How to determine an appropriate resale price

[ffindis]

I am looking at adding on resale and am having trouble figuring out how much to offer on a contract. How much do you think banked points add in value? How much should stripped points detract? Would he fact that they require a delayed closing impact how much you are offering? know this has been discussed but I can't seem to find any posts about this. Thanks in advance for your assistance.

 

[sethschroeder]

I just view it from the points that I would use what the "best case" would be to get rental/transfer points. That gives me the ball park.

As far as delayed closing I wouldn't really want to deal with it unless I could get it way cheaper. The seller could always back out on you at the last minute, prices are going down not up, and Disney has until closing to exercise ROFR from my understanding so they could even take the contract in the future.

I also don't believe there is that special of a contract that deserves me waiting. You would have to outline what you are looking for.

Examples:
Banked points are worth $10-ish (can always rent them out easily for that), stripped contracts have reduction in value of about $13-$16 (as I would use those points), then also calculate in the MFs I need to pay or not

 

[davidl81]

To an extent it is personal preference, but the easiest way for me to value banked/stripped points is to compare it to rental rates. So lets say low end current rental rates are $13 a point then your banked points should add $13 per point in value to the sales price minus any dues that you may have to pay at closing. Most contracts with true banked points won't ask you to pay those fees, so in a way they should be worth the entire $13 a point.
Striped contracts should be viewed the same way but in inverse, ie if it is fully stripped (no current UY points and no next UY points) then I would take that $13 per point - dues (since you should not be paying any dues on a stripped contract and come up with that value.
For example lets take a 200 point SSR contract (and for this example lets say normal rate is $100 per point for a contract with full current UY points and forward, but no banked points). Math wise if that contract is fully banked it should be worth $113 a point, and fully stripped should be worth about $89 a point (assuming the seller is going to cover the dues from next year since in a stripped contract the new owner will actually have dues due in 21, but those points would have already been used by the seller).
Now in reality we don't see these $24 per point swings in banked versus striped contracts. Banked contracts maybe get $5 per point more in value and stripped contracts maybe get $5 less in value. To me banked contracts (as long as priced accordingly) are a great value when buying resale and those are almost always the only contracts I consider. Conversely I would not consider a stripped contract unless the price was so low I would have trouble turning it down (for my SSR example if base price was $100 I would not buy a fully stripped contract any more than $80 a point). Most sellers though won't drop their prices that much on a striped contract as buyers for the most part IMO do not put the correct value in those stripped points and tend to overpay for a contract. To be totally honest if I were going to sell any of my contracts I would fully strip them before posting them for sale (either use the points myself, or rent them out for money) since the market really does not deduct enough value from those contracts.

Delayed closing is tougher to put a dollar value on. As Seth posted a lot of things can change between now and when a delayed contract is set to close. For me it would just have to be a super special contract to wait for a delayed closing, and by nature it wont have banked points since the reason it is delayed is the seller is using the points that are left on a contract for their own vacation.

 

[EYL]

With the pandemic and as a buyer, I don't think banked points would count too much if I were to make an offer. I mean, it would be worth something during normal times, but when availability is affected due to the closures and with the rental prices being a bit lower since there doesn't seem to be a shortage of rental points, I would value it much less than before. What the seller wants and what I would pay for are very different at this point. Just my 2 cents...

 

[Ruttangel]

The way I did it was calculate what that would mean for total years left on contract and therefore total points you would be getting.
if loaded then add up to 1 year and if stripped deduct up to one year, so far AKL for example you may want to look at this range based on points.

 

[davidl81]

The way I did it was calculate what that would mean for total years left on contract and therefore total points you would be getting.
if loaded then add up to 1 year and if stripped deduct up to one year, so far AKL for example you may want to look at this range based on points.

View attachment 517612

So in your example you are saying a loaded contract is only worth $3 a point more than a "base" contract. I think that does not quite equate since if I get a banked contract upon closing I could immediately rent out the points from the banked year. So unless I am only able to rent out the points for $3 a point (assuming I am not paying dues on the banked points which for the most part you do not) I will come out with a value of more than $3. Even right now in a COVID world if I posted points for rent on this board at $10 per point with the renter not being able to cancel unless the resorts were closed those points would be rented out before the end of the day.

 

[davidl81]

With the pandemic and as a buyer, I don't think banked points would count too much if I were to make an offer. I mean, it would be worth something during normal times, but when availability is affected due to the closures and with the rental prices being a bit lower since there doesn't seem to be a shortage of rental points, I would value it much less than before. What the seller wants and what I would pay for are very different at this point. Just my 2 cents...

I think that would make sense if we were really seeing rental prices drop. ON this board people are still getting $13-$18 a point. the only thing that is really dropping are confirmed reservations where a David's etc is kind of holding the renter's feet to the fire. Now none of us know what rental prices are going to look like in 2021, and you very well may be correct that prices could drop, but we have no actual way of know that beyond speculation.
That being said I would think to be conservative you could back off some of the value of banked points, but IMO they still should retain at least $10 per point in value (if seller was not wanting to get those dues back).

