is The Re-Sale Market That Out Of Control?

[heynowirv]

Wilderness Lodge Membership expires 2042 - Annual Dues $6.03 per point

160 points. August use year. 160 points coming on 8/1/16 and 160 points coming on 8/17/14. Can close 7/6/15. Closing Costs: $484 Annual Dues at Closing: $0 Priced at $80/pt ($12800) Total Price: $13284 Ref# WL160-08-1115-sd

I just saw this ad today.Would somebody buy a contract like this? No points till Aug.16 .Close on July of 15. I hope they don't expect you to pay MF till 17.

What are your thoughts? I know I wouldn't bother.

 

[DenLo]

I don't understand why anyone ever buys stripped contracts. But people do. You can always add to your proposal that the current owner is responsible for the points through 2015. And figure an estimated amount for those points to lower the cost of your purchase.

What I do not understand is that buyers consider a contract that restricts closing until after a future reservation. I would not make a bid on the contract the OP showed.

 

[Brian Noble]

It has always seemed to me that the market over-values stripped contracts, and under-values loaded ones. I'm not sure why this is, but so it goes.

 

[heynowirv]

It has always seemed to me that the market over-values stripped contracts, and under-values loaded ones. I'm not sure why this is, but so it goes.

 

[MinnieMouse100]

When we bought resale we refused to consider stripped contracts. The savings really were not that drastic and there was no way we were paying to wait on our first trip.

 

[Huey]

Never made any sense to me.

I even tried presenting the logic that the stripped contract is worth $14pp (or whatever the rental value is) less than a full contract but the brokers I have spoken to won't buy the rationale so I can't see how they would be willing to pass that on to a seller with any conviction.

Conversely, a loaded contract is theoretically worth $14pp more in my book.

Personally I am always happy to pay slightly over market average for a loaded contract. I tell myself I can rent out the loaded points as I don't intend to use them, that way I am making some free money...I then book an extra trip.

If I could make commission from selling myself stuff I want by sugar coating like a sound financial decision I would own one of the nice Golden Oaks properties (which ironically I have been discussion with myself, as mortgaging one to rent out seems like a very sound financial investment...)

 

[OhioDVC]

A stripped contract is worth it IF the purchase price has been adjusted accordingly. But like the other posters have mentioned, rarely does the purchase accurately reflect the borrowed points that the buyers goes without.

 

[crisi]

A stripped contract is worth what it sells for. And the fact is that is nowhere near a $14 a point discount. Its a few dollars a point at most. Knowledgeable buyers will hold out for a loaded contract or a big discount, but there are plenty of people who will buy a stripped contract for $6 less than a loaded one and believe they got a bargain.

And, as an owner, doesn't bug me a bit to know I can sell a stripped contract without having to discount it much.

 

[DebbieB]

I was looking at The Timeshare Store listings and most of the contracts do not have 2014 points.

Check this one out:
Animal Kingdom - $79 per point. 200 points coming on 3/1/17 and 200 points coming on 3/1/18. Priced at $79 per point.

For 2016 points to be gone, they have to have borrowed for a trip 3/1/15 or after, which would mean a delayed closing.

Listed the same day, probably the same owner:

Animal Kingdom - $79 per point. 8 points coming on 3/1/16 and 200 points coming on 3/1/17. NO ANNUAL DUES UNTIL 2017. Priced at $79 per point.

Then there's one sitting there since May 21:

Animal Kingdom - $80 per point. 210 points coming on 12/1/14 and 210 points coming on 12/1/15. Priced at $80 per point. I can't believe someone didn't go for that one. There are a lot of Animal Kingdom unsold.

 

[crisi]

I was looking at The Timeshare Store listings and most of the contracts do not have 2014 points.

Check this one out:
Animal Kingdom - $79 per point. 200 points coming on 3/1/17 and 200 points coming on 3/1/18. Priced at $79 per point.

For 2016 points to be gone, they have to have borrowed for a trip 3/1/15 or after, which would mean a delayed closing.

Listed the same day, probably the same owner:

Animal Kingdom - $79 per point. 8 points coming on 3/1/16 and 200 points coming on 3/1/17. NO ANNUAL DUES UNTIL 2017. Priced at $79 per point.

And if you are selling, and competing with people who have mostly stripped contracts, you'll sell for the same price they are. And if you are buying and not patient enough to wait for a loaded contract at a good price, a stripped contract is still a good deal over direct.

