Member Dues as a cost factor in resale

[BeachClub2014]

I do find it interesting that you say they are willing to negotiate closing costs and price per point but not MF

Me too, that's why I asked my original question. I just think it odd that many folks are so tied to the idea that the dues are somehow associated to when the points are used during a re-sale transaction.

 

[pangyal]

Me too, that's why I asked my original question. I just think it odd that many folks are so tied to the idea that the dues are somehow associated to when the points are used during a re-sale transaction.

I assume it's because the seller has to come up with cash to pay the MF at closing if you get them to agree to cover them, if they haven't paid them already (which, considering it is already almost May, they really should have). Closing costs and such can come out of their disbursement.

 

[Friendlyadvice2]

Depending on how the agreement was arranged with a broker, if I were selling a contract, I would not negotiate on MF either because that's money in my pocket in the form of a return of my prepaid expense. If I needed to negotiate one component it would be price per point because that's less commission I'd have to pay the broker.

 

[BeachClub2014]

Depending on how the agreement was arranged with a broker, if I were selling a contract, I would not negotiate on MF either because that's money in my pocket in the form of a return of my prepaid expense. If I needed to negotiate one component it would be price per point because that's less commission I'd have to pay the broker.

Now that I can understand. Moreso than the argument that buyers should pay the MF for the UY they get the points.

And at the end of the day as a seller, the main concern I should have is the bottom line....and as a buyer, the main concern is total amount paid......and not how we get there.

 

[Minniesgal]

Oh I get that people believe it to be a seller's market. Totally understand that. But DVC is a totally discretionary purchase and therefore should be driven more by the buyers, than the sellers.

Let me put it another way, when you buy a house you only pay a pro-rated portion of the property taxes as you only owned it for a portion of the year. Heck, even DVC pro-rates the dues when you buy direct.

I absolutely agree with you here, that's my point entirely. It just seems odd to me that several brokers/sellers I have been dealing with are very dogmatic when it comes to the dues, refusing to budge at all but were willing to move a lot on the asking price and closing.

Now that I can understand. Moreso than the argument that buyers should pay the MF for the UY they get the points.

And at the end of the day as a seller, the main concern I should have is the bottom line....and as a buyer, the main concern is total amount paid......and not how we get there.

Yes but you talk about sellers being dogmatic in there approach but reading your posts you are equally being dogmatic in trying to get sellers to sell you points with the MF pro rata as Disney do when they sell direct. Typically this is not what has been down for the resale market.

For both sides the ability to conclude a deal generally relies on the ability to compromise. If both sides are being dogmatic nothing much to do but walk away. Seems to me if you want to purchase in this market you might need to be a bit more flexible.

 

[bumbershoot]

Oh I get that people believe it to be a seller's market. Totally understand that. But DVC is a totally discretionary purchase and therefore should be driven more by the buyers, than the sellers.

Is that how you felt when you were the seller, though?

Let me put it another way, when you buy a house you only pay a pro-rated portion of the property taxes as you only owned it for a portion of the year.

When you buy a house you can't go back and live in that house before you bought it.

When you buy points, as long as the points you're paying MFs on are being bought by you, you can, in effect, go back and live in that house for those points' worth.

I would have a problem paying full 2015 MFs if I weren't getting all 2015 points, but I suppose it would depend on the total deal. Are your deals selling you all 2015 points?

That is exactly the point I am making. When you use points is totally irrelevant to the dues. If you bank a years worth of points into the next use year, you don't get to defer paying the dues. And if you borrow points into a current use year from the future year you don't pay more. You could never actually "use" the points and still have to pay the annual dues because you owned them.

But then if I don't use them and instead I sell them to you, YOU will be getting the use of those points, so why wouldn't I want you to reimburse me for the points?

as a buyer, the main concern is total amount paid......and not how we get there.

Seems like it might be a good idea to look at that; if they say "pay MFs but we'll take x off of whatever", just pretend they said it the other way around.

 

[BeachClub2014]

Yes but you talk about sellers being dogmatic in there approach but reading your posts you are equally being dogmatic in trying to get sellers to sell you points with the MF pro rata as Disney do when they sell direct. Typically this is not what has been down for the resale market.

I'm not at all dogmatic in my thinking about DVC, maybe that's my shortcoming. I just try to get the best deal and have a different understanding of how the MF actually are calculated and what they truly represent.

But then if I don't use them and instead I sell them to you, YOU will be getting the use of those points, so why wouldn't I want you to reimburse me for the points?

Because your Membership Fees (dues) don't support your points. You've already paid for them, either to Disney or to a re-seller. Your MF support your ownership interest in a resort and all of the other associated DVC benefits. The only connection between points and MF is to determine how much your membership costs in that calendar year to support your ownership interest.

