New $500 Resale DVC Transfer Fee

[DonMacGregor]

Whether the posts have been edited or not I have always found @DonMacGregor posts informative and sometimes shine things in a different light that hadn't crossed my mind.

Thanks. Was that Zelle or Venmo for the payment?

 

[muppets3d]

And every single day, people offering/negotiating on DVC resale contacts increase their number by $500 (or more) in the blink of an eye (especially if it translates into only one or two dollars per point. Also, I just saw a SSR "list price offers only" contract that was priced $15 more than similar contracts sell, so it does work both ways. Probably the right UY at the right time, but it did sell (and I know it sold for the full price because I made an offer on it. LOL)

To be clear, I'm not suggesting that there won't be ANY downward pressure (there have already been strong arguments regarding high-priced resale resorts being an exception, especially with the gap between resale and direct being so close) but even those are really only add-on contracts for existing owners. I just don't believe the effect will be all-encompassing and debilitating to the resale market, nor a harbinger of its demise.

No I don't think it will kneecap the resale market either, but it will have an effect.

 

[walt34]

You do it your way, I'll do it my way (which has worked just fine for the better part of 5 years and 6,600 posts). It's a DVC message board, not the UN General Assembly, and we're not debating international human rights here, just DVC resale contracts. Regardless, the pedantry always finds a way, so no need to worry.

Just trying to be helpful but clearly not appreciated.

 

[Cyberc1978]

Not to the bulk of buyers but to some. In my own case I was DVC curious for a while and seriously on the fence for nearly three years. I was very price conscious, and whether rational or not, closing costs, annual dues and price per point all mattered a lot to me. I think had every contract effectively cost $500 more, I would have stayed on the fence longer. I needed reasons to buy, not reasons to wait. If say, 5 percent of price sensitive buyers decide to wait or pass all together, or buy Poly direct etc., then inventory will build up and resale prices will decrease. Maybe only by a few dollars per point on average.

So sorry but if you can’t afford $500 extra then DVC is not for you or anyone else who can’t afford paying the extra bucks. The upfront cost is pennies. Fair if you DONT want to pay an additional $500, but that’s a different story compared to can’t afford it.

 

[RoseGold]

So sorry but if you can’t afford $500 extra then DVC is not for you or anyone else who can’t afford paying the extra bucks. The upfront cost is pennies. Fair if you DONT want to pay an additional $500, but that’s a different story compared to can’t afford it.

If you're buying $30,000 of VGF, sure. Who cares about 500$.

This fee becomes really meaningful as these resorts age and the contract value itself gets closer to zero. Mathematically, this (and other closing costs) is enough to flip DVC into worthless contracts as they age, like in other timeshare systems.

It's not about who can "afford" it. It's about Disney making money, sure, but it's also about paralyzing these contracts at end of life. It wouldn't surprise me to see it go up more just to restrict the transfers of 0$ contracts common in other systems. Disney wins when contracts are locked down and points aren't used or sold.

 

[Sandisw]

Emotionally or perhaps even logically, I was nodding along with this comment—but then I remembered the number of contract negotiations that have fallen through in the rejected offers thread for less than $10/pt, sometimes less than $5/pt. It definitely happens with some frequency for people with a set idea of how much they will pay per point max.

Oh, it might matter to the subset of diehards here…but the overall market in general?

Maybe it’s just my definition of impact…to me, impact means we start seeing a meaningful drop in contracts sold by the brokers who report it.

 

[Sandisw]

Let’s please not argue over the way people post, edit, etc.

It is helpful for add: ETA…thank you.

 

[Cyberc1978]

If you're buying $30,000 of VGF, sure. Who cares about 500$.

This fee becomes really meaningful as these resorts age and the contract value itself gets closer to zero. Mathematically, this (and other closing costs) is enough to flip DVC into worthless contracts as they age, like in other timeshare systems.

