Resale Closing Costs and MF?

[SanDeeKath]

Hi there,

We are looking to buy resale for about $15,000. We were quoted $600 closing costs, which seem a bit high to me. They also want us the pay the MF for this year. The use year is Dec so we do get the 07 points all this year as well as the O8 coming in Dec 08.

Just wondering if this sounds ok. (not done through TSS).

Also, what if no points on the resale are available till November of 08. Would I still be expected to pay the MF for this year? I'd have no points to use till the end of the year. Sooo confused.

Thanks. K

 

[Caskbill]

Whether you get 2007, 2008, or even 2009 points all depends on what's been used by the current owners, and what hasn't.

BTW, maintenance fees have nothing to do with use year, but when it comes to resale it is handy to use a formula. When you purchase from Disney all maintenance fees are pro-rated. Often people selling resale forget that and try to get the buyers to pay maintenance fees that they really shouldn't.

Think of it this way: for a December use year, if the contract has all the 2007 use year points, you can think of those points as being spread evenly from Dec 2007 through Nov 2008. If you are getting ALL the 2007 points, then reimbursement would be to pay all the 2008 MFs, and 1/12th of the 2007 MFs.

At the other end, suppose the seller has already used all the 2007 points and you won't get anything until Dec. In this case you would not pay any of the 2007 fees, and you should only pay 1/12th of the 2008 calendar year maintenance fees. In other words the seller should pay for Jan 2008 through November 2008 and you would only pay for Dec 2008.

If the seller had used half of the 2007 points, and half are still available in the contract that you will receive, then you think of it like this. Half the points equates to half a year of fees. So the seller should pay the fees for Dec 2007, Jan 2008, Feb 2008, Mar 2008, Apr 2008, May 2008. 6-months worth. You would pay the remaining 6-months: Jun 2008, Jul 2008, Aug 2008, Sep 2008, Oct 2008 and Nov 2008. Additionally you would pay Dec 2008 as that would be the first month of your 2008 use year points.

If as you indicated there are no 2007 points left and you won't get any points until Dec 2008, don't let them try to tell you that you have to pay all the 2008 calendar year fees because you're getting all the 2008 use year points. It doesn't work like that. The seller needs to pay 11/12th of the 2008 annual fees because those fees apply mostly to 2007 use year points. Only 1/12th of the calendar year 2008 fees actually apply toward 2008 use year points.

Hope this helps.

 

[SanDeeKath]

Thank you so much! That is so helpful. And that is just what this seller is trying to make me do. Pay all the MF for 08 during closing with a Dec 08 UY and no 07 points.

Now I will be able to evaluate all the contracts much better. This site is great!

K

 

[robinb]

Thank you so much! That is so helpful. And that is just what this seller is trying to make me do. Pay all the MF for 08 during closing with a Dec 08 UY and no 07 points.

Now I will be able to evaluate all the contracts much better. This site is great!

K

Did the seller pay the 2008 dues in full? That sounds silly if they were planning to sell. When we were thinking of selling our OKW contract we went to a month-to-month payment of dues in 2007.

Our use year was August, we sold it in September 2007 and our buyer paid all of our 2007 dues since all 2007 points were included. If all 2008 points are included I think you should have to pay the 2008 dues.

ETA: Having pro-rated dues is an advantage of buying from Disney.

 

[Buckeye Fan]

If it helps, we purchased 2 SSR contracts in January 07. It was through GMAC, and here's what we negotiated with the sellers by contract:

120 point contract
* Contract had 120 banked points from 2005, 120 2006 points and all 2007 points coming in Aug 2007.
* Paid $84 per point (at the time, ROFR was around $81 - $82 pp. Not much was passing below $82.)
* As the buyer, we paid $195 GMAC fee and MFs for 2007. Seller paid all closing costs.

270 point contract
* Contract had 217 points from 2006 and all 2007 points coming in Aug 2007.
* Paid $84 per point (see above)
* As the buyer, we paid MFs for 2007. Seller paid all closing costs and $195 GMAC fee.

Best of luck in purchasing! Look around, as that perfect contract will come through for you! In advance...WELCOME HOME!!!

