DVC direct sales vs. Resale

[kathrna]

OK, besides sighting the obvious, cost, I am looking for pros/cons of each and what first time buyers liked or didn't like about their first time buying experience or what you wish you would have done/glad you did do.

At DVC, they are only offering SSR and AKL, they have a lower closing cost and the 10% credit incentive. Points are available immediatly and you can pick your UY.

At TTS, you can buy at any of the resorts, the process takes much longer, closing costs are higher, I would need to find my own financing if I wanted the interest to be tax deductable, BUT the price per point would save me$$.

Is resale worth the headache? What do you all think. (I just wanted to show that I did do A LITTLE homework up there.)

Thanks! ~Kathy

 

[DVC Mike]

Initial Purchase from DVC

• You can get the exact number of points that you want (although you must buy a minimum of 160)
• Faster than resale (you will be in the system and have your points and be able to make reservations much faster than resale)
• No worries about the purchase if Disney executes ROFR, since that only applies to resale purchases
• More expensive cost per point than the resale market
• You can finance through DVC, and Disney doesn’t report the loan to credit reporting agencies
• The full set of points you buy will be available immediately, versus a resale contract which may be “stripped” of points.

Initial Purchase via Resale

• You may not get the exact number of points you want
• You can purchase less than 160 points for your initial buy-in to DVC (Disney won’t let you buy less than 160 points).
• It will take much longer to get into the DVC system and have your points (resales typically take 6-8 weeks)
• Disney may exercise ROFR and you may loose the resale and have to start all over (When buying resale, one of the potential pitfalls to try to avoid is making an offer that will cause Disney to exercise it’s Right of First Refusal)
• Resale is typically less expensive then buying from DVC
• You can’t finance through DVC, although most resale brokers will recommend a finance company
• A resale contract may be “stripped” of points where the user has used many of the current year’s points, and may have borrowed some or all of next year’s points. Be wary of “stripped” contracts on the resale market.
• Can pickup any of the older resorts (you have to tell DVC that you won't buy AKV or SSR before they'll sell you the older resorts)

My initial purchase, as well as my 10 point add-ons, have all been done with DVC. I tried to pickup some contracts via resale, but the right contract (point size and use year) didn't become available and I decided it was faster and easier to buy direct from DVC (even though it cost a bit more).

 

[Rwars10230]

If you are willing to deal with extra red tape in order to save money then you may consider a resale. We bought directly through DVC. Also remember that and incentives that are running are only available if you buy from Disney directly. If you can still get double points it is quite a good deal, however I have heard rumors that the offer has expired.

 

[drag n' fly]

Initial Purchase from DVC

• You can get the exact number of points that you want (although you must buy a minimum of 160)
• Faster than resale (you will be in the system and have your points and be able to make reservations much faster than resale)
• No worries about the purchase if Disney executes ROFR, since that only applies to resale purchases
• More expensive cost per point than the resale market
• You can finance through DVC, and Disney doesn’t report the loan to credit reporting agencies
• The full set of points you buy will be available immediately, versus a resale contract which may be “stripped” of points.

Initial Purchase via Resale

• You may not get the exact number of points you want
• You can purchase less than 160 points for your initial buy-in to DVC (Disney won’t let you buy less than 160 points).
• It will take much longer to get into the DVC system and have your points (resales typically take 6-8 weeks)
• Disney may exercise ROFR and you may loose the resale and have to start all over (When buying resale, one of the potential pitfalls to try to avoid is making an offer that will cause Disney to exercise it’s Right of First Refusal)
• Resale is typically less expensive then buying from DVC
• You can’t finance through DVC, although most resale brokers will recommend a finance company
• A resale contract may be “stripped” of points where the user has used many of the current year’s points, and may have borrowed some or all of next year’s points. Be wary of “stripped” contracts on the resale market.
• Can pickup any of the older resorts (you have to tell DVC that you won't buy AKV or SSR before they'll sell you the older resorts)

My initial purchase, as well as my 10 point add-ons, have all been done with DVC. I tried to pickup some contracts via resale, but the right contract (point size and use year) didn't become available and I decided it was faster and easier to buy direct from DVC (even though it cost a bit more).

