Real cost of resale points

[FLYNZ4]

What is the "real" cost of resale points after commission fees, MFs for banked points, and closing costs?

I was told by one of the resellers (one of the resellers who seems to have a very good reputation here on the board) to expect to pay the price of the points... but the buyer typically pays the MFs associated with any current year points, or banked points... plus the closing costs. The seller typically pays the commission.

For illustrative purposes only... Lets say I find 150 points at BWV with 0 banked points, and all of the 2004 points, listed for $76/point. I might offer $74/point... and settle on $75/point.

Costs might be as follows:

11,250 (150 X 75)
637 (150 X 4.25 MFs)
500 (closing costs)

Total is 12,387 or $82.58/point.

While cheaper than buying through DVC club at $84/point... it does not seem to be a huge price differential.

Are my price assumptions all wet? I see people "quote" that buying resale will result in significant price savings over DVC... but the numbers do not seem to support that.

BTW... the other common comparison seems to be quoted resale prices (mid 70s) as compared to DVC price of $95/point. However... DVC "lists" the points at $95/point... but then immediately discount it to $90/point to anyone who has a pulse. I would suggest that the real cost of buying new from Disney is $90/point.... not $95.

Given the above example (once again for illustrative purposes only)... wouldn't the most fair comparison be?:

Resale: 82.50/point (38 year contract)
DVC Resale: $84/point (38 year contract)
DVC new sale: $90/point (50 year contract)

/Jim

 

[Beca]

First, I am confused on a couple of your "figures", when you calculate $82.58 per point on a resale, that includes one year's worth of main. fees, but when you show DVC at $84, and $90 respectively, those figures do not include main. fees. So, that does not seem to be an accurate comparison.

When we purchased our resale, I was told by The Timeshare Store that the buyer NEVER pays maintenance fees on banked points. Our UY starts in Sept, so our main fees were pro-rated to cover Sept. thru Dec. Here's our info(not including main fees...they really are the same whether you buy resale or DVC, so it is a moot point).

We purchased a BWV 210 point contract in April. It is a Sept. UY, and it had 119 points from UY2003 banked into UY2004, so this Sept, we will have 329 points available to us.

They were listing it at $74 per point... we offered $72...they were "thrilled" with our offer. We paid closing costs and 2004 UY main fees (Sept thru Dec), they paid MF on ALL of the 2003 points (including the banked ones).

Our closing costs were $475, which adds $2.26 to each point. So, now we're at $74.26 per point. We thought about renting our 119 points as our own "Magical Beginnings" which could've lowered ours costs $1190, for a "purchase price" of $68.55 per point, but we could not resist the chance to go to WDW for "free" (since we did not pay for the points, nor pay MF), so we decided to keep the points!

So, now we are back up to a total cost of $74.26 per point.

When you divide that by 38 years, it comes to $1.95 per point, per year.

When you take SSR at $90 per point, it comes down to $1.80 per point, per year. So, in that sense, SSR is a better "value". But, since my total resale cost was $15,595, and SSR would've cost me $18,900...buying resale saved me $3305, or 20% of MY purchase price. That is a big savings right off the top!!

Now, the other reason we wanted to "own" at BWV was because we tend to plan our trips VERY far in advance (we are now planning Dec 2005). Doing this, we knew we could utilize the "standard view" option at BWV, and save 25% on the "cost" of the rooms during our stay, but still be able to have the advantageous location. We like to go in Dec, and we knew that if we didn't own at BWV, we would not be able to get those views. This enabled us to buy a smaller contract (otherwise, we would have bought a 250pt contract), thus saving us even MORE money.

So, there is truth to both sides of the story. Certainly SSR is a better "bargain", but I got into DVC spending less money than if I had bought from Disney. And, considering NOW is when I want to go...I just didn't see worrying too much about the extra 12 years. While I would LOVE to have BWV for 12 more years, I will be 73 years old in 2042 (God willing!!), and that would make me 85 when SSR expires. While I hope I am up and running around, and if not, I could certainly give the remaining years to my children, right NOW is what I purchased for!! I want them to be able to go to WDW when they are growing up, and while I am young enough to enjoy it!!!

