How do you set a value on a small contract?

[ClosetDisMom]

Disclaimer: I have add-on-itis. I think I have it under control, but I still troll the listings on the resale sites.

I want a small contract. I am thinking that 25-50 points would be enough of a cushion for me... right now. So, I have been looking for a small contract with my UY (September). I found one today for SSR listed at $125/point. Now, I realize that small contracts go "at a premium" and this one is not stripped - in fact it even has 2 banked points. However, even with the market today, $125 seems a little too high. I put in a low ball offer, just because this tiny contract fits for what I think we need but I have a lot of time to troll and wait for another to come up.

My question: how much higher per point should a small contract be? If SSR is currently going for $95 (average on the ROFR board, I think), how much higher should the smaller, non-stripped contracts go for? Just wondering... what are your opinions?

 

[CraigInPA]

The challenge of small contracts like this is that they appeal to two different groups:
1. Existing members who need just a few more points, and don't want to pay the direct price. These folks will buy when it makes sense, which is to say where the total price (with closing costs) is less than the direct price minus the "hassle factor".
2. Non-members who cannot afford DVC's minimum points buy-in. These folks will sometimes pay the direct price (or more) to get into DVC with a small contract.

 

[chalee94]

I agree that 125 seems high. But like any other deal, it's a function of how desperate the seller is to unload the points and how motivated a buyer is to get the contract.

I think you are right to make an offer that suits you and be willing to move along if the seller isn't willing to make a deal.

 

[Bruin_mouse]

Agree with @CraigInPA. There seems to be a lot of appeal to pay a four digit amount instead of five. It kind of throws what's rational for price/point out the window. Unfortunately you'll almost always have to pay a premium for contracts that are under 100 points.

 

[ClosetDisMom]

The challenge of small contracts like this is that they appeal to two different groups:
1. Existing members who need just a few more points, and don't want to pay the direct price. These folks will buy when it makes sense, which is to say where the total price (with closing costs) is less than the direct price minus the "hassle factor".
2. Non-members who cannot afford DVC's minimum points buy-in. These folks will sometimes pay the direct price (or more) to get into DVC with a small contract.

Yep... I fall into category 1. My mom, who is curious about DVC since we purchased, falls into 2. I am just wondering what the average price increase for the small contracts is.

I know they go fast, too. The one I put a low ball offer in this morning listed today and was sold before 10 AM.

 

[ClosetDisMom]

Agree with @CraigInPA. There seems to be a lot of appeal to pay a four digit amount instead of five. It kind of throws what's rational for price/point out the window. Unfortunately you'll almost always have to pay a premium for contracts that are under 100 points.

I get it. I love seeing the total price tag be under $5000. I am just wondering what is fair market value for the "premium."

 

[DizneyLizzy]

I saw that SSR one that you were looking at, and I can tell you that if my use year were Sept, I'd pay $120-125 ppt. It's still a lot under the $151 ppt Disney is currently charging. If you only need a few more points per year, it might be worth it.

 

[ClosetDisMom]

I saw that SSR one that you were looking at, and I can tell you that if my use year were Sept, I'd pay $120-125 ppt. It's still a lot under the $151 ppt Disney is currently charging. If you only need a few more points per year, it might be worth it.

Thanks for the input. It was sold to someone else before my offer was even received. So, maybe I will see it show up on the ROFR and learn what was actually paid.

 

[DizneyLizzy]

Thanks for the input. It was sold to someone else before my offer was even received. So, maybe I will see it show up on the ROFR and learn what was actually paid.

Then I guess you know it was probably a decent deal!

 

[Bruin_mouse]

One other thing to keep in mind is that closing costs for resale are pretty static for 25-150 points. Usually around $500 or so for non-Aulani (and maybe HHI) contracts. That adds $20+/point to the price you're paying. That, along with the difficulty in matching up 25-50 point contracts in your UY, make direct purchases more appealing in this type of situation.

 

[gharter]

Rightly or wrongly, a small contract at 25-50 points seems to go at a substantial premium compared to larger contracts.

 

[The Jackal]

One other thing to keep in mind is that closing costs for resale are pretty static for 25-150 points. Usually around $500 or so for non-Aulani (and maybe HHI) contracts. That adds $20+/point to the price you're paying. That, along with the difficulty in matching up 25-50 point contracts in your UY, make direct purchases more appealing in this type of situation.

If they wanted $125 plus closing costs puts it around $145. It’s easier to buy direct from Disney. Points there almost immediately and if you have the Disney Visa you get 6 months with 0% interest to pay it off. One phone call and done. Just my opinion.

 

[Matty B13]

With SSR at $155/point direct, $125/point resale is ridiculous. Better off going direct, and I'm sure DVC has plenty of SSR points and every UY too, so you probably wouldn't have to wait.

