Math and Pricing for Stripped Contracts on Resale

[heathrow42]

Would like if someone could take a look at my math/reasoning and give feedback if I'm looking at this the right way or missing something..

We have 185 pts at BLT. We need atleast 100 pts to get out of the borrowing hole we are in, and we're considering up to 150 pts. In looking at Disney vs Resale - the new restrictions don't bother us, since we use these pts strictly for staying at BLT in December and don't forsee that changing. (We've done CR/BLT in Dec for >12years)

We want to keep the same UY we have - but the contracts I've seen in the 100-150 pt range for BLT w/ Dec UY on TTS have been stripped - All 2010/2011/2012 pts gone. Which doesn't help us get out of the borrowing hole we are in anytime soon- but the price of $94 or $97 looks attractive on the surface. So here's my math, what do you think? I'm estimating we need 230 pts, based on this year, it could actually be more.. and in fact, our trip is a day shorter than we'd like because I didn't want to borrow more points.

A description of the hole we are in:
2011: We have 139 pts that we will get 12/1/2011. Our reservation is 229pts. We have to borrow 90 pts from 2012

2012: We will have 90 pts that we will get on 12/1/2012. The reservation will probably be around 230 pts. We will have to borrow about 140 pts from 2013.

2013: We will have 45 pts that we will get on 12/1/2013. The reservation will probably be around 230 pts. We will have to borrow our full 185 pts from 2014.

2014: We will have have 0 pts that we will get on 12/1/2014. We will only be able to borrow 185 pts we won't have enough pts for our reservation.

Disney vs Stripped:

If we buy pts direct from disney: I saw one post that said $115/pt and they would give 2010 and 2011 pts. 125 pts would be $14375. 140pts would be $16100. That would stop the borrowing now - we wouldn't need to borrow the 90 pts from 2012. I've also seen posts citing $130/pt - ouch. 125 pts would be $16250 and 140 pts would be $18200.

If we get a stripped contract of 125 pts @ $94/pt that gives us 125 pts starting in 2013 - then we'd still only have (45+125) 180 pts in 2013 and we'd still have to borrow 50 pts to get to 230. In 2014 we'd have 260 pts (185+75) and we wouldn't have to borrow.

If we get a stripped contract of 140 pts @ $97/pt - that gives 109 pts in 2012 and then 140 pts in 2013 we'd still have to borrow 31 pts from 2013. Then in 2013 we'd have 295 pts. The borrowing stops.. and we might finally be able to consider booking MK views. In 2014 we'd have 325 pts.

So we were trying to estimate the lost value of a stripped contract.

In the 125 pt example: If it's stripped of 2011 pts, if we had to replace them via a transfer at $10/pt, that would be $1250. Add that to the cost: 11750+1250= $13000 Making the price per point actually $104 (13000+1250)/125pts. It's actually worse for that contract because it's stripped of 2012 pts too.. making it $114/pt if we wanted to replace them. (11750+1250+1250)/125

The 140pt example: It's stripped of 2011 pts, if we had to replace them via transfer at $10/pt that would be $1400. Add that to the cost: 13580+1400=14980 or $107/pt. It's stripped of some 2012 pts too, if we wanted to replace those via transfer @ $10/pt it would be another $310. 13580+1400+310=15290 or $109/pt ($15290/140pts)

So, is this why stripped contracts are less? That if you had to replace the points it would come out almost the same as Disney? Should I hold out for a contract that isn't stripped? ..or buy enough so it works itself out in a couple years, and I have enough points for larger room/longer stay. Should I buy through Disney just to get out of the hole now? I think that I can get more pts via resale for roughly the same price than through Disney.

I figure it's better to buy whether from Disney or resale, sooner rather than later. The prices (atleast via Disney) will only go up, and we'll get out of the borrowing sooner. I don't mind borrowing, but at some point you run out of points - and since we go every year, we don't want to run out.

Is my math right? Assumptions right?

Thank you very much if you've stuck with me this long.. hoping one of the old DVC veterans who have done some add ons will come along with some insight!