 

[castleri]

I'm confused - in the first post you say you get all the 2007 points which were just issued in DEC 07 and in your next post you say you get none of the 07 points. If you get the 2007 points you should pay all of the 2008 maintenance fees for the number of points you get as they are based on a calendar year and you would be paying 11/12 months for the 2007 points and 1/12 for the 08 points which you get Dec 08. If you only get some of them then you should be able to pro rate the amount based on the number you get. If you get none of the 2008 points then you should only be responsible for 1/12 of the MF for the points you will get in Dec 2008.

 

[JimMIA]

Everything in a resale is negotiable, and yes, those closing costs do seem somewhat high. I would call TTS and ask them how much closing would be on a $15,000 contract.

You have to remember that your true per point cost includes closing costs and any other charges you have to pay. Typically, but not always, closing costs are paid by the purchaser.

As Bill noted above, dues have nothing to do with UY (they are calendar-year dues for the expenses during that 12-month period), but they are commonly paid by whoever gets the points. Again, that's negotiable, and Disney does it the opposite way, so that gives you an argument to use. If you are dealing with a broker who doesn't know what they're doing, they may not even know that.

I can't imagine paying that $195 fee one broker charges. That is just pure profit, with zero service to either the buyer or seller. Whatever that purportedly covers, every other broker does for nothing. If you're going to pay something like that, be sure to factor it into your per-point cost.

Looking for a $15,000 resale, there should be a lot of inventory available. I'd check around and consider all of the factors involved, not just the per point price. And, if you don't see exactly what you want, just wait a week and you'll probably find it.

Another strategy is to call a couple of brokers and get on their call list. (I know TTS does this, don't know if the others do). Tell them as specifically as you can what you're looking for, and when they get a contract that matches your needs, they'll call you before it publicly goes on the market. That's how most of those "Sale Pending" listings appear on the TTS website -- they're bought before anyone knows they're available.

 

[robinb]

Everything in a resale is negotiable, and yes, those closing costs do seem somewhat high. I would call TTS and ask them how much closing would be on a $15,000 contract.

I think $500-$600 in closing fees is just about right. Also, TTS has a policy to ask for reimbursement of MFs for the calendar year when the points become available. So, if this contract has 2008 points, TTS will ask for the buyer to pay for dues for the calendar year of 2008. As for the dues on any 2007 points, sometimes the buyer will pay and sometimes they won't. As you say, everything is negotiable.

If this contract does not have 2007 points, I would not consider it to be a very good contract (unless December was the perfect UY for the buyer).

OP, I want to second Jim's idea to contact some of the more reputable resale companies and be put on their list. Think about what your perfect contract would be and then just sit tight for a while. I bought my last resale that way.

 

[JimMIA]

We are looking to buy resale for about $15,000. We were quoted $600 closing costs, which seem a bit high to me.

I went back and looked at my original purchase through TTS. Our purchase price was a little over $22,000, and the closing costs were $252.

There were, however, other costs paid at closing which added another $300 or so -- title insurance, state documentary tax stamps, and a couple of tiny charges for miscellaneous stuff. Those costs were not actual closing costs, they were payments to the State of Florida, the title insurance company, etc, which were processed by the closing agent.

 

[robinb]

I think most people just lump all the fees into the big bucket called "closing costs".

 

[JimMIA]

The use year is Dec so we do get the 07 points all this year as well as the O8 coming in Dec 08.

I give up -- you tell us! It depends on the details of that contract, and as Robin pointed out, that is certainly a crucial point.

Also, what if no points on the resale are available till November of 08. Would I still be expected to pay the MF for this year?

I wouldn't pay either 2007 or 2008 in that case.

Even though dues are not really related to points, putting the two things together does seem fair in a resale. But if I were not getting any points until the end of 2008, I would fall back to the position that I don't owe 2007, because 2007 is over, and I'm not paying any more than 1/12 of 2008 because I'll only have points for 1/12 of 2008. (Which is not exactly true, because I would be able to borrow, but then I'd be borrowing the points that had to last for 11 months of 2009, so I still lose.)

Frankly, if I were buying, there would have to be something really special about a contract with no points in it for 10 months before I'd buy it! I never say never, but I can't think of many rationales for buying a stripped contract like that.

 

[JimMIA]

I think most people just lump all the fees into the big bucket called "closing costs".

Maybe yes, maybe no. She certainly needs to know precisely what she would pay at closing, and the realtor is required by law to tell her pretty exactly. If that $600 does not include all of the costs, it's way high.