 

[CraigInPA]

MF's are paid on a calendar year basis, based upon how many points you have. If you have a early UY, don't use the points at all, and it's early in the year, it's entirely reasonable to expect the new owner to pay the MF's. On the other hand, if it's November, and the UY is February, and those points have been sitting there and need to be rented or used in the next 3 months, it is not reasonable for the new owner to pay MF's. For those users who expect the buyer to pay MF's in this situation, there is one obvious answer for the buyer: Buyer, pay less for the points. If the ask is $90, and there are 100 points, and the maintenance fee is $450, just offer $85.50 per point.

 

[CarolMN]

Please remember to be respectful of other poster's opinions when you state your own.

While this is an interesting discussion, there are no "rules" on who should or shouldn't be paying the MFs for a resale.

In fact, it really doesn't matter. What matters is that a buyer and seller agree to terms. There are many ways to structure a deal. Whether I'm buying or selling, what matters is the total amount that either comes out of my pocket (as the buyer) or what goes in (as the seller).

 

[mjillard]

My willingness to pay MF depends, like any other factor in the purchase, on how much I want the contract. Everything is negotiable, but that doesn't mean the seller absolutely must negotiate. BLT sellers in particular have no reason to negotiate. I get the sense that you have a rationale that paying the fees is somehow unfair, but I believe fairness really has nothing to do with it. By all means, if it means that much to you, hold out. Just know that it may take a little bit longer to find the perfect contract with a seller who will budge.

 

[DVCcurious]

I think you shouldn't get hung up on one of the three costs (price per point, dues, closing costs) and instead look at what the total cost will be out of pocket.

So if you see a BLT for $100 per point but buyer pays MF, and an identical BLT for $110 but the seller pays MF then the first contract is clearly cheaper and will cost the buyer about $105 per point, vs $110 per point.

I've learned that you just don't try to rationalize some things. How should MF's be allocated is one of those things. I mean, who cares? All you really care about is "how much is this going to cost me total". It's like buying a car and you get a great deal on the price but then when you go into the finance dept they start tacking on all this stuff about undercoating and high interest rates, etc. Then you get mad. Because what you care about is your total cost, not one part of the total cost.

I bought DVC in 2012 and again in 2014 both times were resale. Both times I paid all MF and Closing Costs. But I got "great" deals because I bought loaded contracts with all previous year's points at below-market (2012) and at-market (2014) price per points.

For example in Dec 2012 I got a VWL 200 points with all 2011 and 2012 points for $55 per point. I paid all dues and closing costs.

In Oct 2014 I bought a BLT for $105 with all 2013 and 2014 points and I paid all dues and closing costs.

But here's the thing: I only paid dues on the current year's points, I got the banked points dues-free. Then I rented all the banked points at $11.50 per point (I couldn't possibly use all those banked points). So I paid $5.50 (avg of BLT and VWL) for the current year's dues, then I rented the banked points for $11.50 and I made $6 per point as compared to a contract with no banked points where the seller pays the MFs.

So I guess what I'm saying is you should buy a contract with ALL previous year's points banked and all current years points. So a 200 point contract would have 400 available currently. If you can get that contract at a reasonable price per point you will come out way ahead vs a contract with no banked points.

 

[tasha99]

If the use year is almost over and the points are unbanked, then I think the seller should pay the MFs. In other cases, whoever gets use of the points should pay the MFs*. I suppose you could say that sitting in my home, typing here on the Disboards, I'm getting benefit of my DVC membership, but I think that's hogwash. My benefits come when I use my points, and only when I use my points. I wouldn't budge as a seller on MFs unless the buyer was offering me a higher price per point, at least not in this market.

I do agree with those who say it's a sellers market now. I bought 2 of my contracts just a few months ago, and I haven't found the good deals that were available in Nov/Dec. I think it's cyclical and based not only on the economy, but also when annual dues are coming up.

*Fully stripped contracts are an exception and the MFs should be taken from the price per point

 

[BeachClub2014]

I've learned that you just don't try to rationalize some things. How should MF's be allocated is one of those things. I mean, who cares? All you really care about is "how much is this going to cost me total". It's like buying a car and you get a great deal on the price but then when you go into the finance dept they start tacking on all this stuff about undercoating and high interest rates, etc. Then you get mad. Because what you care about is your total cost, not one part of the total cost.

I agree, it isn't really rational. That is my point. I had encountered a few brokers/sellers who wouldn't even entertain the idea of negotiating on the MF but were willing to negotiate large drops on price, and in one case closing costs. I am not "hung up" at all on the MF as part of the deal, I very clearly understand what the fees truly are and how if a buyer isn't successful in lowering the cost per point sufficiently then in many cases they end up "overpaying" on the contract because of the loaded fees.