Thanks,
--heather

 

[DVCconvert]

I know this will seem overly simplistic compared to all the work you've done, but, I would just go here:
http://www.disboards.com/showthread.php?t=2661661&page=26
and review the sales of BLT that are comparable to what you're looking at and make an offer in line with what has passed rofr.

HTH

 

[KGD]

I don't know if this helps, but I just looked at Fidelity and there is a 160 point Dec UY contract available for $95 per point with 172 points for 2010 (I assume some banked points from 2009), 160 for 2011 and forward. Contract #1341632.
http://www.fidelityresales.com/Disney-BLTC.pdf
May be larger than what you are looking at but you may be able to rent some points later on if you found yourself with too many points to spare!

 

[CarolMN]

If it were me, I'd hold out for lower prices and a December use year contract that isn't stripped.

From what you posted, it looks like you don't need to really get worried until it's time to book your 2014 trip. That's a lot of time to look for a better contract without sacrificing a trip.

Why pay more dues until you absolutely have to do so? Nothing wrong with borrowing while you look.

IMO, if there are no points, the seller should be reimbursing the buyer for future maintenance fees. With a December use year, If you don't get points until 2014, I would expect the seller to pay for 2011, 2012, 2103 and 2014 mtce fees. Keep in mind that you'd have to estimate those and that DVC would expect YOU to actually pay them when due. That means you would have to require the seller to provide an estimated amount for those at closing.

FWIW, I think the prices of the stripped contracts are too high, thus my advice to borrow and wait until something better turns up. It will. Time is on your side.

 

[dbs1228]

I agree with CarolMN! I actually posted the following a few weeks ago on a different thread:
I was surprised at some of the really stripped BLT contracts! There are a few that do not have points coming until 9/13 and they are priced at 92.00pp with closing it equals 95.33pp. I figured out if I bought through DVC with current incentives I would pay about 125.00 BUT if I rented out all the points from now until 9/13 the actual cost would be 95.00pp. Just saying....

At this time I did not factor in the 500.00 gift card dvc is offering which makes the direct buy about 3.00 pp less based on 150 point contract. I just say do the math and figure point values you are or are not getting at about 10.00 per point.

I think you will see more BLT contracts come out in the next year or so, at lower prices, and some will be loaded so I would for sure wait and borrow in the mean time.

 

[ORD2KOA]

It looks like you don't need to really get worried until it's time to book your 2014 trip. That's a lot of time to look for a better contract without sacrificing a trip.

Why pay more dues until you absolutely have to do so? Nothing wrong with borrowing while you look.

I agree with this advice. It's too soon to see if there's going to be a significant reduction in the resales prices after the 3/20 changes. You may be getting ahead of yourself a little. Keep an eye on the resales, but perhaps you don't need to jump in for 2 years. What you save in MF will help pay for the extra points.

 

[quinnc19]

I am also interested in a small BLT contract, although I don't need the points now. I'm trying to resist the addonitis, thinking that the reduced perks and possible addition of another DVC on the monorail loop might reduce resale prices in the not too distant future.

 

[Sandisw]

I agree with CarolMN! I actually posted the following a few weeks ago on a different thread:
I was surprised at some of the really stripped BLT contracts! There are a few that do not have points coming until 9/13 and they are priced at 92.00pp with closing it equals 95.33pp. I figured out if I bought through DVC with current incentives I would pay about 125.00 BUT if I rented out all the points from now until 9/13 the actual cost would be 95.00pp. Just saying....

At this time I did not factor in the 500.00 gift card dvc is offering which makes the direct buy about 3.00 pp less based on 150 point contract. I just say do the math and figure point values you are or are not getting at about 10.00 per point.

I think you will see more BLT contracts come out in the next year or so, at lower prices, and some will be loaded so I would for sure wait and borrow in the mean time.

Completely agree with you as well.

