Question re Selling DVC Points

[hankt10k]

After a few years of thinking about it I am finally seirously considering a DVC purchase. Not everyone in the family is convinced however. I have heard many horror stories about folks trying to sell timeshares but I'm assuming selling DVC points is a bit different. So here are my questions.
1. If we buy in and, for whatever reason, decide we want to sell the points in a few years, what can I expect.
2. Has the resale market been brisk?
3. Have resale costs per point increased each year? Any idea how much?
4. Does Disney's right of first refusal protect me from having to sell at a very low price, i.e., do they actually buy the points back or do they simply not allow the sale if they deem the price too low?

Would appreciate any guidance.

Thank You,
Hank T.

 

[doubletrouble_vb]

Answer to question number 4 is that they will buy the points...at the same price you buyer offered you...if they want to buy them for whatever reason they choose to.

Answer to question number 1 is that nobody knows. DVC isn't an investment. Any timeshare can tank virtually 100%.

Buying with an eye towards resale doesn't seem like a good idea if you have an intermediate horizon. I can understand it if you saw a good deal, had a specific vacation plan and would sell in a couple of years. I sort of can understand it if you are looking 10 years out. In between...you'll probably wind up losing money.

I don't have the answer for you on questions 2 & 3 but it does seem like the resale market rose nicely and then fell back a little bit. On top of that keep in mind that the listed prices were probably not the sales price plus a cut had to have gone to the realtor. If you bought 10 years ago you are selling at a profit.

 

[CarolMN]

It is true that DVC has held its value much better than traditional timeshares. Those who bought in during the first few years (and maybe even later) could get more than their initial investment back if they chose to sell.

That said, it's not a good idea to buy if you think you will be selling in a few years. Keep in mind that you will most likley have to pay a broker a commission when you sell. Most brokers have minimums of $1000 - $1500 (at least that's what I've read elsewhere on this forum). Buyers have to pay closing costs which average $450 per contract. Both those items will impact the price you can get for your points. It will likely take quite a few years before you would be able to "recover" your "initial investment", if at all.

IMHO, DVC is not an investment in the financial sense. It's really a prepaid vacation program that, in the right circumstances, can save you money on Disney vacations.

 

[Mickbee]

Here is a thought if you do buy:

At the time of purchase, ask to break it into two contracts. This would only work if youwere buying more than the minimum. Reason being; if down the road, you didn't have a need for 300 points, you could sell one of the smaller contracts while maintaining the other. The other reason is if you want to deed or will your membership to multiple children. They could have their own.

Just a thought... I don't know the minimum contract that would allow this.

IMHO, I don't think you will make money, but I don't think you would loose a ton IF history dictates. Again, just MHO.

If you buy, you may not want to sell...

 

[Garretts92]

What's involved in breaking a contract up? Is it hard to do?

 

[Mickbee]

I don't think it can be done after closing.

I would suggest speaking with your guide and request two contracts. They should be able to point you in the right wirection and provide the criteria for doing it.

Perhaps one can be the primary and the other could be treated as an add on. Just a thought...

 

[Hilary]

I have read of several posters here who have bought at BCV and already added on, so you could 'split' your contract that way- simply by purchasing a smaller number of points now than you were considering, then adding on in a couple of months.

 

[Terry S]

My original BCV purchase was 640 points which I asked to be treated as 4 seperate contracts of 150, 150, 170 and 170. DVC treated it like an original purchase and 3 add-ons even though it was all done on the same day. I did this for a few reasons, first in case I need to sell a portion of it, 2nd I have 2 kids and this way each kids could have 2 contracts. Although I really screwed that up 3 weeks later when I did a 160 point add-on before the price went up and the incentive went away. Now I have 5 contracts to split between 2 kids. Oh well, I guess I will just have to do an add-on sometime in the future to even things out.

 

[TheRustyScupper]

1) As the years progress, the ability to sell the points will be harder and at a less price-per-point, since they have a definitive expiration date and with no residual value (eg. has zero value on January 31, 2042, when your ownership ends).

2) The current resale market is good and is brisk, but will diminish as the years go on, since the years people can use the property after the sale also decreases. (eg Why pay big bucks for something you can use for only a few years?)

3) The price of resale points have increased. The price stays consistently a few dollars under the Disney sale price. Unknown how long this will remain.

4) Disney's only reason for Right-of-First-Refusal is to keep the price of a first-time-point-sale artificially high, so the Disney prices can remain high. If resales were allowed to move via the free-market, they would be bought instead of from Disney. Disney does not have to buy back the points, they only have the ability to buy them back.

 

[DVC-Don]

Lets put it this way: We are currently on a waiting list for a OKW resale.