 

[icc2515]

If you look at the ROFR thread there are many small contracts that sell for $25-$30 over the price of a larger contract. BLT has a 50 point contract that went for $40 over the price of the lowest ppp contract. The problem is that there are people out there that are willing to pay that premium. It's mostly the brokers fault in that they tell the sellers and buyers that small contract demand a premium. I have been told this by every broker I have talked to. If buyer out there would just refuse to buy at the inflated prices, the prices would come down. Remember it is the buyer that determines the price, not the seller.

If I were to buy 200 points direct from Disney, I would ask for 8 25 point contracts. Somebody buying BLT in 2008 would have paid $112pp. Since 2009 they would have paid $43.37pp in maint fees. If they sold their 8 25 point contracts today they would have made a profit of $9.63pp and stayed for free for 10 years. I think back then Disney charged little to nothing for closing fees. This is assuming they sold the 25 point contracts for $165pp, which there is a 50 point contract in the ROFR thread for that amount.

 

[_auroraborealis_]

Someone probably paid $130pp for that SSR contract. Nature of the small contract.

 

[ClosetDisMom]

If you look at the ROFR thread there are many small contracts that sell for $25-$30 over the price of a larger contract. BLT has a 50 point contract that went for $40 over the price of the lowest ppp contract. The problem is that there are people out there that are willing to pay that premium. It's mostly the brokers fault in that they tell the sellers and buyers that small contract demand a premium. I have been told this by every broker I have talked to. If buyer out there would just refuse to buy at the inflated prices, the prices would come down. Remember it is the buyer that determines the price, not the seller.

If I were to buy 200 points direct from Disney, I would ask for 8 25 point contracts. Somebody buying BLT in 2008 would have paid $112pp. Since 2009 they would have paid $43.37pp in maint fees. If they sold their 8 25 point contracts today they would have made a profit of $9.63pp and stayed for free for 10 years. I think back then Disney charged little to nothing for closing fees. This is assuming they sold the 25 point contracts for $165pp, which there is a 50 point contract in the ROFR thread for that amount.

Thanks! This is what I was wondering and you were clutch with the answer. So, if SSR is going for $95 right now, then a price of $125 is not out of range - but IS probably no better deal than direct buy... fair enough.

 

[Debbie Jean]

Keeping in mind that a new buyer cannot buy 25 SSR or anything else direct.

 

[DizneyLizzy]

Keeping in mind that a new buyer cannot buy 25 SSR or anything else direct.

Can a resale member buy 25 points direct?

 

[Dean]

Disclaimer: I have add-on-itis. I think I have it under control, but I still troll the listings on the resale sites.

I want a small contract. I am thinking that 25-50 points would be enough of a cushion for me... right now. So, I have been looking for a small contract with my UY (September). I found one today for SSR listed at $125/point. Now, I realize that small contracts go "at a premium" and this one is not stripped - in fact it even has 2 banked points. However, even with the market today, $125 seems a little too high. I put in a low ball offer, just because this tiny contract fits for what I think we need but I have a lot of time to troll and wait for another to come up.

My question: how much higher per point should a small contract be? If SSR is currently going for $95 (average on the ROFR board, I think), how much higher should the smaller, non-stripped contracts go for? Just wondering... what are your opinions?

Smaller contracts do go for a premium and there is no guarantee they'll hold that premium long term. I put it about 50/50 that they will not and figure there's about a 10-20% chance eventually they will go for less (same with seller paying at least part of the closing). That said, currently they are the most expensive way to buy in currently on a per point basis. Same closing, higher per point, more likely to be stripped or at least not loaded. But $20 a point is only $500 on a 25 pt contract, hardly worth fussing about if buying the 25 pts is the perfect option for one's situation.

Personally I think buying multiple smaller contracts as an exit strategy is foolish and risky but each situation tends to be different. I also think worrying too much about the legacy option is not reasonable but again, situations vary. I'd likely look a little bigger even if I felt 25 pts were perfect right now. I believe most should have at least a 10-20% cushion over what they think they need, even more for some esp though looking at studios in lower seasons for cheaper views. A couple of options would be to buy a larger loaded contract and use what one could then rent the rest. One could even do this and sell it later and likely come out ahead if they got a loaded unit. For this I'd probably just go retail, the cost isn't that much different.

One thing on the points cushion, my believe is one should buy the extra when buying for most situations, not to go buy additional just to have the cushion. Once one gets to a larger pool of points, I would tend to drop that stance and for some, esp those new to DVC, feel that often having less than you think you need long term is best. Let's say you're looking at AKV value studios adventure season and you calculate you need 100 points for that, I'd say that 150 pts is likely the minimum reasonable as a new buyer. OTOH, let's say one is looking at the same resort but 2 or 3 BR premier and calculate you need 400 points, not only would I buy less, I'd likely buy a lot less and look at a second home resort. I'd also point out that if one buys a loaded contract, it'll feel much larger for a time and the reverse is true for a stripped contract.

 

[Dean]

Can a resale member buy 25 points direct?

I think so but it won't cause them to get the perks if they don't have them otherwise.