 

[Belle & Ariel]

There are a few good ones on **********:

607G
Bay Lake Tower 030 $102 Oct 30 pts for 2011 + 30 for 2012 + 30 for 2013. $3,060
575
Bay Lake Tower 225 $94 Feb 3 pts for 2011 + 225 for 2012. Can't close till June 5th. No dues till 2012! $21,150
661 Bay Lake Tower 160 $94 Sept 160 points for 2012 and 160 points for 2013 $15,040

I would just be afraid Disney's price will keep going up. Watch for a good promo--when we were there in Dec. we went to the Welcome Home Wednesday and were invited to a sales event at BLT that had special pricing.
Good luck!

 

[JimMIA]

When I calculate what my vacations cost, I use two numbers because there are really two components to the cost of points.

One component is the acquisition cost, which I consider to be the price per point divided by the number of years remaining on the contract. Just as an example, if one were paying $120 per point for BLT (49 years left), the annualized acquisition cost would be $120/49 = $2.45 per point. That's a real cost -- you are paying for those points whether you actually receive them or not.

The other component is the annual dues for the points. For 2011, that's $3.89 for BLT.

So...for whatever current year points I wasn't getting (whether 2010 or 2011, depending on UY), I would subtract AT LEAST $2.45 + $3.89 = $6.34. Annual dues alone are not nearly enough of a deduction.

And, having said that, I would be perfectly comfortable deducting $10 per point assuming that's the price you would have to pay to replace the stripped points you will not be receiving. That would be a huge slug for the seller, but if they don't want to accept that, they can decline. They're the ones with the "damaged goods."

AND...having said all that...I personally would continue to borrow for a couple of years until I was maxed out, and then buy what seemed appropriate. As long as you don't have a cancellation which causes you to lose points, there's nothing wrong with being in a borrowed situation. With BLT especially, I think you'll save considerable money with that strategy.

 

[sweetdana]

If your not opposed to maybe being ROFR (maybe not).. Why not bid 10$-15$ less on the contract for the missing points and ask them to pay the dues 2012 and closing costs. I think your on the money with a drop of savings, and I assume the seller would be interested in it with no points available any time soon. I would put offer on 1 if turned down try the other. If it is ROFR no harm start over.

Otherwise I would wait, something will come up. Also the more that show up the better chance of a lower price. It is weird how tripped contracts vrs fully loaded are often not too far off in listing price. You can always buy 24 points from disney at 15$ a point per yr to finish a ressie, or buy a 100 point transfer for 1K from the rent/trans board while waiting for the perfect contract. At any point you can do direct and it is done.

 

[disneydenisel]

This is what I use to determine my cost of resale versus direct.

Buying direct, using the example of your 125 pts:

1) I take the price, which you are saying is $115/pt for BLT.
2) Then I will subtract $10/pt for this if there are any points from the previous year that I don't need to pay annual dues on. So in this case, I would consider my price per point to be $105/pt.
3) Now, if there is an incentive, say a gift card or anything like that, then I will divide that by the number of points and subtract that number. Aren't there incentives at BLT right now? If incentives were a $500 gift card, then I would subtract $4/pt, making my price $101/pt.
4) Closing costs are now being charged by Disney for add-ons, but it is a lot lower than resale AND you can use a credit card (which I like because we can get points on our mileage plans that way). So let's say closing costs are $1.50 a point, so I will add $1.50 and get $102.50 per point.

On a resale,

1) I take the price, which you are saying is $94/pt
2) There are no points banked or available, so I do nothing here
3) There is no incentive, so I do nothing here
4) Closing costs are at least $4/pt, and more if you want title insurance, so let's say $5/pt. That makes the price $99/pt.

Finally,

***I will look at how long I have to wait for ROFR and for Disney to put me into the system. I will look at when I will have points available. For this purchase above, I would think, gosh, it's only $3.50/pt x 125 to get the points now from Disney. That is only a difference of $437.50. I would save that much and more even after paying annual dues on those 2011 points instead of renting points for 2011 (at $10/pt, renting those would equal $1250). Plus, I would get mileage points on my credit card, and not have to do the whole cashiers check thing, etc.

That's how I do it. Are there incentives for BLT right now?