Now, if you want to take it one step further. Let's look at this. If I were to take that $3305 that I saved in my initial purchase and invest it in the S&P 500 (assuming the 11% returns they have had over the last 30 years), at the end of 38 years, I would have $174,359.10 just from saving my $3305. Now, if you calculate that based upon my purchase as opposed to the 250 point purchase I would have made at SSR (based upon the point figures of preferred view rooms at BWV, since that is where we primarily want to stay), which is a $6905 difference, and look where investing that money gets me in 38 years...I would be $364,281.30 better off!! Those are some staggering figures!!! And, you may laugh at that, but that is EXACTLY what we are doing!!! The difference between what we would've spent at SSR, and the difference of what we actually spent will be invested in July, when we pay off our timeshare.

So, I once again come back to...buy where you want to stay!! If the 12 extra years at SSR is important to you, then SSR becomes the bargain. If you have limited resources and can get "more bang for your buck" buying resale, then that becomes the bigger bargain. I think people can "justify" their decision as the "best" one for many (albeit emotionally charged) reasons.

There are many ways do describe "cheaper"...go with the definition that works for you based on your desires!! I'm sure you will think you got the best deal...and that is exactly as it should be!!! I know I think I was a "pretty savvy shopper", and I am thrilled at my purchase...I hope everyone, no matter where they bought, gets to feel the same!!!



Beca

 

[Granny]

As Beca pointed out, you inaccurately added the maintenance fees to the resale "cost per point", but didn't add them to the new contract sale for the first year's points. So your difference will be more like $12 a point...which can add up on a significant sized contract.

But as Beca also points out, the initial outlay is not really where the decision point should be made. Find the place you want to stay the most, and purchase accordingly.

We wanted to stay the most at VWL, so we purchased that through Disney since that was the only way to get the points at the time.

We also wanted to stay at BWV and purchased resale. That was also our only option at the time.


If you really want to compare financials between resorts, look at the maintenance fees. Over the course of 38 or 50 years, that will be by far the biggest outlay of money...much more than the original cost of the points.

 

[Beca]

Granny,




Beca

 

[calypso*a*go-go]

Beca and Granny: Good comparisons

Bottomline -- find the deal that's best for you and go for it. We made an offer, it made it through ROFR, we wrote the check, we own it. 'Nuff said.

 

[FLYNZ4]

Thanks for the responses to far.

Clearly I am confused with the MF's and how they are pro-rated. Are MF's always calculated on a calendar year basis? How does use year figure into the calculation of MF?

It would be very helpful to my understanding if there were a few examples given on who (buyer/seller) would pay which % of the MFs depending upon:

a) which month the contract was purchased
b) how far into the UY the contract was purchased (assuming this matters at all)
c) how many points are left in the current use year.

Thank you in advance.

/Jim

 

[FLYNZ4]

Becca/Granny/Calypso,

I understand completely about the location argument. When we first decided to buy DVC, we assumed that we were only interested in either BCV or BWV. We really love the Epcot resort area, and we have made at least 10 trips to the various resorts in the area... mostly at the Beach Club hotel. Our trips have typically been between 2-3 weeks in duration... although there were a couple less than a week. I would estimate that we spent ~140 nights cumulative in those hotels since 1992. That says a lot about our preference!

The thing that turned us off about BCV was the view. For some reason, view is always a big deal to us... and 100% of our stays to the Epcot hotels have been the "Lagoon View". At the time, they offered 4 view categories (in decreasing price): lagoon view, pool view, garden view, std (parking lot view). What we don't like about BCV is that there is no lagoon view. We understand that they were space constrained... and BCV was an afterthought to an already built-out resort... but we would feel disappointed to return to the Beach Club, and not get the view that we like so much.

That lead us to prioritize BWV as the area for us to buy. We know that we would be very happy at BWV as well, especially since a BW view can be requested. To be honest... we keep debating if this should be our first choice. We are in total agreement that this is a fantastic location!

