Question about whether to rent or buy a resale

[CowboyCO]

First Off-- My family is Hook, line and sinker in love with Disney World!

We've stayed at POR, Allstars, but never deluxe or at DVC.

We think it is likely that we will go to DisneyWorld every year to 2 years until our kids are out of school (another 12 years). Probably every 12-18 months if we knew the lodging is taken care of.

We're thinking of buying a 100 point contract, maybe for SSR because it would likely be worth a little more on resale in 15 years due to it's later expiration. That would likely be around $8000-9000. Our other thought is to look for a 50 point contract and rent somebody else's points when needed. We would likely only be using a studio.

My wife thinks we may be smarter just to rent somebody's points when we are planning to go to Disney and forget about buying. After all, as our two DSes get older, maybe Disney won't be as exciting for them (although I can't imagine that).

Has anybody else struggled with this decision? We know we'll be going to Disney, but don't know if it's worth it to get DVC...

I appreciate your input! Also -- Does anyone know where to go look for people who are selling individually and not through a broker? I see that those type of listings aren't allowed on the Disboards.

 

[PottersMom]

I am in the same boat- sort of. I don't need anywhere near 150pts, nor could we afford that. But it would be about 60pts to stay in a studio for 5 nights, so we were thinking buy only 30 pts.and bank and borrow as needed. This would be enough to use DVC every other year. My DH is not from this country- and he works for a major hotel chain. So this means we will be traveling to see his family every few years, and if we dont- for as long as he works for the hotel we get a substantial discount there if we decide to go to Disney and we don't have points to use.
But then, if this is the situation, why buy at all? My answer to that is, for $3500, (or basically 2weeks rack rate TODAY) our hotel would be paid for 25 times over. (every other year for 50 yrs.) It just seems like a good value. If we need more points- (say if more family joins us) we could rent the extra points from another owner if we want. This way I don't have to give up staying on property just b/c he has a discount somwhere else.
Is this a stupid plan though?

 

[LisaS]

Does anyone know where to go look for people who are selling individually and not through a broker? I see that those type of listings aren't allowed on the Disboards.

I expect others will be able to help you better than I can with your "rent vs buy" decision. But this part of your post caught my attention. As a buyer, you have nothing to gain by buying from someone selling privately rather than through a broker. With other real estate transactions, the main advantage to buying this way is that the buyer can negotiate a lower price since the seller isn't paying a commission. But when someone sells a DVC contract, the purchase agreement between the buyer and seller must be reviewed by Disney who has the "Right of First Refusal" (ROFR) on the deal. If Disney feels the sales price is too low they will step in and buy the contract. The seller gets the same deal agreed to with the original buyer, Disney buys the contract and the original buyer (i.e., you) is out of the deal and has to start looking for another contract to purchase.

Also, you will notice from both the listings on The Timeshare Store's website and also the transactions listed on the DISboards' ROFR history thread that small contracts sell for a premium. For example, while a 150-point contract at OKW might sell for $78/pt, a 50-point contract will be priced in the mid to high 80s. The reason for this is that Disney has been exercising its ROFR pretty aggressively when a nonmember is trying to buy into DVC with a small contract. So the work around that buyers have used is to offer a much higher price/point than Disney's usual ROFR level for that resort so that Disney will pass on the contract.

So unless you have some other compelling reason for buying privately (something other than price) then I would suggest you consider buying through a broker. It costs you the same either way but gives you more protection and will likely lead to a faster and smoother transaction.

 

[Granny]

My wife thinks we may be smarter just to rent somebody's points when we are planning to go to Disney and forget about buying. After all, as our two DSes get older, maybe Disney won't be as exciting for them (although I can't imagine that).

This is just my opinion, but if you don't see you and your wife wanting to go to WDW at least every other year after the kids are grown then I wouldn't recommend DVC for you.


You said you are only looking to go to WDW for another 12 years...possibly only 6 trips?

Your wife is right...just rent the points, don't get encumbered with ownership and in a dozen years you won't have to worry about selling your DVC contract.

Those are my two cents.

 

[CowboyCO]

After the kids are out and in college and beyond, I could still see going with just us two. But we would probably be mixing in Europe and the Caribbean like we did before we had kids.

Probably we would visit every year to 18 months while we have kids and every two years after. That's why I was thinking a 50-60 point contract might be good idea. If we need more points we could get them and later we could bank and double up on points every other year.

Thanks for the many responses and i appreciate the advice on Brokers. My thought was to save money like FSBO, but it sounds like that may not be a possibility due to the ROFR.

 

[LisaS]

VAScubaGuy has just updated the ROFR thread (the latest table of info is always on the last page or so): http://www.disboards.com/showthread.php?t=720134&page=203

It shows the contracts that passed ROFR and those that did not pass ROFR. Note the number of points in the contract because the price/point you have to pay to pass ROFR will be much higher for small contracts than for larger (150+ points) contracts at the same resort.

If you purchase through The Timeshare Store (this board's sponsor) they will also be able to guide you on the price/point you will have to pay for the contract to pass ROFR.

Just be aware that despite all our data here on the boards, we haven't really cracked the ROFR algorithm. There are times a contract that is priced right at the usual passing price is taken by Disney and a week later a contract priced $1/pt below that level gets through.

 

[Minnie88]

But when someone sells a DVC contract, the purchase agreement between the buyer and seller must be reviewed by Disney who has the "Right of First Refusal" (ROFR) on the deal. If Disney feels the sales price is too low they will step in and buy the contract. The seller gets the same deal agreed to with the original buyer, Disney buys the contract and the original buyer (i.e., you) is out of the deal and has to start looking for another contract to purchase.

So unless you have some other compelling reason for buying privately (something other than price) then I would suggest you consider buying through a broker. It costs you the same either way but gives you more protection and will likely lead to a faster and smoother transaction.

What would happen if someone wants to sell their contract to a very close friend or relative at a "low price"? Would Disney swoop in and steal the contract? What would they consider too low?

 

[poohbear7]

Disney had ROFR on any contract for sale. If you price it to low they will probably buy it back. If you look at the ROFR thread it will give you an idea what will pass and what won't.

 

[LisaS]

What would happen if someone wants to sell their contract to a very close friend or relative at a "low price"? Would Disney swoop in and steal the contract? What would they consider too low?

I believe there are some circumstances where Disney will waive ROFR, such as a parent passing their contract on to a son or daughter. I doubt that selling to a friend would qualify or even to relatives that are not immediate family.

As far as what price is too low, that is a moving target. As Disney increases their prices, they also increase the ROFR levels for resales. To get an idea of the current ROFR levels for each resort (because they differ from resort to resort), look at the most recent data on the DISboards' ROFR thread.