Is a large contract more likely to pass ROFR at a lower price per point?

[disneylovinfamilyof6]

A seller has accepted our offer on their large contract. I am nervous that at the price per point is low enough that Disney will yank it. Are they less likely to pull a large contract in ROFR, or does it not matter?

From what I've read, Disney could pull a large contract and break it up into smaller contracts to sell direct themselves. Does this happen often? It's not at a "premier" property, but it is one that expires in 2042. Will that make our chances better of getting through?

I've read the historical ROFR threads and there is no reference point for this size of a contract.

Any insight is appreciated.

 

[supersnoop]

There's really no rhyme or reason to ROFR. In my opinion, a larger contract is more likely to be taken.

 

[CraigInPA]

A large contract with current year points (and/or banked points) and sold at a significant discount over average size contracts are more likely to be taken. Stripped large contracts are less likely to be taken.

 

[jerseyduke]

A large contract with current year points (and/or banked points) and sold at a significant discount over average size contracts are more likely to be taken. Stripped large contracts are less likely to be taken.

Really? I thought the opposite. Even with no current UY points, the points on a contract count toward DVC's 2% obligation. So if DVC wants to sell 500 points, but it needs 500 points to maintain it's 2% ownership obligation, a stripped contract would be the cheaper way to do this.

ROFR is based on factors the public can not know. Waitlist demands - and that also means a contract's UY may be relevant. They may not be able to use a specific residential unit.

If the need a specific UY/Res. unit, they will pass on a cheaper contract and buy a more expensive one...

In general I would say a lower price per point increases the chance of ROFR, but there are other factors as well.

 

[ScubaCat]

For the question about "breaking" up the contract, that is true. What technically happens is that anything they buy back goes into their "pool" for that particular unit number. They can then sell any increment of points out of that pool they want. That's one of the ways that they maintain a competitive edge even selling at a higher price point.

 

[CarolMN]

For the question about "breaking" up the contract, that is true. What technically happens is that anything they buy back goes into their "pool" for that particular unit number. They can then sell any increment of poits out of that pool they want. That's one of the ways that they maintain a competitive edge even selling at a higher price point.

I believe this is one reason ROFR seems so random to us. No way for us to know how many points they have (or might need to make a contract to sell) for a particular unit. Units are defined differently, depending on the resort. A unit is not necessarily one room or one building.

 

[disneylovinfamilyof6]

For the question about "breaking" up the contract, that is true. What technically happens is that anything they buy back goes into their "pool" for that particular unit number. They can then sell any increment of points out of that pool they want. That's one of the ways that they maintain a competitive edge even selling at a higher price point.

That makes sense. And of course this contract would have the same unit # for all of the points since it's a single contract.

 

[disneylovinfamilyof6]

So all of this begs the question: how low is too low?

Looking back through the last 18 months of ROFR threads I've seen some pass at a couple dollars higher pp, but I've seen them get yanked at $10 more per point.

If Disney takes it in ROFR they have to cut a check to the seller for the same amount we would have, right? (They must adhere to all of the terms of our contract.) I'm assuming they have a budget for buybacks, along with a priority list of what they want to buy back based on wait lists?

 

[jerseyduke]

So all of this begs the question: how low is too low?

Looking back through the last 18 months of ROFR threads I've seen some pass at a couple dollars higher pp, but I've seen them get yanked at $10 more per point.

If Disney takes it in ROFR they have to cut a check to the seller for the same amount we would have, right? (They must adhere to all of the terms of our contract.) I'm assuming they have a budget for buybacks, along with a priority list of what they want to buy back based on wait lists?

Let's say 2 150 point contracts at the same resort hit the ROFR desk. Same resort, both fully loaded.

#1. April UY, 150 points, part of BLT residential unit 23. 118 per point.
#2 Sept UY, 150 points part of BLT residential unit 62. 128 per point.

If is very possible that Disney takes #2, and lets #1 pass - taking the more expensive one.

I do not think points can move in UY, although I am not sure.
However, they can not move in residential unit.