It was not until we really started getting serious about buying, and already had requests for BWV resale contracts placed, that we even considered SSR. From a location standpoint... we think that immediate access to DD is a big deal. As our kids got older... they really appreciate going to DD much more than when they were younger. This past summer they went to Disney Quest many times... it seemed more popular to them than the theme parks. Deb and I also enjoy going to PI in the evening to listen to music, visit the clubs, or go to a comedy show... plus we like some of the restaurants there. I think being within an easy walking distance will be quite valuable to us... maybe on par with location of BCV... although I would think that from an absolute basis... BCV is probably the #1 choice by a very slight margin. As we continue to learn and play more golf... we may decide that SSR is a better location... although that course is not the finest that WDW has to offer. Bottom line... it is a hard choice for us location wise... and I think we would be quite happy with either BWV or SSR.

Which finally brings us to the financial argument. It seems to me that SSR is a better deal financially. We will be paying cash so financing is not an issue. I think that the equity of the various resorts will rise initially, then begin to decline... especially as DVC opens new resorts with longer terms. I have another post which speculates that the best strategy might be to buy SSR now, then sell, and re-buy into a new resort sometime in the future (10-20 years) if/when they offer a new resort with a longer contract. If I felt more confident that they would offer contract extensions at some point... I might be more inclined to buy BWV now. I still think they will offer extensions... but the wisdom of this board seems to be against that thought... and you are all clearly more experienced with DVC than I am. Finally, the lower MFs of SSR are a clear advantage over BWV... and I believe that MF's dominate the equation in the amount of money spent for DVC over the long term.

This is a long post... so bottom line for us is that SSR and BWV are both excellent locations for us... with a slight location preference for BWV (but only very slight)... and with an equally small preference toward SSR from a financial standpoint.

/Jim

 

[RobDoc]

You've gotten some great advice thus far. One point you might want to consider- ALL aspects of the resale purchase are negotiable.

The buyer does NOT always have to pay current maintenance fees and/or closing costs(make your offer and see what the seller will do). I have purchased 3 resales and did not pay closing costs on one of them and only partial maintenance fees on another. Be sure to consider all costs in the resale and base your offer on those calculations.

Purchases direct thru DVC will have no closing costs (ever) and MF will be prorated based on your purchase date. If you buy on July 1- you will pay 6 months of MF. If you buy on October 1- you will pay 3 months of MF. MF are all based on the calendar year- without regard to your Use Year.

Just do the math and find what will work out best in your case. Over the long run, you will pay far more in MF than the original cost- so I would not let a few hundred dollars get in the way of purchasing the number of points you want at the resort you want.

Run the numbers and enjoy the result!

 

[JimC]

What I looked at when purchasing was the total number of points I was buying to the end of the contract and the cost per point on that basis. It makes like comparisons of various contracts possible. Maintenance fees for current year and closing costs are fully negotiable and I requested that the seller pay both.

 

[WDWguruDH]

As has been stated, you can negotiate all aspects of a resale. You might be able to get the seller to pay closing costs and MFs. We have purchased 2 resells and 2 through DVC. On one resell we did not pay any of the MFs and on another we did (had banked points, so we paid for the current year MF).
If your example is the one you are negotiating, then I would definitely consider the cost of MF in the contract. As Doc stated, you will get those dues prorated from DVC, thus they would be less than what you pay in MF for in a resell. The best thing to do would be to add up all the costs between now and December 31 for each contract and compare those costs.
Using your example (you might be able to get a better deal, but we will use it) and a June 1st purchase date:
Resell:
11,250 (150 X 75)
637 (150 X 4.25 MFs)
500 (closing costs)
Total is 12,387 or $82.58/point.
For 38 more years.

Through DVC:
12,600 (150 X 84)
319 (150 X 4.25 X 6/12(prorated) MFs)
Total is 12,919 or $86.13/point.
For 38 more years.

Through DVC(SSR):
13,500 (150 X 90)
319 (150 X 4.25 X 6/12(prorated) MFs)
Total is 13,819 or $92.13/point.
For 50 more years.