 

[Ruttangel]

So in your example you are saying a loaded contract is only worth $3 a point more than a "base" contract. I think that does not quite equate since if I get a banked contract upon closing I could immediately rent out the points from the banked year. So unless I am only able to rent out the points for $3 a point (assuming I am not paying dues on the banked points which for the most part you do not) I will come out with a value of more than $3. Even right now in a COVID world if I posted points for rent on this board at $10 per point with the renter not being able to cancel unless the resorts were closed those points would be rented out before the end of the day.

My workings just reflect that if you keep the contract for the full life of the contract the purchase price is part of the picture

 

[sethschroeder]

With the pandemic and as a buyer, I don't think banked points would count too much if I were to make an offer. I mean, it would be worth something during normal times, but when availability is affected due to the closures and with the rental prices being a bit lower since there doesn't seem to be a shortage of rental points, I would value it much less than before. What the seller wants and what I would pay for are very different at this point. Just my 2 cents...

Depends when those points expire.

You could easily rent the points for $10/pt in Nov or Dec though as an example.

 

[EYL]

I think that would make sense if we were really seeing rental prices drop. ON this board people are still getting $13-$18 a point. the only thing that is really dropping are confirmed reservations where a David's etc is kind of holding the renter's feet to the fire. Now none of us know what rental prices are going to look like in 2021, and you very well may be correct that prices could drop, but we have no actual way of know that beyond speculation.
That being said I would think to be conservative you could back off some of the value of banked points, but IMO they still should retain at least $10 per point in value (if seller was not wanting to get those dues back).

Hmm... I've always thought, during normal times, people could get much higher than $14.50 on this board since that's the minimum an owner can get from a broker >7 months out. I just had to rent out points and had to drop it to $14 to get any bites. Personal experience. May not be the general experience, though.

 

[sethschroeder]

Hmm... I've always thought, during normal times, people could get much higher than $14.50 on this board since that's the minimum an owner can get from a broker >7 months out. I just had to rent out points and had to drop it to $14 to get any bites. Personal experience. May not be the general experience, though.

Depends on how you look at it. I look at as "what I for sure can get".

I rented last year at $14.50 a point on this forum (185 points - booked in June for September) but figure I could normally rent points for $15-$16 (unless I wanted something very hard to get).

If I were renting now I personally would want $10-$12/point but renting something out I know I could easily get $13/point right now for my points.

Something a buyer needs to account for though is a) will you use the points even and b) will you get your points soon enough to even rent them (allowing 4-5 months now for points to fully appear from offer date)

 

[davidl81]

Hmm... I've always thought, during normal times, people could get much higher than $14.50 on this board since that's the minimum an owner can get from a broker >7 months out. I just had to rent out points and had to drop it to $14 to get any bites. Personal experience. May not be the general experience, though.

You are likely right to an extent, but I still think we have a long ways to go before rental prices start dropping into what I would consider "low" territory ie sub $10

 

[Ruttangel]

Edited

 

[davidl81]

If you are buying a loaded contract you will be paying MF on those as well so you will be paying about $8 per point in MF. If you are financing the cost is even higher.

Generally speaking you will not pay fees on the banked points just the fees on the current years points. It of course varies by contract, but majority of listings are not trying to re-coup the fees they paid for 2019 points.

 

[kmorlock]

Resale smaller contracts throw me bc they vary so much. OKW extended often matches 2042 and runs the gamut of $85-130 depending on how many points. Compiling an offer that isn’t insulting is not easy for me.

 

[sethschroeder]

Compiling an offer that isn’t insulting is not easy for me.

Don't worry about insulting. Put together what you want to pay, send the offer, go from there.

Small contracts will always be priced higher as they don't show up as often. So then it comes down to how much of a premium based on how much you want the contract.

 

[CastAStone]

I am looking at adding on resale and am having trouble figuring out how much to offer on a contract. How much do you think banked points add in value? How much should stripped points detract? Would he fact that they require a delayed closing impact how much you are offering? know this has been discussed but I can't seem to find any posts about this. Thanks in advance for your assistance.

In general I think each year of available points (last Use years, this Use years, next Use years) is worth ~1/12th of the price of the contract. So if you think an SSR contract for example with no points is worth $84, then with 2021 points it's worth 91, with 2021+2020 points its worth 98, and with 2021+2020+2019 points its worth 105. The market doesn't value available points as highly as I do, they are valued at more like 1/15th-1/20th of purchase price; I think I am right (like most people do) and you should be looking for contracts that are as loaded as possible because there is more value in them.

This assumes you can use or rent the points.

 

[ffindis]

I'm looking at VGF contracts with around 125 points. One is stripped with points coming in 2022. The other has 2019 banked into 2020 and points coming regularly after that. What do you think are fair offers on these contracts?

 

[kmorlock]

I’m debating AKV 25 point vs 50 pt OKW Extended. I can’t wrap my head around paying as much Per point for AKV as Poly seems to be going for.

 

[sethschroeder]

I’m debating AKV 25 point vs 50 pt OKW Extended. I can’t wrap my head around paying as much Per point for AKV as Poly seems to be going for.

Small contracts go for a premium. Do you have other contracts already?