Large/Jumbo Contract Discounts

[oldwash]

Small contracts bring premiums for different reasons. So do large/jumbo contracts sell at a discount? What kind of "discount" should say a 500 plus point contract be at? There aren't many out there to look, and of those showing sale pending, what the asking price was vs. what they actually got can't know.

 

[disneynutz]

Large contracts are usually a tough sell. Only buyers looking to book mega vacations or companies buying for mega vacations would be buyers. Smaller contracts allow owners to sell off some of their holdings should their needs or wants change.

Bill

 

[oldwash]

Hoping to try and quantify a "tough sell". If a 150pt contract for a specific resort appears to be selling at $100 a point, then would a 500pt be at $85?

 

[jerseyduke]

The discount, at least based on asking, seems to be in the 10% range. Perhaps a little more.

I see on VWL out there 676 74$ per point (but it is stripped)
1 500 AVK (no points for dec 2016) at 79 per point.

3 in the 80s per point(1 VWL, 1 OWK, 1, AKV), 1 in the 90s (AKV). about 10 over 100 pp.

Out of the 14 I see, there is a 500 BLT one at 117 pp (loaded),but that was listed in October, so is not moving

The ones that are cheaper are more stripped.

Also depends on how fast the seller needs/wants to get rid of the contract, etc.

 

[disneynutz]

If the price for a large contract gets too low, ROFR may take it. Taking one large contract is cheaper than taking several smaller ones for Disney.

Bill

 

[Dean]

Small contracts bring premiums for different reasons. So do large/jumbo contracts sell at a discount? What kind of "discount" should say a 500 plus point contract be at? There aren't many out there to look, and of those showing sale pending, what the asking price was vs. what they actually got can't know.

A difficult to resell contract (VB, HH, large) should command a significant discount. I don't follow prices enough to see what's been happening there but from a value/risk standpoint we're talking in excess of $10-15 a point compared to 150 points, more in the $15 a point range and even more for larger. Obviously home resort will matter in this area as VGF will be less of a discount than say VB. You may get into the same thing as happens with stripped contracts where the sale price doesn't match the lost points or in this case, the future risk. Any buyer going that route is not only taking the future risk and commitment but they are also foregoing the likely opportunity for multiple home resorts in many cases. I can't imagine a single situation where an initial purchase for someone just getting in should be 500 points much less 500 as a single contract.

 

[CaliAdventurer]

Small contracts bring premiums for different reasons. So do large/jumbo contracts sell at a discount? What kind of "discount" should say a 500 plus point contract be at? There aren't many out there to look, and of those showing sale pending, what the asking price was vs. what they actually got can't know.

I have to say, it's to each his own. We just bought a 600 point contract at Aulani. That doesn't even buy 1 week in a 2 bedroom Oceanview at the holidays!

Yes, we're paying a lot of dues but it's less than half of renting and a quarter of rack. So even if it's for one week in Hawaii per year, we don't regret it.
We prefer to stay at the best resorts in the best rooms which means 1) we need a lot of points and 2) we still need to buy at VGF if we want to stay there.
Yes, it may be harder to offload the contract at some date but we don't have plans for that as Ko'olina is transforming. More and more amenities coming in. And if we did want to sell, since we paid less to begin with, I don't see us losing money. But we certainly are Not looking at it as an investment. Just discounted, annual, pre planned, vacations.

 

[jmmess]

I have to say, it's to each his own. We just bought a 600 point contract at Aulani. That doesn't even buy 1 week in a 2 bedroom Oceanview at the holidays!

Yes, we're paying a lot of dues but it's less than half of renting and a quarter of rack. So even if it's for one week in Hawaii per year, we don't regret it.
We prefer to stay at the best resorts in the best rooms which means 1) we need a lot of points and 2) we still need to buy at VGF if we want to stay there.
Yes, it may be harder to offload the contract at some date but we don't have plans for that as Ko'olina is transforming. More and more amenities coming in. And if we did want to sell, since we paid less to begin with, I don't see us losing money. But we certainly are Not looking at it as an investment. Just discounted, annual, pre planned, vacations.

Usually the advice is to buy (e.g.) 3 contracts of 200 each, so that if you did want to sell of a contract, you'd have a better chance than selling the entire 600. Aulani as it is is a harder sale, since it still hasn't sold out, so smaller contracts would be a better option in the event of selling.