It's not about who can "afford" it. It's about Disney making money, sure, but it's also about paralyzing these contracts at end of life. It wouldn't surprise me to see it go up more just to restrict the transfers of 0$ contracts common in other systems. Disney wins when contracts are locked down and points aren't used or sold.

While I agree with the idea if or when DVC has zero value that it will get more difficult to sell. Questions is will it ever happen except when the contract expires. The closer to expiration the less value but will it ever be zero? I think it won’t as long as it’s a better value buying and paying dues vs going direct.

 

[disneylandtour]

I’m not sure I agree. Assuming a 25-point Poly contract is listed at $180 PP (I don’t see any currently, but it I’ll accept it), Poly direct is currently $235 PP, going up o $243 concurrent with the new fee. A difference of $63 PP ($43 if you add the pro-rata fee).

However, a new buyer can’t get 25 Poly points, that’s only available to current members adding on. A new buyer is going to have to buy at least 100 points at a total of $24,300. That 25 point resale they were looking at is still only costing them $5,000 (25x180+500).

Current members adding on, yes it’s getting pretty close ($6,075 versus $5,000 with lower closing costs maybe bringing it closer), but that’s a smaller subset of potential resale buyers. I’m still not buying the idea that the fee will cause a seismic shift in the resale market, and it will really only possibly affect some of the higher priced resale resorts.

The extra $20pp in that supposed contract comes from the $500 fee. $500/25 point is $20 extra per point. So the delta with just this is $35. If you add in the lower closing for direct it's even less.

Like you, I don't think the $500 is going to be a huge issue for the 300 point resale contract. But it'll certain be an issue for some buyers (not all) for the smaller add-on style resale contracts.

 

[disneylandtour]

How, exactly, does the $500 fee lower the value of a resale contract? If I’m going to sell one of my resale contracts, why would I need to lower the price by $500? It’s not like the buyer is going to find another contract without the $500 fee. He might find one listed at a lower per-point cost, but that possibility already exists today. If a seller with a contract listed at market value decides to lower their per-point cost to lure a seller, that’s on them, and it already happens. If no one lowers their price, the market price remains stable.

Easy. These are identical goods (point contracts) with many, many different sellers and buyers. So demand is going to be one of the largest drivers of price. The $500 fee tacks on an additional costs that is going to move some potential resale buyers over to direct and some to not purchase. Again, as I've suggested, I think these percentages are small, like 5-10%, and will be mostly focused on smaller contracts. But let's say you and five other sellers have 50 point Poly contracts for sale. (This is what is on DVC for less right now.). And the average price is around $175 for non-stripped contracts. (This is also what is on DVC for less right now). Now if you remove 5-10% of potential buyers (they go to direct or they decide the extra $500 makes the deal no longer worth it), this means that, on average, these contracts at $175 will sit on the market for a little longer. And as they sit, there's a good chance that one of those sellers is going to take $6 or even $8 off per point to see if that will sell the contract. And then you suddenly have a slightly lower price floor that advantages the one seller who dropped the price somewhere in the high $160s. And not long after this brokers with other contracts are going to call other sellers and explain that the price point for resale is dipping slightly, and if they want to sell, they might want to drop their price a little as well. And that's how this would happen. Slightly fewer sellers, slightly less demand, slight downward dip in prices, etc. as a way to better capture potential buyers out there.

 

[Cyberc1978]

The extra $20pp in that supposed contract comes from the $500 fee. $500/25 point is $20 extra per point. So the delta with just this is $35. If you add in the lower closing for direct it's even less.

Like you, I don't think the $500 is going to be a huge issue for the 300 point resale contract. But it'll certain be an issue for some buyers (not all) for the smaller add-on style resale contracts.

I know $500 is $500 and the smaller the contract the higher cost will the fee amount for per point.

25 points contracts are for current not new members. If you only buy 25 points do you care if they have restrictions or not? I wouldn’t.

