Purchasing resale with a delayed closing....what am I missing?

[Avery&Todd]

So DH and I are still going back and forth about adding points....well, I'm IN but he's not (quite yet) which is why we're going back and forth...

However, I found a listing today for the resort/UY that we'd be looking for, but it states that they can't close until March 2022 - which is 9 months from now...

What are some of the pros/cons with having a closing that not happening until spring next year that I'm missing?

What would I have to do NOW vs. what could be pushed out? Like parts of the closing would be done now and what would be done later?

The rate locked in? A deposit given vs. sending payment in full?

Thanks!

 

[kilik64]

What are some of the pros/cons with having a closing that not happening until spring next year that I'm missing?

Pros: can stash the money in a 6 month cd to get some interest on it I guess? Cons: delayed gratification, possibility of buyer getting cold feet and not selling?

What would I have to do NOW vs. what could be pushed out? Like parts of the closing would be done now and what would be done later?

You can do everything but the closing, so you can get everything lined up to close for march, ROFR, estoppel, closing docs all signed. Once they give a closing date wait until about a week out to wire the money to close.

I personally wouldn't do that long of a delayed closing, couple months maybe, but not 9. Unless this is like the PERFECT contract for you, i'd wait and keep looking. You'll have to put up the earnest money for the title company to hold it so if you do it then find something better, you'd lose that money if you cancelled the deal.

 

[CarolMN]

IMO, the largest risk is a change in market value

If it goes up enough, the seller may back out and you will have waited for nothing. It would almost certainly cost more than it's worth to enforce the contract.

If it goes down enough, you will want to back out. No one wants to pay more than they have to pay.

I'd also pass, unless, as @kilik64 said, the contract is perfect for you and worth the wait and the risk.

 

[Avery&Todd]

Thank you both! I'm sure we'll pass, especially since DH isn't ready, but I was a little shocked to see not 1 but 2 contracts for CCV in our Sept UY pop up at the same time and they both have the same close date restriction so my thought it they're from the same seller....

 

[kilik64]

Thank you both! I'm sure we'll pass, especially since DH isn't ready, but I was a little shocked to see not 1 but 2 contracts for CCV in our Sept UY pop up at the same time and they both have the same close date restriction so my thought it they're from the same seller....

Almost definitely same seller if thats the case, they bought points they wanted over multiple contracts looks like.

 

[macman123]

I have a delayed closing contract.

But it was for Poly for $145pp, they are now far more than that.

You can also save up to pay for the contract.

The only downside is you cant use it now - but I think its worth the savings on delayed closing. Your contract should increase in value.

 

[RoseGold]

I did a delayed closing, but I wouldn't wait nine months. This isn't your contract. There are more!

 

[Rush]

I feel like these types of exaggerated delayed sales are owners trying to have their cake and eat it too. They want to use it to the last minute but also try to sell it when the market appears white hot. I absolutely would see that seller as the type that would back out as closing would draw near just to relist it and get even more money if the market continues to climb. I wouldn’t even think of buying a deal like that, but for argument’s sake, if I saw the perfect contract I’d only consider buying it if the seller were willing to escrow their agent’s commission and title company fees, and I’m not sure that’s even a thing. They’d need some skin in the game for me to play.

 

[Sandisw]

I feel like these types of exaggerated delayed sales are owners trying to have their cake and eat it too. They want to use it to the last minute but also try to sell it when the market appears white hot. I absolutely would see that seller as the type that would back out as closing would draw near just to relist it and get even more money if the market continues to climb. I wouldn’t even think of buying a deal like that, but for argument’s sake, if I saw the perfect contract I’d only consider buying it if the seller were willing to escrow their agent’s commission and title company fees, and I’m not sure that’s even a thing. They’d need some skin in the game for me to play.

I have bought and sold 4 times with delayed closing. Longest was 5 months as a seller.

We did it because there are buyers out there who benefit for extra time to get the cash together and it can be appealing.

It’s why I bought SSR in July 2017 with a Dec closing. I had some funds come due then and the delayed closing helped.

Now this one is pretty far out but for some buyer it might be a good thing.

I just felt as a seller it did no harm to put it up for sale. If it didn’t sell before the trip, I lost nothing.

 

[Avery&Todd]

THANK YOU ALL for your comments and wisdom!

We talked and we're going to pass on these 2 contracts! I'm sure if we decide to go with resale we'll find "our" contract out there but honestly, we only "need" like 60 more points to we'll probably go direct with those - especially since I'll be able to get a loaded contract from WDW and the process will be quicker.

As always you guys are very helpful for this newbie!

 

[Rush]

I have bought and sold 4 times with delayed closing. Longest was 5 months as a seller.

