Rent from seller before closing?

[tlendway]

Hi, tell me if my thought process on this is insane?

We want to take a large party to BWV in Oct, originally thought of renting points to do it, but we all know how hard those are to come by. I'm trying to beat the 7-month window, after which I'm sure BWV will be full (if it's not full already).

So I got to thinking it's time to buy into DVC (we go to WDW every other year anyway) and have the rest of the party pay what they would have spent on point rental - now they're helping me by spending $12/pt towards my purchase price!?!? But I need to finish this soon, since the 7-month window opens up in mid March for our inflexible trip date. But buying resale will take too long to get through the ROFR and closing process, so I thought of two options:

1) Buy direct from Disney, but I think there's a waitlist for BWV and Disney will charge more $$ per point than resale. But this would close the deal well before the 7-month window opens.

2) Find a seller willing to RENT me the points for this year, putting the rental cost towards the purchase price, then close the transaction after we get back from vacation (else closing the sale cancels the reservation).

I'm leaning towards #2, and have found a seller willing to do this, the only down-side will be to be there as guests, days before becoming owners, unable to take advantage of the owner perks! Also, the current price sounds fair - 170 pts at $85/pt, 170 pts available.

So, is this a good idea or am I nuts?

 

[SSRFred]

It's a great idea. It's done regularly with home sales. The only question I have is how it would work with contract language and Disney's ROFR process. Hopefully someone who has done this can chime in.

 

[Deb & Bill]

You have to be very careful. You could go through the sale process except for closing. The reservation will be cancelled upon closing. And you don't want to have the price per point too low or Disney will exercise ROFR and then YOU get a free vacation unless the seller comes back to you for the price of the vacation.

 

[Lesley]

I would think the biggest hurdle would be finding a seller willing to do this. If you've found one, that's great.

As a seller, I would be hesitant to get into this sort of agreement because first of all it delays the closing (ie. the funds from the sale) and there's the possibility that the buyer could back out after taking the vacation- leaving the seller trying to get rid of a stripped contract. Sure, they got the money from the "rental" but it may then take even longer to sell, or it may impact the price they are able to get for it.

 

[RobDoc]

The full "agreement" would also need to be disclosed as part of the accepted offer before submitting to Disney for ROFR.

I'd be very careful with this and make sure everything is well documented - from both ends of the agreement - before allowing any money to exchange hands. If I were the seller, I'd sure want some assurance that the sale will go thru and if I were the buyer I'd want to make sure it would pass ROFR before doing anything.

Good luck!

 

[drusba]

I am not sure Disney still does this since I have not bought resale for long time, but, in past, once it receives notice of a sale, for ROFR purposes, it cancels any reservations in the system.

 

[JimMIA]

2) Find a seller willing to RENT me the points for this year, putting the rental cost towards the purchase price, then close the transaction after we get back from vacation (else closing the sale cancels the reservation).

The problem I see with this plan is - as Doc rightly points out - you have to disclose ALL of the parts of the agreement. If you hold back the part about the rental, you are misrepresenting a material fact in the contract, and that could be EXTREMELY problematic. You might want to Google "misrepresenting a material fact" to get an idea of the consequences.

When you disclose the whole deal, the question then becomes what the actual per-point price is on the purchase. For example, if you rented all 170 points at $10 per point, you'd effectively be paying $75 per point...which is well below the ROFR threshhold. Disney could easily step in, take your $10 per point and fulfill your rental with their points, and then ROFR the $75 pp contract. They get $10 pp for points they had just sitting there, and they get the ROFR at a bargain. You get an inexpensive vacation (but no contract), and the owner gets only $75 per point for their contract.

I think you're trying to do too many things here. Rent your ressie, and then buy DVC if that's what you want to do. Or buy DVC and stay with your own points.

 

[bigdave10000]

I agree with the above posts. Too many things could go wrong. Why not do this, rent points for your stay at BWV. Then buy a BWV re-sale. Then rent YOUR points to someone else to get your money back. That way you are in control of everything.

 

[SuzanneSLO]

To the OP: In light of all the concners raised by the otehr poster, you may want to rethink your option of buying direct from DVC if the resale offer you outlined does not include the points from 2007.

If you buy any UY from DVC other than February, you will essentially get an extra allocation of points that you would be able to use for your October trip. If you value those points at $12 each, then the diffrence between resale at $85 and DVC ($98-$12 = $86) is really only $1 per point.

Some of this difference may be offset if the resale included paying 100% of 2008 MF ($856.83); they often do although this can be negotiated. If you buy from DVC, your dues are prorated based on your purchase date, so you might only pay $749.72 (for 10 and half months), a savings of $107.10 or $0.63 per point.

Now your resale is only saving you $0.37 per point or a total of $62.90. Money is money, but is that savings worth the hassle?

All of the above is based on buying 170 points, but of course, with DVC, you could buy only 160 points, which may fit your needs and save you a little current cash out of pocket.

Although there MAY be a waitlist for some months at BWV, it is likely that it will be short or nonexistent if you are flexible about your UY (anything other than February is pretty flexible). Also, when you call your guide to ask about buying at BWV, you can also ask him/her to check for availability at BWV for your trip. If it is not available, then you may have some further planning to do.

Best of luck -- Suzanne

 

[tlendway]

Thanks for all of the advice! I agree the whole rental path started looking risky or at least complicated.

So I called DVC directly just to see how feasible that route would be. They had points at BWV available, of course at $98. My resale deal was sitting at $85 per point, 170 points, $500 closing, for a total of $14950. DVC originally told me there were no contracts with banked points available, so they told me $98 for 160 points, no closing cost, total of $15680. So I told them resale has them beat by $720 and 10 points, so she put me on hold to "talk to her manager" and came back with 160 banked points and a March UY. Now their offer was "discounted" by $1600 (assuming $10/point I could rent them for at least), for a total of $14080, thus $870 cheaper than the resale offer.

In a way the resale is still a better deal, allowing me to get ten more points for $87 each, but at the cost of all of the risks listed above. So I went ahead with the direct purchase, which by now included the room ressie's I need for October, in fact I already have my member number and the closing documents were mailed yesterday!

The best part is, all of this took place on Thursday, so I was able to surprise my wife (a huge Mickey fan) with this on Valentine's day, the 19th anniversary of the day we met! The cast member had fun with this too, since it was to be a surprise yet the CM needed verbal permission from her for the credit check, so she conference called my wife, who immediately noticed the caller-ID 407 area code, but did not remember that's Disney's, so she bought my lame excuse about VOIP confusion!

Thanks again for all of the tips, these boards are invaluable!

 

[RobDoc]

Thanks for all of the advice! I agree the whole rental path started looking risky or at least complicated.

So I called DVC directly just to see how feasible that route would be. They had points at BWV available, of course at $98. My resale deal was sitting at $85 per point, 170 points, $500 closing, for a total of $14950. DVC originally told me there were no contracts with banked points available, so they told me $98 for 160 points, no closing cost, total of $15680. So I told them resale has them beat by $720 and 10 points, so she put me on hold to "talk to her manager" and came back with 160 banked points and a March UY. Now their offer was "discounted" by $1600 (assuming $10/point I could rent them for at least), for a total of $14080, thus $870 cheaper than the resale offer.
...

Just to clarify what DVC did do here - they sold you a BWV with a March Use Year. They did not "magically" give you any banked points - you got the points from the current (March, 2007) Use Year and are letting you bank them. You will also get another 160 points for the 2008 Use Year on March 1.

If they really included "banked" points, they would expire on February 29 and could not be used after that date.

It sounds like they found a win-win situation for your purchase.

Congratulations!