That was really helpful information

 

[TenThousandVolts]

Advantage to buying Direct through Disney: You can pay with a credit card.
-If you have the cash for the resale, pay with a rewards card- get 1% or more back in rewards currency- then pay the bill. (pretty much reduces your purchase price by 1%)
-If you don't have the cash but you would be able to pay the loan off in 12 months- secure a 0% for 1 year CC (some of those have rewards too) and pay off over the year- basically getting 0% financing.

Just be careful- make sure you can pay.

 

[kathrna]

Thanks all for your thoughts on this. I really appreciate it!

 

[castleri]

DVC does sell the other resorts but sometimes you have to wait until they get some from the contracts they buy back. I don't think there are any incentives involved with these resorts however- the cost is in the $92 a point range. You may have to do some firm talking to a guide to convince them you really want to do this versus SSR or AKV.

 

[JimMIA]

At DVC, they are only offering SSR and AKL,

As noted above, this is incorrect. You can buy a contract at ANY DVC resort direct from Disney.

Some of the guides will tell you different, and others will say you can but will try to talk you out of it -- probably because they have a financial incentive to sell SSR and AKV. But the truth is, you can buy any resort direct from Disney provided they have points at the resort you want. If not, you would go on a waitlist for the points, but those waits are usually short except for certain UYs at BCV.

 

[JimMIA]

If you have the time, I'd sure take a good look at resale. (We've bought both ways.) We saved about $4,000 buying our first contract resale. Be sure to use a good broker because it really does make a big difference.

A couple of comments on some of the previously-posted info:

Initial Purchase via Resale

It will take much longer to get into the DVC system and have your points (resales typically take 6-8 weeks)

This may be a little optimistic. From your original offer, through ROFR, through closing, and then "in the system" and able to use your account, I'd plan on 8-12 weeks for the whole process. The big variables are ROFR and the effeciency of the sellers doing their paperwork. ROFR can take only a couple of days, or it can take a month or more, and obviously that impacts the time waiting. Also, some sellers seem to figure that once their contract is sold, they can take their time about doing the paperwork. That can be pretty frustrating.

Some of the closing companies offer "expedited closing" for a modest fee. That's really just using courier instead of snail mail for sending documents back and forth. We knew exactly what it was, and found it to be helpful -- I think it cut about two weeks off our timeline. But not everyone is a fan of "expedited closing."

Disney may exercise ROFR and you may loose the resale and have to start all over

This is true, of course, but an experienced, reputable broker can make a world of difference.

When we bought resale through TTS, I wanted to bid $1 per point lower because I'd seen other bids at that price. I was advised that $1 lower would NOT clear ROFR, so I bid the asking price. I passed and those other bids I'd seen all got ROFR'd. A good broker can make a world of difference

You can’t finance through DVC, although most resale brokers will recommend a finance company

The least expensive financing for most people, if you have the option, is home-equity. You usually will get a lower interest rate than Disney and the interest will be tax-deductible.

The best option, of course, is to pay cash. You will find a lot of people on this board who think you shouldn't buy a luxury like DVC if you can't pay cash. But that is a personal decision that depends on so many variables that you really have to decide that for yourself.

A resale contract may be “stripped” of points where the user has used many of the current year’s points, and may have borrowed some or all of next year’s points. Be wary of “stripped” contracts on the resale market.

Good advice on the stripped contracts. Sometimes you'll see a stripped contract at a very good price. However, Disney doesn't seem to care about a contract being stripped, so those low-priced contracts are just ROFR-bait.

OTOH, you will often see resale contracts which have extra points -- either current points that you can bank, or points already banked. Those contracts are more attractive and usually don't carry much of a premium.

 

[crisi]

Mike's post is really good.

One missing point is that you don't only risk ROFR with a resale, you also risk the buyer deciding not to sell.

We bought resale and I think its a great way to buy DVC. However, I would caution anyone doing it who needs to USE those points within the next year or more. Yep, year or MORE. It might take you two or three months to find the contract you want. It may take you another three months before you can close. Then you want to use your points - and at certain times of the year availability anywhere can be tough as far out as five or six months. And that assumes you didn't get ROFR'd or your seller didn't back out. That "lost year" may be the difference in cost right there.

It can and does work faster - you could find a readily available contract today, have the offer accepted, close and be in Disney's system in ten weeks - which would put you closing around Thanksgiving - and availability is usually pretty open for late Winter, Early Spring and much of Summer - if you have even a little flexibility in times and resorts. You could be sitting around the BWV pool on points in March. Planning on closing in time to get that BWV Standard View room for Food and Wine '08 - not likely if you made that offer today - and that's a trip 14 months out.