As you can see it is not a huge savings or cost one way or another. Obviously you have to figure in what you can spend or are willing to spend, but the best advice this board continues to give is, Buy Where You Want to Stay. You will be able to stay at any of the DVC resorts, we have successfully stayed at all the onsite ones. But you don't want to be in a situation where you want to stay in your favorite resort and can't because of the lesser booking window...that will cost you more than anything you would save up front.

 

[FLYNZ4]

Everyone... Thank you for the clarification on MFs. In particular, I did not understand that MFs were based on a calendar year basis... and assumed that they were based on the UY. My papers to notarize and sign should be at my house when get home from my current trip, and I'm sure that things will be more clear after I read the paperwork. Of course, I can still change my mind between now and then if I choose.

In fairness, Marshall (my guide) did tell me that MFs were based on the Jan-Dec calendar year... but I forgot that detail. Now it makes more sense when he said that the first year would a good deal because I will only pay MFs for about 25% of the year (based on the completion date of my unit)... yet I will get 100% of the 2004 points. Since my UY is March... I thought that he was in error... where in fact I would really pay 50% of the MFs based on a Mar-Feb UY calendar.

Originally posted by JimC
What I looked at when purchasing was the total number of points I was buying to the end of the contract and the cost per point on that basis. It makes like comparisons of various contracts possible. Maintenance fees for current year and closing costs are fully negotiable and I requested that the buyer pay both.

JimC, did you mean to say seller?

Regarding contract negotiation at BWV, since there are so few on the market... and most do not even make the listings... but rather are purchased by people on a waiting list. Do you think that it is reasonable to expect a lot of negotiation at this stage regarding having them carry the MFs. It would seem easier to negotiate that at OKW or some other properties. I was told by the brokers that OKW is the easiest to negotiate, and that BCV was the harderst... because BCV is the newest resort and sellers expectations of "getting back what they owe" is harder to meet after such a short ownership.

WDWguruDH: thanks for your analysis as well... but I think that you applied BWV MFs to SSR. I believe the following would be correct:

Resell (BWV):
11,250 (150 X 75)
637 (150 X 4.25 MFs)
500 (closing costs)
Total is 12,387 or $82.58/point.
For 38 more years.

Through DVC (BWV):
12,600 (150 X 84)
319 (150 X 4.25 X 6/12(prorated) MFs)
Total is 12,919 or $86.13/point.
For 38 more years.

Through DVC(SSR):
13,500 (150 X 90)
142 (150 X 3.80 X 3/12(prorated) MFs)
Total is 13,642 or $90.95/point.
For 50 more years.

Regarding year to year MF increases... is there any evidence to suggest that MFs are lower at resorts with active ongoing sales? The reason that I ask... is because DVC has a business interest in keeping MFs low for the properties where they are currently selling. Should I expect the MFs at SSR to increase at a higher pace after the resort sells out and they do not need low MFs as a sales incentive any longer? Is there history of this happening at the other resorts post-completion... or where the MFs always higher at (for example) BWV? I can understand the higher MFs at VB because of the oceanfront exposure.

Assuming a 0% inflation rate (since I cannot predict what actual MFs will be) over the next few years... the first 5 year total out-of-pocket expenses would be:

Resale (BWV): $14,937
Resale through DVC (BWV): $15,469
New through DVC (SSR): $ 15,922

So for all practical purposes... the prices are nearly identical. This is in very stark contrast to other timeshare companies where the resale market is less than 50% of the cost of developer based sales.

I am very appreciative for the time you all took to help me understand the economics of each option. I also understand that maybe we could find a better deal than $75/point + MFs + closing costs for BWV... but it seems that we would probably not beat that by more than a few dollars/point... and that the number of BWV contracts on the resale market are fairly limited at this time. A good friend of mine, who is probably the most astute timeshare owner that I know... had 3 BWV deals fall apart on her over several months... and she finally decided to purchase SSR as well... I believe largely because of the 50 year contract. I am pretty sure that we will follow through with our SSR plans. We are very happy with the location... although I am sure that we will hope to find availability in some of the other resorts from time to time. We will probably end up booking my vacations 11 months in advance at SSR, and then wait listing at various other resorts at 7 months for those time that we want some variety.