......and when you buy that car, the dealer is most times willing to negotiate on the undercoating, add-ons and you can shop around for lower interest rates.

 

[BeachClub2014]

My benefits come when I use my points, and only when I use my points.

That is perhaps very true for you, but that's not how DVC really works. A member has access to all "benefits" whether you ever use a point in your account. The MF's still have to be paid whether points are used or not.

If the MF's were truly correlated to how and when points are used then logically the rate of at which dues were assessed would fluctuate by which resort the points are used at. If you use your points at a resort with higher MF's then you pay more, if it's a resort where fees are less, you pay less. But they aren't assessed that way because it really doesn't work like that. The MF's are correlated to what you own, not what or when you use it.

 

[tasha99]

I agree, it isn't really rational. That is my point. I had encountered a few brokers/sellers who wouldn't even entertain the idea of negotiating on the MF but were willing to negotiate large drops on price, and in one case closing costs. I am not "hung up" at all on the MF as part of the deal, I very clearly understand what the fees truly are and how if a buyer isn't successful in lowering the cost per point sufficiently then in many cases they end up "overpaying" on the contract because of the loaded fees.

......and when you buy that car, the dealer is most times willing to negotiate on the undercoating, add-ons and you can shop around for lower interest rates.

That's interesting--I wonder if the broker was protecting his/her commission. I have read on the boards here somewhere the Disney likes to see the buyer paying closing costs on ROFR. Whether that's true or not, I have no idea (seems like the kind of "truth" that could be based on a couple of anecdotal contracts taken).

 

[BeachClub2014]

My willingness to pay MF depends, like any other factor in the purchase, on how much I want the contract. Everything is negotiable, but that doesn't mean the seller absolutely must negotiate. BLT sellers in particular have no reason to negotiate. I get the sense that you have a rationale that paying the fees is somehow unfair, but I believe fairness really has nothing to do with it. By all means, if it means that much to you, hold out. Just know that it may take a little bit longer to find the perfect contract with a seller who will budge.

I actually think the MF's themselves are across the board, fair and reasonable. Sorry if I created a different impression. I just find it odd that when negotiating a recent resale that several buyers/brokers were so unwilling to even discuss negotiating on them, saying that it is a "given" that the buyer should pay as they are using the points. Nothing should be a "given" as part of the negotiation.

 

[tasha99]

That is perhaps very true for you, but that's not how DVC really works. A member has access to all "benefits" whether you ever use a point in your account. The MF's still have to be paid whether points are used or not. --snip--
.

What benefits do you get when you're not using your points, and are they worth the $5-6 per point? What other real benefits are there besides a DVC hotel room? Are you saying that you think the privilege of being able to buy a TiW card, or being able to pool hop is worth more than a few bucks?

 

[hopeful4fl]

I think Disney has a simple formula when ROFR'ing a contract. Is there a buyer available that will pay > cost price + admin cost? Of course, sometime you see contracts with lower price being passed and higher being takem, but that may be due to use year that another member wanted as an add on.
I doubt they look at who is paying for what. I think the buyer and seller negotiate what they think is a best fit for them and as everyone has stated, everything can be negotiated, but one should look at total cost.

 

[BeachClub2014]

That's interesting--I wonder if the broker was protecting his/her commission. I have read on the boards here somewhere the Disney likes to see the buyer paying closing costs on ROFR. Whether that's true or not, I have no idea (seems like the kind of "truth" that could be based on a couple of anecdotal contracts taken).

I have heard that as well and have no clue if it is true or not. I can't really think of a reason why DVC cares one way or the other as to who pays the MF's or closing costs. Maybe I am totally missing it but it would seem that their concern in ROFR is total dollar per point valuation based on total points available in the contract and whether or not there is a ready direct purchase buyer waiting for a similar contract. But who knows....

 

[BeachClub2014]

What benefits do you get when you're not using your points, and are they worth the $5-6 per point? What other real benefits are there besides a DVC hotel room? Are you saying that you think the privilege of being able to buy a TiW card, or being able to pool hop is worth more than a few bucks?

No, I am not saying that. DVC says that when you purchase a fractional ownership of one of the DVC resort's. Your ownership of the fraction of the resort comes with "membership" in DVC. Those are tied together. You cannot be a "member" of DVC without owning a piece of the magic, and you can't own a piece of the magic without being a member. So the the MF's are used to support your fractional ownership of the property and your "membership" in the club. They are not, and should not be viewed as somehow tied to the use of points. MF's get paid during any portion of the year when an individual has an ownership interest, and therefore "membership benefits", whether points ever get used. Do I think the "other" benefits are worth $5 - $6 per point? Absolutely not.