 

[Buckeye Fan]

Since we didn't pay closing costs, I had to go back and look at both contracts. On our 120 point, the seller paid $450 and on the 270, the seller paid $600. This was for a "full closing," not for a "deed only" closing.

 

[lisareniff]

I think $500-$600 in closing fees is just about right. Also, TTS has a policy to ask for reimbursement of MFs for the calendar year when the points become available. So, if this contract has 2008 points, TTS will ask for the buyer to pay for dues for the calendar year of 2008. As for the dues on any 2007 points, sometimes the buyer will pay and sometimes they won't. As you say, everything is negotiable.

This is one reason we did not purchase a resale from TTS with our VB contract. They seemed very argumentative (or perhaps it was defensive) about this policy when I talked to them about a possible contract.

 

[JimMIA]

Since we didn't pay closing costs, I had to go back and look at both contracts. On our 120 point, the seller paid $450 and on the 270, the seller paid $600. This was for a "full closing," not for a "deed only" closing.

The numbers really depend on what is included in "full closing." If the state doc tax stamps, title insurance, etc is included in that figure, it sounds more reasonable. If someone paid doc stamps, title insurance, etc in addition to the "full closing" fee, those costs are really high.

In the case of your 270 point contract, that would have been almost exactly the same total price as our contract, with your closing costs being more than double ours. If the "full closing" included all those other costs, your total cost paid at closing was about $100 more than ours.

We can say one party or the other pays a particular charge, but the reality is the purchaser is paying for everything, because the seller is adjusting their price to cover their sales expenses. The seller has a bottom line they want to walk away with, and they take all of the selling costs into account.

 

[robinb]

This is one reason we did not purchase a resale from TTS with our VB contract. They seemed very argumentative (or perhaps it was defensive) about this policy when I talked to them about a possible contract.

I'm sorry that you got that vibe from them. They were great with both contracts I bought from them and the one I sold through them.

The OKW contract I sold was an August UY and there was NO WAY that I was going to take only 5/12ths of the MFs I paid for that year. Then again, I sat on my contract until the points came "live" to sell it.

 

[lisareniff]

I'm sorry that you got that vibe from them. They were great with both contracts I bought from them and the one I sold through them.

The OKW contract I sold was an August UY and there was NO WAY that I was going to take only 5/12ths of the MFs I paid for that year. Then again, I sat on my contract until the points came "live" to sell it.

It really took me by surprise and maybe I hit a bad day. I had heard such good things on the boards. They were so adamant that their way of charging for full MF for any UY in that calendar year was 'correct' even with no point available until that UY started.

 

[snowbunny]

They were so adamant that their way of charging for full MF for any UY in that calendar year was 'correct' even with no point available until that UY started.

It's not a TTS "charge," it's a negotiable point in the contract of sale. Just like buying a house, if you want to make a different offer, you make a different offer. TTS is the seller's representative and that must be remembered during the process.

I agreed to pay 08 maintenance fees in the contract I am buying at VWL (Oct UY) via TTS because it is the tiny contract I wanted, and there is not a lot of negotiating power in low-point contracts nor money at stake.

If I were buying a $15,000 contract - especially at SSR where there are many, many contracts for sale on the TTS listings alone - I would certainly negotiate everything.

 

[nunzia]

Our closing costs were high through GMAC..plus they added a 195 admin fee and then higher than expected additional cost to get some sort of title search. Whatever..I knew I was getting hit. From now on, now that I'm in the system I'll buy from Disney, as the higher point cost will not be so bad considering no closing costs.

 

[lisareniff]

It's not a TTS "charge," it's a negotiable point in the contract of sale. Just like buying a house, if you want to make a different offer, you make a different offer. TTS is the seller's representative and that must be remembered during the process.

I agreed to pay 08 maintenance fees in the contract I am buying at VWL (Oct UY) via TTS because it is the tiny contract I wanted, and there is not a lot of negotiating power in low-point contracts nor money at stake.

If I were buying a $15,000 contract - especially at SSR where there are many, many contracts for sale on the TTS listings alone - I would certainly negotiate everything.

I fully understand that Snowbunny. But you know, you wouldn't have gotten that impression from our phone conversation. It is how they like to structure their clients listings and offers.