 

[CaliAdventurer]

Usually the advice is to buy (e.g.) 3 contracts of 200 each, so that if you did want to sell of a contract, you'd have a better chance than selling the entire 600. Aulani as it is is a harder sale, since it still hasn't sold out, so smaller contracts would be a better option in the event of selling.

Sure that makes sense completely.
However, it would only ever make sense to sell if I need to liquidate. Otherwise, having the points do me no harm as long as I afford the dues which I could rent the points if I couldn't. Since Aulani is so expensive, its not easy to rent there for a week on a 2 bedroom, as I learned this year and precipitated our purchase. Would 300 at VGF and 300 at Aulani with the same UY be ideal? Sure, but we would have paid much more for VGF points and would therefore not want to use them at Aulani. Also, if I bought three 200 or contracts, I'd have paid tens more dollars each point. Moving the line out on everything.
If for some reason, I couldn't afford the dues, I'd rent or sell and the loss ( supposing there is one) would probably not be more than the money I saved using them while I had them. If I just plain didn't want to use them anymore, I would donate the time to my children's school auction or as gifts (I know they are Not tax deductible) I also only paid 1 closing. I don't see a crippling downside.

 

[Dean]

Sure that makes sense completely.
However, it would only ever make sense to sell if I need to liquidate. Otherwise, having the points do me no harm as long as I afford the dues which I could rent the points if I couldn't. Since Aulani is so expensive, its not easy to rent there for a week on a 2 bedroom, as I learned this year and precipitated our purchase. Would 300 at VGF and 300 at Aulani with the same UY be ideal? Sure, but we would have paid much more for VGF points and would therefore not want to use them at Aulani. Also, if I bought three 200 or contracts, I'd have paid tens more dollars each point. Moving the line out on everything.
If for some reason, I couldn't afford the dues, I'd rent or sell and the loss ( supposing there is one) would probably not be more than the money I saved using them while I had them. If I just plain didn't want to use them anymore, I would donate the time to my children's school auction or as gifts (I know they are Not tax deductible) I also only paid 1 closing. I don't see a crippling downside.

That'd be correct if one made the perfect choice up front and never needed to sell. Remember the inherent value of what one buys is pretty set. My opinion is that no one fairly new to DVC has enough info to truly make an informed decision in this area though some will get lucky that their initial choice ends up being a good one for them. I tend to push back against the common recommendation of buying multiple small contracts as insurance for later simply because I believe the additional cost is generally not worth it and that one should never buy planning to sell later. However, once one gets to around 200 to 250 per contract, I think the risk is simply too great for most situations not to do multiple if possible. If I were that large I'd want something more than just the discount like a fixed week that fit my needs or a significant discount of at least $10-15 a point compared to say 200 points. Plus for Aulani it'd have to be a subsidized contract.

 

[CaliAdventurer]

That'd be correct if one made the perfect choice up front and never needed to sell. Remember the inherent value of what one buys is pretty set. My opinion is that no one fairly new to DVC has enough info to truly make an informed decision in this area though some will get lucky that their initial choice ends up being a good one for them. I tend to push back against the common recommendation of buying multiple small contracts as insurance for later simply because I believe the additional cost is generally not worth it and that one should never buy planning to sell later. However, once one gets to around 200 to 250 per contract, I think the risk is simply too great for most situations not to do multiple if possible. If I were that large I'd want something more than just the discount like a fixed week that fit my needs or a significant discount of at least $10-15 a point compared to say 200 points. Plus for Aulani it'd have to be a subsidized contract.

We saved, conservatively, about $30-35 per point off resale prices : D from a motivated seller who Was widowed shortly after they purchased the pkg with, had remarried, and now bought a vacation home in Hawaii. So you can see the financial argument for not ruling out jumbos on this one. : ).

Also, Aulani is a different animal. There are many large packages compared to other properties because many are foreign buyers, it costs 500+ for a week there in a top category, and no one wants to travel to Hawaii for justmz a long weekend. Subsidized dues are out there and I'd certainly try to find one if a smaller contract but the dues aren't more than some wdw props.

It would be foolish to buy Aulani though, if you don't actually plan on going there most of the time. So if you're doing it to buy cheaper into wdw, that's dumb- you wouldn't even have a home resort back up.

We plan to hit Aulani annually as well as wdw since we live in Seattle and it's about the same distance with direct flights both ways.

And I have to say- I learned almost all I know- wrong, right, or otherwise from all you wise and seasoned folks here. I'll report back if there's buyers remorse down the road. Fingers crossed!!