 

[beer dave]

And if you are selling, and competing with people who have mostly stripped contracts, you'll sell for the same price they are. And if you are buying and not patient enough to wait for a loaded contract at a good price, a stripped contract is still a good deal over direct.

Very true--- the purchase cost of the contract is really about 25 percent or less of the total cost over the lifetime--(resale). Less than $2 a point at AK right now-- So if you buy a stripped contract and don't have to pay MF until you receive points again, it is the difference between 78 and 80. Interestingly enough, I just discovered thanks to mikebw (?) that disney ROFRed BWV at 78 per point. It seems the selling price for these contracts regardless of stripping is based just above where D will take them back? Subject to D's desirability, I guess. I doubt that Disney cares if they are stripped or not when they reclaim.

 

[ML_LovesDisney]

As a current member, doing an add on would be a reason. I just found the perfect contract, which is stripped until 2016, can't close until December, but it is a small contract, with my UY (April UY at BLT doesn't seem to common on the resale boards). As a buyer buying for the first time, I can understand not wanting to buy a stripped contract, but for me I don't care because I don't need those points immediately. I just want to have them for future use.

 

[heynowirv]

So the answer is yes, they are out of control. Unless you're buying direct.

 

[crisi]

In order to say if they are out of control, the question is "in comparison to what" - in comparison to other resales - no. In comparison to direct - no. In comparison to prices during the recession, yes. In comparison to prices pre-recession - no.

So I'd say no, they aren't out of control. Prices for the years 2009-2011 were an anomaly.

 

[beer dave]

As a current member, doing an add on would be a reason. I just found the perfect contract, which is stripped until 2016, can't close until December, but it is a small contract, with my UY (April UY at BLT doesn't seem to common on the resale boards). As a buyer buying for the first time, I can understand not wanting to buy a stripped contract, but for me I don't care because I don't need those points immediately. I just want to have them for future use.

I agree. Add ons don't necessarily need to be loaded.

 

[beer dave]

In order to say if they are out of control, the question is "in comparison to what" - in comparison to other resales - no. In comparison to direct - no. In comparison to prices during the recession, yes. In comparison to prices pre-recession - no.

So I'd say no, they aren't out of control. Prices for the years 2009-2011 were an anomaly.

Re sale prices? What happened? I wasn't paying much attention then...

 

[crisi]

Re sale prices? What happened? I wasn't paying much attention then...

During the recession, prices dropped dramatically. In 2008 BWV (which is what I own, so my memories tend to be a little clearer) was going for $85-95 a point - smaller contracts for more. During the recession, it was possible to get BWV for less than $63 a point (which was our purchase price in 2002 - I have vivid memories of looking at listings in 2009 at what I had paid almost a decade before). Disney was seldom exercising ROFR - and bargain contracts went through regularly.

If you are looking at prices now, in 2013, and comparing them to having looked a few years ago - with the intent of buying - it looks like huge inflation - if you look with a longer view - prices have recovered - much like the housing market.

 

[DebbieB]

Plus Disney has raised the direct prices for both new and existing. Plus they have pushed up the ROFR bar. As long as I've been a member (1999) I've said the only resort that would make me sell my BWV for would be GF. I never dreamed it would be more than double what I paid for BWV ($65) and much higher points per night. I'll just roll the dice at 7 months for an occasional trip. I stayed there in May in a studio, it was beautiful but the purchase price is just ridiculous.

 

[jmassey1samchi]

I guess buying a stripped contract makes sense if a person is looking to not spend as much to get into dvc as they would spend on a loaded one. Right?
If one purchased a contract now for something that closes in January, and no points until March 2016, are they able to just borrow 2016 points for a 2015 trip? And subsequently do that each year, with the end result being your contract effectively expires one year earlier?

 

[beer dave]

I guess buying a stripped contract makes sense if a person is looking to not spend as much to get into dvc as they would spend on a loaded one. Right?
If one purchased a contract now for something that closes in January, and no points until March 2016, are they able to just borrow 2016 points for a 2015 trip? And subsequently do that each year, with the end result being your contract effectively expires one year earlier?

Yeah you could. and if you borrow ten percent less than the contract amount each year, in ten years you are even. The only trouble would be if you had to cancel, no banking.