 

[Cruelladeville]

If you are buying a resale, you can't split the points up. Whatever the original contract was for, that's the way the contract stays, no matter if it's sold many times or not. If you buy new, then you can set things up any way you want the points to be. In answer to the question about the price of the points, I bought in at $54 per point, so if I sold them I could break even or make some money. However, the reason for buying DVC in the first place isn't to make money, it's to pre-pay for your vacations. As time progresses toward 2042, the points will be worth less and less money. Your car will be worth less as we move toward 2042, too, that's a given when you buy your car. DVC works the same way, but you will have had many vacations in the mean time. And DVC is a better investment if you have to sell, since you won't lose a huge amount immediately. If you purchased Marriott last summer at $18,000, and had to sell due to a divorce, for example, you wouldn't be able to sell for more than $10,000 this summer. DVC holds it's value far better than that.

 

[Mai Ku Tiki]

Just a thought...about the 2042 Doomsday scenario....

Maybe far-fetched... but as Disney resort prices continue to increase (my folks paid $35 at Poly in 1972-imagine what they will be in 2022!), DVC points MAY become more valuable.

Even though there will be fewer years left for our DVC contracts, it may still be attractive to new buyers in 2022 when compared to Resort prices! Wishful thinking.... ?

 

[Mickbee]

Originally posted by Mai Ku Tiki
Just a thought...about the 2042 Doomsday scenario....

Maybe far-fetched... but as Disney resort prices continue to increase (my folks paid $35 at Poly in 1972-imagine what they will be in 2022!), DVC points MAY become more valuable.

Even though there will be fewer years left for our DVC contracts, it may still be attractive to new buyers in 2022 when compared to Resort prices! Wishful thinking.... ?

Funny you worte this, because I was thinking the same thing...

 

[Dean]

At some point the DVC price will start to decline. My guess is somewhere around 25-28 years or so. Obviously a decline is in relationship to what the price could be without the ending time approaching so it may still be at a fairly high level for some time to come. The other variables are whether DVC is still selling, what the price is through DVC and what advantages there might be to buying through DVC (new ending date on new resorts?). Once DVC stops sales for good, the ROFR will also end (or have ended previously). This is actually one of the main reasons resale prices are as high as they are.

While I think it's true that DVC holds it's value as well or better than most other timeshares, there's still risk involved. BTW, I own 3 Marriott weeks that I could sell tomorrow for a far larger profit than I could sell my DVC points for.

 

[Cruelladeville]

Dean, you obviously did not buy in at Grande Vista or Cypress Harbour

 

[ralphd]

There will always be a market for a DVC membership, but the closer you get to 2041, the value will definitely decrease. Future inflation will also have an effect on the price.
The law of supply and demand will be the governing factor.

ralphd

 

[Dean]

Originally posted by Cruelladeville
Dean, you obviously did not buy in at Grande Vista or Cypress Harbour

No, but they are nice resorts. I do not however see them as a good value for trading purposes. I have seen GV summer for as low as $5000. My weeks at all at HH, all bought resale. I have standing offers for 2 of my weeks for 50% more than I gave for them and could sell the other week through Marriott for what I gave after their fees.

I'm always amused when we talk about resales saving $2000 when I gave about 60% of the price Marriott sells the Grande Ocean weeks for. Of course I gave up the Marriott reward points option going resale, I feel the $25000 I saved on the two weeks was well worth the sacrifice of a program that I did not see as having much value anyway. DVC has artificially inflated the prices because of the ROFR and hype and that will change when they stop selling eventually. Timeshares are usually between 40-60% marketing and the like and DVC is no exception.

 

[Shontell_Crawford]

Originally posted by hankt10k

1. If we buy in and, for whatever reason, decide we want to sell the points in a few years, what can I expect.
2. Has the resale market been brisk?
3. Have resale costs per point increased each year? Any idea how much?
4. Does Disney's right of first refusal protect me from having to sell at a very low price, i.e., do they actually buy the points back or do they simply not allow the sale if they deem the price too low?

Hank,

I have been reselling DVC since 1997, but I still learn something new everyday, so I don't call myself an expert. That being said, here are my opinions on your questions:

1.If you buy in, you should expect a quality vacation club that is top notch within the industry. It will always be "sellable". I cannot say the same for some other properties out there.
2. The resale market is brisk if, and only if, you are reasonable with your expectations of sale price (and you buy Orlando - Vero has not been "brisk"). You must beat Disney's current price or buyers will go directly to Disney. That may change if they sell out and stop building.
3.Resale prices have gone from $45 per point to as high as $70 per point over the years.
4.Disney's right of refusal doesn't "protect you", but it makes me feel better as an owner. I bought resale and if I sold today would have to sell higher than I originally paid if Disney's buyback is $62 (which some say is arguable). Either way, as long as Disney continues to exercise this right, and raise their prices all sellers and owners will do well when it comes to selling. Should Disney extend the length of their leases on a newer property, I would think resale prices will drop considerably.

My .02 - don't ever buy a timeshare with the intention of selling it. Buy with the intention of using it - the best way to get your money back. If you must sell, you probably will take a loss unless you keep it for quite awhile (or unless you buy resale to begin with).

Hope I have helped! Good luck with your decision.

All the best,
Shontell