Buying direct DVC will let you book your vacation before you close.

 

[JimMIA]

Crisi makes an excellent point, and parts of it apply both to resale and direct purchases from DVC.

Most of the time, a direct purchase of a "new" resort -- SSR or AKV -- would result in you being able to book reservations as soon as you make a deposit. The stay would have to occur after your closing, but you could go ahead and book ressies before you close.

Most of the time, buying a "sold-out" resort from Disney, you would get your points as quickly, or almost as quickly, as buying resale. Some people call and get their points with the first phone call. Others -- especially if they are looking for something very specific, like BCV with a December UY -- can wait up to a year to get the points from Disney.

The resale inventory is large enough that you can usually get a contract you like immediately...or at least quickly. However, if you are looking for a small contract (<100 points) that's going to be harder to find. If you want a specific UY, that limits your choices. So resale is more variable. But I would say the vast majority of resale purchasers find what they want within a week or two of being ready to make the leap.

Regardless of how you buy, however, Crisi's point about lead time on ressies will apply. Many of us book at 11 months, and if you want to visit during one of the peak periods (and DVC peaks are different from WDW peaks), you will have to book 11 months out. We've all seen many disgruntled posts from new owners who just closed and then find they can't get ressies for Christmas Eve through New Years, or during Food and Wine, or during Spring Break, or...

That issue will apply regardless of how you get your points. The overall process is longer through resale, but this issue really applies to both methods.

 

[twinscandc]

All the info on buying from WDW or resales is great. But, one thing I have not found yet is "What kind of discounts and benefits will I get once we buy? I have heard that members get discount AP tiks but how much off?

I am not trying to be greedy but before we take the plunge, I want to know what my 15-20K is really going to get me....Thanks for any help....



Loving the Mouse from Indiana

 

[No1HawkFan]

Go Iowa vs. Syracuse

Thanks for the response Amy.

I understand. If the current years points are worth $10 per point that is why you pay an extra $6.85 ($2 more per point and the annual dues on those points which is $4.85 per point) for them.

I guess it also shows that if sellers simply wait a few months to sell it might mean a difference to them. Someone that has a February use year will probably get more money listing their property in January than now.

 

[Amy5000]

[*]A resale contract may be “stripped” of points where the user has used many of the current year’s points, and may have borrowed some or all of next year’s points. Be wary of “stripped” contracts on the resale market.

I am trying to quote somebody but I am sure I did that wrong and somebody will pick on me.

I don't understand why this appears to be written in a way to scare a buyer. If I look at TSS resales it is pretty clear the status of each package. Why should someone be "wary?" You think they don't advertise correctly? Let's say somebody needs 200 points at the Boardwalk and they are not traveling again until December of 2008. They want to get the process started since it takes 6 to 8 weeks to close as they plan ahead. They decide to buy a 200 point listing at the Boarwalk with 200 points coming on 10/1/08. They get the property for around $84 per point, which would make it through ROFR, and they wouldn't start paying dues until January of 2008. If they bought something with points coming 10/1/07 they might have to pay $86 or $87 and would also have to reimburse the sellers for the 2007 points or pay an additional $970.

I would say those are smart buyers. They are planning ahead and getting exactly what they want. When reading these boards, however, it appears everyone thinks these people are not smart as they are "stripped" contracts.

Alright I'm going to take this one on...the reason you should be wary is not because you will think you are buying something other than what is advertised... You are correct in that you will have a clear idea of when a contract is stripped. The reason to be "wary" is b/c you really have to understand the value of what you are loosing in purchasing a stripped contract: Current points are the most valuable points.

I was the buyer you were describing. I was looking in early 2007 for a contract and my first trip wasn't going to be until spring of 2008. Why did I really need those extra pts up front? (And that actually was my first thought on the matter).

Well, here's the math for you:

1. My first contract was ROFR'd by Disney. It was a 100 pts SSR - Feb use year with no pts until Feb 08. I bid $82 per pt. Disney took it.

2. My second contract passed ROFR. It was a 100 pts SSR - Oct use year with 100 banked 06 pts. I bid $84 per pt. and got the contract.

