If I am financed through DVC for a contract, and I need to get out, will Disney just take back the contract?

[Disney1fan2002]

I have a contract I purchased through DVC 3 years ago, as excited as I was to realize my kids were all adults, my work schedule right now doesn't allow me the leisure time I was hoping for. How easy/hard would it for me to get out of it? I know I can sell through the Timeshare store, but I would need to ask for at least the payoff amount. Then DVC has ROFR. It seems it would be easier for Disney to just take the contract back.

Has anyone been through something like this? I am just thinking through some options. I probably won't get rid of it, but just in case......

 

[erionm]

It's very rare for DVC to purchase back a contract directly. If they did, they would offer less than what you could get by selling yourself.

 

[Ben E N]

You could also look into renting out your points until your work schedule allows you to use them more often in the future.

 

[_auroraborealis_]

You really need to try to sell privately unless you want to simply have them foreclose.

 

[jerseyduke]

How much do you owe?
Can you get the balance from another source, pay it off and sell it, then pay back the loan?

 

[Shellyred8]

I would look into renting out the points for a couple of years and then re-evaluate if you still want to sell. We rented ours through David's DVC rental and it was super easy.

 

[BillPA]

This is why it's not a good idea to buy when you can't afford it. Sorry you're in a bad way, good luck getting out. Maybe the Timeshare store will buy it, then they can resell it.

 

[Disney Dad ADL]

No, Disney won't take it back directly. If you decide to sell, you would need to go through the secondary market with a broker, then use that money to pay off your loan. If that is not enough to cover the loan balance, then you would still be liable to cover the shortfall and would have to figure out how to cover the rest. Similar to what happens if you are underwater on a car loan or house mortgage and you sell your car/house.

Sounds like you purchased direct? DVC values have gone up over the past 3 years I believe, but I'm not sure if it would be enough to cover a loan for a direct purchase.

SSR was $150 direct in 2016. Looks like it's listing for around $100 per point now, but you pay say 10% for commission/fees, so $90 per point. If you had a 10 year, 10% interest loan, 3 years in you've probably paid about 20% of the principal. You'd probably still be about 20% short.

If you bought VGC on the other hand, you would probably be able to cover it. Direct pricing in 2016 was $180 per point. Average resale listing price is $190 (!).

 

[WebmasterPete]

This is why it's not a good idea to buy when you can't afford it. Sorry you're in a bad way, good luck getting out. Maybe the Timeshare store will buy it, then they can resell it.

I don't believe the OP said anything about not being able to afford it. Just that they no longer have use for it the way they once did. Also, for the record - Timeshare Store doesn't 'buy contracts' - they list them on behalf of the seller.

 

[KAT4DISNEY]

I have a contract I purchased through DVC 3 years ago, as excited as I was to realize my kids were all adults, my work schedule right now doesn't allow me the leisure time I was hoping for. How easy/hard would it for me to get out of it? I know I can sell through the Timeshare store, but I would need to ask for at least the payoff amount. Then DVC has ROFR. It seems it would be easier for Disney to just take the contract back.

Has anyone been through something like this? I am just thinking through some options. I probably won't get rid of it, but just in case......

I'm not necessarily recommending this but if you stop paying on the loan and stop paying dues DVC will take it back via foreclosure. What ends up on your credit report though I'm not certain. If it's temporary you can't use it then you could consider renting out the points for the next couple of years to cover the costs associated with it. Otherwise it is selling it and it sounds like coming up with extra funds to pay off the loan at the time of the sale.

 

[MrsBooch]

OP never said anything about not being able to afford it....?

 

[crisi]

When Disney has bought back contracts, they tend to REALLY lowball - you'll be farther under water than if you sold through a broker.

Don't forget to factor in the broker commission to your calculations when you are figuring out if you should sell. On the rental side, you don't forget you should be paying taxes on any rental income - so factor that into the rental calculations to see if you can break even.

 

[kniquy]

How easy/hard would it for me to get out of it? I know I can sell through the Timeshare store, but I would need to ask for at least the payoff amount. Then DVC has ROFR. It seems it would be easier for Disney to just take the contract back.

You could rent it out which would help to cover the maintenance fees and a little more to go on the mortgage. This is if you are not totally 100% sure you want to sell and want to wait and sit on the idea.

In the case of wanting to sell you could shop around to see what the selling fees are for each company. They might vary (don't know as I have never sold).

You could figure out what you need to price your contract at to payoff the mortgage and not have any additional out of pocket for the selling fees-- but if this price is well above market it will sit for a very long time.

ROFR really doesn't affect the seller. Once you have agreed on a price with the buyer -- whether disney decides to take it or passes - you get your money either way. It only sucks for the potential buyer.

