New Trade In Program

[CarolMN]

Love it!
I had to double-check the definition for "Arbitrage"
But I think that is an under-statement for what they are doing here. It borders on being predatory, to me.

IMO, it's no different than owners renting points /reservations for more than their cost.

Nothing wrong with either. No one is forced to do business with them and a Disney vacation is a want, not a need.

 

[pianomanzano]

I'll also add if there's anything predatory about any of their initiatives, it has to be the their top DVC contracts with low upfront costs. Most of the contracts listed are stripped contracts with no dues paid upfront. For example, from their latest blog advertising this, you can get a 160 pt AKV contract for $110pp for 5% down ($880) and a 12 year loan from Monera for $282.96 a month. That's more than 40k for a contract that costs around 17k. Granted, one should be prepaying to avoid paying it for 12 years (and conversations on whether on should be even financing aside), it's a little misleading and/or predatory to advertise as a low cost option when the total paid is more than double the contract. Although as previously mentioned, no one's forcing buyers to go through this process to buy DVC.

 

[KAT4DISNEY]

This is a classic case of arbitrage. They're buying low from both sides and selling higher to both sides. If they get stuck with a contract for some reason, they have a large margin to hold it until they find a new buyer.

The model is pretty sound from a business perspective, with minimal risk to them. The people doing the swaps, however, aren't getting the full value of their assets, and are likely paying a commission on top.

Just like a car dealer athough in this case I'm not certain it adds much ease since it's only removing the negotiation step. And that just isn't that difficult with DVC whereas selling a vehicle yourself can take a bit of time although that's still worth it in most cases IMO.

 

[Sandisw]

I'll also add if there's anything predatory about any of their initiatives, it has to be the their top DVC contracts with low upfront costs. Most of the contracts listed are stripped contracts with no dues paid upfront. For example, from their latest blog advertising this, you can get a 160 pt AKV contract for $110pp for 5% down ($880) and a 12 year loan from Monera for $282.96 a month. That's more than 40k for a contract that costs around 17k. Granted, one should be prepaying to avoid paying it for 12 years (and conversations on whether on should be even financing aside), it's a little misleading and/or predatory to advertise as a low cost option when the total paid is more than double the contract. Although as previously mentioned, no one's forcing buyers to go through this process to buy DVC.

I guess I just see it as an option for those who feel that is a good option.

While it would not be for me personally I can see there might be someone who figures it just streamlines things.

As long as the parties understand the terms, then I don’t see an issue with it being offered.

 

[DonMacGregor]

As others have said, while it’s not a strong possibility at the moment (and maybe why it’s a limited time deal), I’d be afraid of one or both of the contracts being taken in ROFR.

 

[E2ME2]

Predatory might be a little bit strong, but I agree that people who take part in the program really sacrifice value for convenience. Depending on the contract you have to trade-in, you're looking at a couple months to find a buyer, go through ROFR and closing and rinse/repeat for buying the new contract. Listings on their site have always been higher compared to other brokers, but there's always opportunity to haggle and get prices down to a more affordable range (which based on the blog post describing the promo, one can still submit offers).

What doesn't make sense to me why all of the listings on their site aren't eligible for this trade-in promo. My guess is the ones marked trade-in eligible are ones that they may own from previous instant cash offers they've done and are trying to clear inventory.

I suspect the trade-eligibles are investor-owned, not individuals??

 

[E2ME2]

As others have said, while it’s not a strong possibility at the moment (and maybe why it’s a limited time deal), I’d be afraid of one or both of the contracts being taken in ROFR.

I'd be willing to risk it, if the trade values were more equitable. If they offered me the same PPP that they were listing as trade-eligible on their site, I'd give it serious consideration.

 

[JPKanks]

We were offered $64 after fees for our OKW contract. Adding insult to injury there is no negotiation for the contract we would have bought. No thanks!

You should listen to episode #129 of the DVC Show

 

[Cfabar1]

I have no interest in trading contracts, but maybe some will find this helpful… I have noticed some contracts I am interested in list this as a feature.

 

[Doberge]

I'm trying to understand the type of buyer this benefits. A seller can already use the instant buy feature and then use that cash to be a buyer. But as has been pointed out, one can't just buy any contract on the site, much less use the cash to buy on any other site.

They might attract more people if they made it similar to the rental side cruise program and give the seller a credit to use the cash however they want- any new DVC contract, DVC renting, cruise credit, etc. But the way it's described as set up? We must be missing something.

 

[AstroBlasters]

I think it’s funny how they threw shade at Disney on their podcast for offering to buy back contracts at ”significantly below resale market rates” and then pull things like this….

It’s a free market, they can do whatever they want as a business… but there is no moral high ground here….

 

[Aussie RJ]

To be fair.. Using the chat feature on their website, they stated to me that I would be selling the contract for less under the trade option than if I listed separately. They are not hiding anything.

 

[Cfabar1]

I think it is another attempt to desperately find value in a sinking market. Their firm I think is struggling and desperately wants to retain as much profit as possible in this market.

Can’t blame them. It’s a tough time. But they have to be careful as it is getting tougher and tougher to justify using them. When I offer prices around the fidelity range for February average, and they say there’s no way it makes me more likely to not use them in the future.

 

[kilik64]

I think it is another attempt to desperately find value in a sinking market. Their firm I think is struggling and desperately wants to retain as much profit as possible in this market.

Can’t blame them. It’s a tough time. But they have to be careful as it is getting tougher and tougher to justify using them. When I offer prices around the fidelity range for February average, and they say there’s no way it makes me more likely to not use them in the future.

They own a not insignificant amount of the contracts themselves.

 

[Cfabar1]

They own a not insignificant amount of the contracts themselves.

Yes, exactly. Anyone who says “they’re just posting things and there’s no overhead, they just want their commission” I don’t think truly gets what an empire they have built…. To me, they have built a series of companies that are all closely related. Some buy, some broker, some title, some finance, etc. All these things work together and the last thing they want is for the whole system to come crashing down. They know the more sales that go through at lower numbers, even more lower prices are on the way - and since they own some of these contracts, the last thing they want is to be holding the bag.

Yes, I know they can rent the points… but with Disney launching so many sales, and bringing back free parking, rentals become even less attractive.

 

[kanerf]

Keep in mind that on the seller side, ROFR is just fine. You get paid and often right away.

 

[sethschroeder]

Just like a car dealer

And you know what they say about used car dealers.....

To me, they have built a series of companies that are all closely related.

Almost like having your Bank and your Used Car Dealership being the same company you are dealing with. Such a great idea as a buyer or seller lol.

 

[Rick195275]

I chatted with them last night about this offer, was given an offer of $130 pp on BLT. After looking at the contracts being offered in the program and having the added costs explained to me I politely declined. There is zero value in this program for anyone other than them but as someone else stated they are pretty transparent about it.

 

[E2ME2]

They own a not insignificant amount of the contracts themselves.

Maybe they could list their contracts with Fidelity www.fidelityrealestate.com at a more competitive price !?

 

[AnnaKristoff2013]

I think it’s funny how they threw shade at Disney on their podcast for offering to buy back contracts at ”significantly below resale market rates” and then pull things like this….

It’s a free market, they can do whatever they want as a business… but there is no moral high ground here….

The way they keep quickly jumping from "gimmick" to "gimmick" here seems a bit desperate to me. First there were the "no haggle hot deals!" that were in fact negotiable, and weren't that actually that "hot" compared to other brokers. Now this. I suspect that brokers are feeling the squeeze of a tight market right now, there just aren't that many people looking to buy DVC right now.