop to on the resale market--or do you think they drop at all?

In the short term I think pricing will drop a bit, mostly because I'm anticipating a lot of panic listings from current owners. (Since this perk restriction goes into effect immediately, this is the absolute worst time to sell IMO. But I've already seen numerous posts from people who claim they will sell because of some level of disgust / anticipation that prices will fall.)

There may also be a slow-down in buying as people re-assess the situation.

But over time I don't think this will mean a whole lot. The prevailing advice given on forums like this will be to buy a small contract direct if you really want the perks. Might cost a thousand dollars extra up front, but people will make that up in a couple sets of Annual Passes. And it's still a lot cheaper than buying ALL of one's points direct.

 

[Madame]

People buy things all of the time without a thought of resale value. Or knowing that resale value is diminished.

Think about cars. People will buy a new car, and the minute they drive it off of the lot, or at least past the return date, the car's value has dropped considerably.

Same with a house. After closing, it often takes 5 years or more to be able to make up what you paid in closing.

Not much different now with DVC.

Yes but a car & a house are necessities. DVC isn't. Besides a lot of people buy a house & car with resale in mind. At least responsible people do.

 

[boxer]

So you wouldn't pay any more than $30,000 resale for 250 Poly points when DVC's price for the same thing is $38,750 (after incentives)?

I'd say you are exactly the sort of customer DVC wants walking through the door.

Well it would be a little over $30 with closing and such......plus the 3-4 months close, possible stripped contract, etc. Then, if you are an AP purchaser (like myself), then you would add up those savings over the life of the contract---along with the other perks--and I bet you are closer than what you think to direct purchase.

I've done both direct and resale--and up to this new rule, I was ALL about resale......now, depending on what property you purchase, I'm not so sure.

 

[MammaMoe48]

But when you buy DVC, you are not looking at what you can sell it for down the road. You are expecting to hold onto it for the life of the contract.
Yes life happens. But I doubt that will affect new buyers decisions.

True, we are sort of new buyers, we bought AKV in 2013 and our plan is to keep it for the life of the contract and also add our son to the deed when he's old enough so he can use it with his family (God willing) and then if it's possible, he'll extent the contract for his kids (assuming we don't fall victim to the Zombie Apocalypse by that time ). If I were to sell, I'd wait 15-20 years until it's $300/pp or more and sell mine for $175 a point - I paid $150/pp in 2013. That way I'd make back all my principal and some of the interest. Again, this is assuming no zombies (and that my math is right).

 

[TisBit]

I believe your assumption is that someone buys today and sells today. That is rare and honestly generally occurs when someone hasn't thought it out. Already, you can't get what you paid back out of it if you sell in the first couple of years. But the same theory holds with buying a new car. If you buy it new off the lot today and try to sell it next month you will lose a fortune.

I bought my first contract in SSR, the worse investment ever according to many here. What I paid for it directly from DVC I could now make a health sum of money. Same thing when I bought from BLT, I paid a lot less than I can sell it for now on the resale market. But that isn't why I bought it and I don't plan on selling them.

 

[suebeelin]

I bought with my eye on resale value. I there wasn't a decent resale market, we DEFINITELY wouldn't have bought.

We always planned to sell our BLT within a decade after purchase. We were ambivalent about bwv.

Now we just don't know.

We think more ppl evaluate based on resale value.... All the more reason to buy resale or rent points if the value of the resale market drops further

 

[PacoDF]

It is a fact that the resale value of anything affects the decision of buying it in the first place. Of course not everybody thinks about it before buying, but the market as a whole does. This happens all the time.
If the resale value of cars is 0, the sales of new cars would drop sharply; almost everybody will retain their current cars until they fall apart... . Even then, some people will not care just because they have the money or they value a new car in a higher value than other people.

Resale value HELPS. A lot.

If the market allows you to recover 50% of your original expense, that actually reduces by 50% the cost of your original financial decision of buying.


Anyways, IMHO this new policy will not affect the resale market in any significant way. The only thing that will happen is that Disney will have a easier/sweeter sales pitch. This move is for they to be able to sell direct more easily and to cap the costs of offering new perks to a always growing base of owners. And those costs add a lot of money that should be paid some way or another by DVC or other Disney divisions.

 

[TisBit]

It is a fact that the resale value of anything affects the decision of buying it in the first place. Of course not everybody thinks about it before buying, but the market as a whole does. This happens all the time.

Anyways, IMHO this new policy will not affect the resale market in any significant way. The only thing that will happen is that Disney will have a easier/sweeter sales pitch. This move is for they to be able to sell direct more easily and to cap the costs of offering new perks to a always growing base of owners. And those costs add a lot of money that should be paid some way or another by DVC or other Disney divisions.

I think the only effect that it might have on the resale market, is that you might get more people to purchase directly. When we originally bout in (I think around 2004) I signed up for the sales presentation and briefly looked at the resale market. But the price differences wasn't enough for me to go that route, mostly out of convenience. We financed with Disney (paid it off quickly) had fully loaded contract with previous years points, not have to go through ROFR and such. It was a convenience and I opted to spend a bit extra for that.

Remember the customer here. It is Disney fans and they have shown over and over again, they will pay extra for something without blinking an eye. Look at the tour, parties, extra magic, etc etc etc.