Here's my analysis:

If you look at the above contracts you'll see a few things. For only $2 more per point, the second contract comes with 48 years of pts allotments and the first one, for a discount of $2 comes with 46. But that's not really the clincher. I wouldn't be too excited to pay $1 per pt for pts I'm getting in 40 years, the pts come now:

Under the first contract, when I take my vacation in April of 08 I would have had to (i) use all the current pts from my 08 use year, and (ii) borrow 50 pts from my 09 use year or rent points on the open market. Rented pts. would have cost a minimum of $10 per pt or ($500).

With my second contract when I take my roughly 150 pt. vacation in April of 2008, I will be working with 200 pts. since I have the banked 06 pts (the current use year when I purchased the contract) and then current 07 pts. I will then be able to bank pts into the following year. For a whopping $200 extra, I purchased an extra set of current pts which were worth roughly a minimum of $1,000.

But let's make a second supposition: That I only need 100 pts to vacation every year and I really won't need to bank. Why do I need the current year's points: Under my example above, I easily rent or transfer the points out for a minimum of $10 per pt. and correspondingly lower my purchase price. So on my second contract I would have been able to save a minimum of an additional $800.

No matter how you cut it, you have to consider that having current points on a contract adds a minimum of $10 per pt value, but generally do not sell for more than a few $ more than a stripped contract.

HTH

Amy

P.S. I'm really glad Disney ROFR'd my first contract b/c my second one was much better for me.

P.P.S. While I'm a big believer in looking for non-stripped contracts, I would still consider a stripped one, but I'd really have to look at the cost benefit analysis to see if it worked. My above example didn't take into account that you sometimes pay MF related to current or banked pts. I paid 07 MF (although I got 07 and 06 pts), and I want to admit that this too needs to be considered when doing the math on this transaction.

 

[kapeman]

This thread really needs to get stickied.

 

[tink_lover]

OK - learning a lot reading thru the thread. I did not know that Disney could sell older contracts. When we toured, we were not interested in SSR or AKV so asked about others. We were told no other choices right now That changes a lot about what we will be asking our next visit.

 

[beetle64]

Great post Mike

A resale contract may be “stripped” of points where the user has used many of the current year’s points, and may have borrowed some or all of next year’s points. Be wary of “stripped” contracts on the resale market

Another potential problem from a "stripped contract" is one that is not advertised as such (indeed it's advertised as all points being present and correct) and in between any checks being made on the contracts point status and the sale, this years and next years points get used. Now a good/reputable agent will do their best to make sure this doesn't happen but as a buyer you should make sure it's specifically stated that X number of points are banks, Y number of points in the current use year are available and z number of next years points are available for use.
It doesn't happen as often now as it has done in the past because a resale agent that's familiar with how DVC works should do their best to make sure it is all laid out, but even if they do all their due dilligence a seller may try to take advantage and use some all of the available points. The buyer has a number of routes open to make sure they get their "justice" but it is an additional potential headache to the whole process.

With smaller contracts (less than 50 points) for members adding on, generally the higher closing costs eats up pretty much all of the savings from a lower "purchase price". As the contracts get bigger that fixed cost plays a lesser role.

 

[sznk]

1. Contract thru Disney: I understand that after Disney gets your deposit, you can book reservations, but how long until you actually CLOSE ?

2. Contract thru Resales (such as TSS): typically how long between returning your closing papers (& $) and the actual CLOSE ?

TIA

 

[Amy5000]

1. Contract thru Disney: I understand that after Disney gets your deposit, you can book reservations, but how long until you actually CLOSE ?

2. Contract thru Resales (such as TSS): typically how long between returning your closing papers (& $) and the actual CLOSE ?

TIA

1. I purchased a 25 pt add-on from Disney on Sept. 27th and they listed the estimated closing date as Nov. 16th.

2. My resale took in the neighborhood of 8 to 10 weeks. I didn't use TSS, so I'm not sure of the timeline for them, but I suspect it may be similar.

Amy

 

[sznk]

1. I purchased a 25 pt add-on from Disney on Sept. 27th and they listed the estimated closing date as Nov. 16th.

2. My resale took in the neighborhood of 8 to 10 weeks. I didn't use TSS, so I'm not sure of the timeline for them, but I suspect it may be similar.

Amy

good info, Amy.

on #1: I'm surprised the Disney direct add-on takes so long to close. I figured since it doesn't go thru ROFR it would be quick. You can't stay on points until closed, correct?

on # 2: What was the time between you returning the closing papers and the actual closing date?

thanks...