If Disney has someone waiting to buy 250 points, and they currently have 0 points in Unit 23, but 150 points in unit 62 in their inventory, ROFRing #2 enables them to make a sale. ROFRing #1 does not. That is a reason the more expensive one may get taken.

Disney is also required to maintain ownership of 2% of the points (and I believe they only sell 51 weeks worth of points)

A totally stripped contract of 500 points still adds 500 points to Disney's total ownership, even with no current points. So, if Disney's goal is more geared to their 2% obligation, a stripped contract is better for them financially, since it is likely to be cheaper.


I doubt a budget for buybacks comes into play much. It is more about maintaining 2% ownership, and waitlist priority, as one is required, and the other is to make a profit.

Budget buybacks would only serve their intents to control the resale market prices, and as a result the direct prices. I just do not think this is something that they have to use ROFR for that much.

 

[supersnoop]

So all of this begs the question: how low is too low?

Looking back through the last 18 months of ROFR threads I've seen some pass at a couple dollars higher pp, but I've seen them get yanked at $10 more per point.

If Disney takes it in ROFR they have to cut a check to the seller for the same amount we would have, right? (They must adhere to all of the terms of our contract.) I'm assuming they have a budget for buybacks, along with a priority list of what they want to buy back based on wait lists?

They get a room full of monkey's drunk, blindfold them, and have them throw darts. Any contracts they hit get bought back.

Seriously, don't bother trying to understand it. Nobody has been able to figure it out yet. Make an offer you're comfortable with and see what happens.

 

[supersnoop]

I do not think points can move in UY, although I am not sure.
However, they can not move in residential unit.

I'm under the impression that the use year is directly tied to the unit. In other words, every contract in a single unit will have the same use year.

 

[disneylovinfamilyof6]

They get a room full of monkey's drunk, blindfold them, and have them throw darts. Any contracts they hit get bought back.

 

[jerseyduke]

I'm under the impression that the use year is directly tied to the unit. In other words, every contract in a single unit will have the same use year.

That would make sense. It was just something I was not sure about.

I am sure they have a system, it is just one that is not so easily reverse engineered.

 

[miTnosnhoJ]

I'm under the impression that the use year is directly tied to the unit. In other words, every contract in a single unit will have the same use year.

That makes sense. That would explain how a certain Use Year could sell out, while others are still available.

 

[supersnoop]

I am sure they have a system, it is just one that is not so easily reverse engineered.

We only know one side of the equation. We know what contracts are submitted and which contracts are taken. Well, we have a subset of that information here, but it can be derived from the OCC site. The problem is, we have no idea what Disney has on their side of the equation; buyers, waitlists, units, use years, etc. There is literally no possible way to reverse engineer the equation.

 

[malba2366]

Ive shared my opinion of how they decide which contracts to buy back on other threads. While the residential unit/use year likely is factored in, I also think they are calculating potential revenue from the buyers. For example if they have a direct buyer lined up who spends way more than average in the parks they will take contracts to sell to that person. However if they have a direct buyer lined up who only buys annual passes and nothing else they will let the contract go through ROFR. These type of calculations would be very easy for disney to make.

 

[erionm]

Ive shared my opinion of how they decide which contracts to buy back on other threads. While the residential unit/use year likely is factored in, I also think they are calculating potential revenue from the buyers. For example if they have a direct buyer lined up who spends way more than average in the parks they will take contracts to sell to that person. However if they have a direct buyer lined up who only buys annual passes and nothing else they will let the contract go through ROFR. These type of calculations would be very easy for disney to make.

Really? Care to share how you think they are tracking sales by person for those that are not room charging their purchases?

 

[WBogley]

I really think it is all about their direct buyer. Once their buyer says I want a specific resort and use year they go into the huge pool of Rofr listings that meet the buyers requirement and flip it to them for as cheaply as possible for the max profit. I really don't think they do the model of buy and hold these older contracts. Dis the parent, would much rather buy back common stock than buy back timeshares.

 

[supersnoop]

I imagine it has a lot more to do with who's sitting at the table at SSR at the moment. "Hey, this guy says he'll buy, but he only wants BWV. Do we have any in the queue we can sell?"