I would care if those 25 points was the difference between blue card vs white card.

if I only buy 25 points I would either use them as SAP or for a specific purpose ie adding on an extra night in my favorite season or going from studio to a 1br.

 

[disneylandtour]

I know $500 is $500 and the smaller the contract the higher cost will the fee amount for per point.

25 points contracts are for current not new members. If you only buy 25 points do you care if they have restrictions or not? I wouldn’t.

I would care if those 25 points was the difference between blue card vs white card.

if I only buy 25 points I would either use them as SAP or for a specific purpose ie adding on an extra night in my favorite season or going from studio to a 1br.

I agree. I think there will be a lot of people like you, where it's not a huge issue. But for some it will be an issue. And from the start, I've estimated that group is around 5-10% of potential resale buyers. For some, the added $500 for a small contract will be enough to push them over to direct so they can use those points, with other direct points, at any resort, rather than use them as resale SAPs. You don't have to reduce demand much to see some minor fluctuation in price, especially when prices are being individually set by many individual sellers. Again, I think the largest area where this will be felt is with all those 50-point contracts.

 

[DonMacGregor]

The extra $20pp in that supposed contract comes from the $500 fee. $500/25 point is $20 extra per point. So the delta with just this is $35. If you add in the lower closing for direct it's even less.

Like you, I don't think the $500 is going to be a huge issue for the 300 point resale contract. But it'll certain be an issue for some buyers (not all) for the smaller add-on style resale contracts.

In the hypothetical, the OP proffered a $180 PP Poly resale contract as the basis for the analysis. I added $20 per point to that number ($500/25 points) to get to $200 per point for the resale contract per-point cost that for contract submitted for ROFR after 1/1. I then took what will be the new Poly direct contract at the end of this month, at $243 as the comparator. That gets you a delta of $43 per point (243 - (180 + 20). Using $235 is pointless at this point as it's not long for this world.

As has been acknowledged, those resorts with higher resale values will obviously see some downward leverage when compared to direct price, especially when you factor in the lower closing costs of a direct contract. The 25-point resale contract was only included to set a low versus high threshold for the analysis. Other resorts, even if bought by existing members as add-on points may not be so cut-and-dried as the price differential is greater.

 

[Sandisw]

I agree. I think there will be a lot of people like you, where it's not a huge issue. But for some it will be an issue. And from the start, I've estimated that group is around 5-10% of potential resale buyers. For some, the added $500 for a small contract will be enough to push them over to direct so they can use those points, with other direct points, at any resort, rather than use them as resale SAPs. You don't have to reduce demand much to see some minor fluctuation in price, especially when prices are being individually set by many individual sellers. Again, I think the largest area where this will be felt is with all those 50-point contracts.

Except the only ones who can buy less than 100 points direct are current owners.

New buyers who want less than 100 points can only buy resale so those buyers will have no option.

And, while this is a new fee for resale, DVD still charges closing costs for direct purchases.

They used to charge a $250 for doc prep fee for contracts. And then I just read it might be $300 now? So, direct fees rise too.

 

[jcolvin5]

They used to charge a $250 for doc prep fee for contracts. And then I just read it might be $300 now? So, direct fees rise too.

Just added on some RIV points and can confirm it’s still at $250 for the document prep fee. But don’t give them any ideas. It’ll happen sooner rather than later.

 

[Sandisw]

Just added on some RIV points and can confirm it’s still at $250 for the document prep fee. But don’t give them any ideas. It’ll happen sooner rather than later.

Good to know it’s still the same! But, at one time, DVD didn’t even charge it…until they did!

 

[Brianstl]

No I don't think it will kneecap the resale market either, but it will have an effect.

It won't kneecap it, but it will apply a downward pull on price per point. Resale buyers are already the most cost conscious buyers and it will have an impact on what the majority are willing to pay per point. Also, it totally changes the cost analysis of the strippers/flippers/commercial renters who set the real floor for resale contracts despite people thinking it is ROFR. The smaller the contract the less they will pay per point.