I will tell you that the resale contract i bought was put on the market back in September 2018 (owners had only bought in June 2017). They had it priced well above market because they needed pay off their mortgage and they had bought direct. That wasn't my problem so i put in an offer $20 less per point than what they were asking. I think their initial price per point probably turned off many buyers so it sat on the market for 6 months. We negotiated at $15 less per point than what they were asking, but it was in line with where the market was.

I think the resale market it pretty hot so if it is priced right it will probably sell quick and you will have your money/mortgage paid off in 3 months.

 

[Dean]

I have a contract I purchased through DVC 3 years ago, as excited as I was to realize my kids were all adults, my work schedule right now doesn't allow me the leisure time I was hoping for. How easy/hard would it for me to get out of it? I know I can sell through the Timeshare store, but I would need to ask for at least the payoff amount. Then DVC has ROFR. It seems it would be easier for Disney to just take the contract back.

Has anyone been through something like this? I am just thinking through some options. I probably won't get rid of it, but just in case......

Unless you had a large deposit, you likely owe more than it's worth resale though you should investigate this. I too think renting out for now would be your best option if you think you might use it in the future. They won't just take it back but they will foreclose. I can't speak to the issue of whether they'll report it as a foreclosure which could affect other options like insurance costs & CC rates if you have them. I also can't speak to whether they'll come after you for the difference but they could. You could contact them and investigate whether they'll take it as deed in lieu of foreclosure but if reported to the credit agencies, it'll have roughly the same affect as a foreclosure plus you'll get a 1099 and I think have to count any forgiven amount as income.

 

[ejsteg]

This is why it's not a good idea to buy when you can't afford it. Sorry you're in a bad way, good luck getting out. Maybe the Timeshare store will buy it, then they can resell it.

I agree - no one should be buying a timeshare if you have to take out a loan.

 

[Dean]

This is why it's not a good idea to buy when you can't afford it. Sorry you're in a bad way, good luck getting out. Maybe the Timeshare store will buy it, then they can resell it.

It doesn't sound like from the OP's post that's the case here but the general admonishment that it's not a good idea is appropriate for others reading. That's my guess of what Bill's intensions were.

 

[Jimbadd]

Why not sell

 

[Deb & Bill]

Why not sell

The OP still owes on the purchase and would need to get enough to pay that off. If it is a newer resort, the amount to pay it off might be higher and require a higher price to get enough to pay it off plus pay the commission on the sale.

 

[Disney Dad ADL]

Unless you had a large deposit, you likely owe more than it's worth resale though you should investigate this. I too think renting out for now would be your best option if you think you might use it in the future. They won't just take it back but they will foreclose. I can't speak to the issue of whether they'll report it as a foreclosure which could affect other options like insurance costs & CC rates if you have them. I also can't speak to whether they'll come after you for the difference but they could. You could contact them and investigate whether they'll take it as deed in lieu of foreclosure but if reported to the credit agencies, it'll have roughly the same affect as a foreclosure plus you'll get a 1099 and I think have to count any forgiven amount as income.

One question I had though. Normally, if you are underwater on a home mortgage and a bank forecloses, they sell the house at auction, then you owe the difference between what you owe and what they got, is that correct?

DVC is sort of a different beast. If you financed directly through DVC, and they foreclosed, they would just take the contract, correct? However, DVC doesn't sell at a loss, they sell at full direct price. So how would the amount owed be determined?

 

[Dean]

One question I had though. Normally, if you are underwater on a home mortgage and a bank forecloses, they sell the house at auction, then you owe the difference between what you owe and what they got, is that correct?

DVC is sort of a different beast. If you financed directly through DVC, and they foreclosed, they would just take the contract, correct? However, DVC doesn't sell at a loss, they sell at full direct price. So how would the amount owed be determined?

Technically you would still owe the difference and they could come after you if they wanted. Remember anything they take back and sell is competition for active sales which has a real cost to them somewhere in the general vicinity of 50% of the sale price. So they're likely losing money on most of them comparatively speaking. I suspect their lack of pursuit is more of an admission of the relatively small dollars at stake compared to a home and the costs and aggravation of chasing people in multiple states. Plus if they file Bankruptcy Disney wouldn't get anything anyway for a 7 and little to nothing for a 13 over 5 years. Same for the house BTW. As for a determination of actual loss it'd be the amount owed plus legal fees plus commissions and marketing just looking at it big picture. But you're right in that they have an advantage compared to many timeshares in that they can at least sell for "full price" and limit the damage. Plus they made a good sized profit up front albeit profit that's gone in some way which is one area the argument against resale limitations falls apart. They likely approve people have a good idea they're going to get some of the contracts back and thus I suspect they approve people more liberally than they would on a home mortgage, more like the approvals for the pre 2008 mortgage situation where one could qualify for a home loan with clearly no way or paying it long term. The probably know which ones they are most likely to get back up front. Historically they haven't reported to the credit agencies but the can if they want.