We did it because there are buyers out there who benefit for extra time to get the cash together and it can be appealing.

It’s why I bought SSR in July 2017 with a Dec closing. I had some funds come due then and the delayed closing helped.

Now this one is pretty far out but for some buyer it might be a good thing.

I just felt as a seller it did no harm to put it up for sale. If it didn’t sell before the trip, I lost nothing.

I completely understand the benefits for both sides. I just think without real skin in the game for the seller, some, not all, and certainly not you, would be tempted to retract the sale to get higher proceeds if the price had risen significantly in the 9 months waiting to close, for virtually no penalty.

I’ve only purchased, so I’ve always felt like from a buyers perspective, these agreements are held together on a little bit of faith on both sides and luck. Yes, they could owe commission, but the agents would have to litigate it to get it. I don’t see them doing that because of the expense involved.

That’s why I suggested escrowing their commission, just so they know they’ll lose it if they retract the sale. Seems like a reasonable solution to help confirm both sides are committed.

 

[The Jackal]

Here is a con, the seller can back out right before closing and there is nothing you can do. It does happen. Some people get cold feet. Sometimes prices go up and people want the extra money. Then that’s 9 months you missed out on contracts. You could have bought one and used it by then. I personally do not think people should sell a contract if the closing date is greater than the average closing dates. Either sell it after your trip or cancel your trip, sell the contract and pay cash for your trip. Hey that’s just me. I will never buy one with delayed closing, unless it is extremely discounted.

 

[Avery&Todd]

Here is a con, the seller can back out right before closing and there is nothing you can do. It does happen. Some people get cold feet. Sometimes prices go up and people want the extra money. Then that’s 9 months you missed out on contracts. You could have bought one and used it by then. I personally do not think people should sell a contract if the closing date is greater than the average closing dates. Either sell it after your trip or cancel your trip, sell the contract and pay cash for your trip. Hey that’s just me. I will never buy one with delayed closing, unless it is extremely discounted.

I did wonder that as well - I mean, why list it NOW when they don't want to close until March 2022? Why not wait until closer to the end of this year....

especially since it appears they are using points for trips - what if something comes up and they need to push their own trip out?

too many variables....

 

[RichVIII]

Beyond the price fluctuation, the other cold feet scenario that concerns me is when they take this last trip using their points they remember why they purchased DVC or the fall back in love and can't now imagine selling. I agree with @Rush on this, they want their cake and eat it too.

The other scenario is the fishing expedition, they are willing to give it up if they get a really high price (which they are now).

 

[Avery&Todd]

Beyond the price fluctuation, the other cold feet scenario that concerns me is when they take this last trip using their points they remember why they purchased DVC or the fall back in love and can't now imagine selling. I agree with @Rush on this, they want their cake and eat it too.

The other scenario is the fishing expedition, they are willing to give it up if they get a really high price (which they are now).

YES! I totally agree! I mean, if you've got these points, and you're actively using them and listing a contract for sale that you don't want to close on for 8 months, I feel a lot of things can pop up to change your mind...

I know it would for me!

 

[Avery&Todd]

WOW!! I just checked the 2 listings that popped up yesterday and one of them is already "sale pending"!

Yikes!

Someone was more daring than me!

 

[RoseGold]

Wow, that's not even a cheap listing??!!! What on earth! Who would wait 9 months for that???

 

[Avery&Todd]

Wow, that's not even a cheap listing??!!! What on earth! Who would wait 9 months for that???

HA! NOT ME!!

the ONLY thing I can think of is Sept UY is not easy to find - and the ones I've seen are larger contracts so maybe someone was looking for something smaller?

 

[Rush]

I said it before, I’ll say it again, we’ve officially entered CrazyTown!

There was a time where we all felt the resale restrictions by Disney had driven people to purchase resale. I feel the tables have turned a bit and now resale prices are driving people to direct in a way we haven’t seen before. That may be beneficial for the resale brokers now, but in the long wrong it might prove detrimental to their business strategy of undercutting direct by a 30-40% margin. Of course Disney isn’t blind to that and I suspect that is one of the main forces driving up the rise in direct prices more so than the demand for direct sales at the sold out resorts. It’s a vicious cycle and buyers of both types are paying the price, literally.

 

[RoseGold]

It’s a vicious cycle and buyers of both types are paying the price, literally.

It's a natural result of no new inventory. Like when all the car factories closed, the price for used cars went up. People were still buying cars.

Disney has no new construction planned, a small VGF building flip of maybe 2M points, and the same millions of RIV/AUL inventory hanging around. As long as that is true, the resale will stay hot, and that will be years at this rate. I do believe that without the restrictions, RIV would be sold out. But that wasn't Disney's long term plan.