/Jim

 

[marymrg]

When I bought my resale, I paid half of the closing costs and half of the maintenance fees. We closed in July on an October UY contract that had a little more than half of it's current points banked and all of the new points coming in October. I had offered this on a contract that I had seen on one of the websites and the agent said he knew the seller wouldn't go for it but knew of a new seller who might! (almost identical contracts)

It's all negotiable..........

If I buy another resale, I'll have a figure in mind depending on how resales are going and might go lower on the points cost and offer to pay all closing and MF's or some other combination!

 

[WDWguruDH]

FLYNZ4, you are right, I did use BWV, I did not know SSR. Your correct figures, put the prices even closer...pick where you want to stay the most. The extra 12 years really shouldn't come into it - the pay back or break even point will be the same, about 7-11 years depending on how you figure it and if you finance or not. Thus all the remaining years will be going on just dues, a good deal. If you want to lock the "just dues" stays, then the extra 12 years is a deal, if not then where you want to stay the most is a bigger deal.
As far as increasing MF, they will all go up, they have varied somewhat from resort to resort, but average in the 3-5% range. I have found that those that are closer to the action have higher MF, probably due to the property taxes, thus I would guess SSR, will not get as high as BWV.
You are right in the comparison to other resells, DVC is high. A couple reasons, DVC exercises the ROFR and DVC is great, demand stays up. The good news, you probably won't lose a bunch of money if you buy, at least in the short-term. The bad news, you can't get a "deal" when buying resell.
I would also be leery of pushing too hard for a better deal. We paid closing cost on both of our resells. In the grand scheme of things it is a small amount and seemed trivial. We did negotiate the MF on each, paying some on one and none on the other. What we did was contact the timeshare broker and tell them what we were after. Then if one came up, they could let us know and present the deal, this happened well before either contract hit listings. Following is an example of what we proposed (using today's prices).
1) 200-250 points BWV
2) September Use Year (we like ours all the same, but don't need too).
3) All current year points available
4) $74 a point(ours was actually in the low $60s)
5) Will pay closing
6) Will pay for current year MF if there are banked points more than half the contract(in this case 100-125). If you will use them, this is cheaper than you could rent them. Otherwise, seller pays all MF.

We gave this information to a timeshare broker twice, both times within a month we had one (listing never made the postings). Once we got a 250 point contract with 250 banked points - paid current MF only. The second time we got a 150 point contract with no banked points and paid no MF. Because the broker had our offering range already, the owner was informed and ready to accept. By the time we were contacted, it was a done deal in a few hours.

 

[av8tor]

I just went thru the same experience. Could not decide between SSR or a resale at BCV. I found this message board, got some great advice and made what I think is the best decision for my family. The overwellming response was to chose BCV because we have young kids (DS is 6, DD is 2) but most importantly buy where we want to stay.

I think with the current DVC expansion, there will be much more competition in the future to book at the smaller resorts.

Instead of saving purchase dollars I decided to buy a resale contract with banked points and 25 more annual points than I was considering at SSR. I made an offer on a BCV resale contract before it was ever listed and am now waiting for it to close (point price is sufficiently high to clear ROFR and everything looks good but fingers are crossed). We are getting an April UY. All 2003 points were banked and all but 14 of this years points are available. I am paying the closing cost, MF on this years remaining points and nothing for the banked points (standard resale term before negotiating). Effectively we are getting a free vacation due to the banked points.

I did not negotiate aggressively because I don't want the deal to fall apart. A couple of hundred dollars one way or the other just didn't matter that much to me to get what I wanted. The good news is I didn't feel I could make a bad choice, just which one was best for us.

Moral of the story, forget the financial stuff (neither option has a significant advantage over the other and who can predict the future anyway) and buy where your family is most interested in staying.

Good Luck!

P.S. I have a Beech F33A