Resale offer from private party

[ricthemic]

First time on this board, Sorry in advance if this is a common question.
We are DVC Saratoga members. Last month while relaxing by the pool at BWV I got to talking to a couple who wants to sell their BWV DVC membership. I told them about this resale website which they said they had never heard of. They just emailed me offering us a very good deal. Better than the cost per point I see on this site. I understand from this site that Disney reserves the right to buy back any package first.

We are equally interested and suspicious.
Being new to DVC and this board does anyone have any advice or are aware of scams like this posted before (if it is a scam)
We thought it was strange how they overheard us talking about DVC to another DVC couple and then jumped in and offered us their membership.

Thank you

 

[JimMIA]

Well, you talked to them face-to-face...how did they impress you?

I don't think just because they offered you a low price necessarily means it's a scam. They may just be longtime owners who don't know what their DVC is worth. The most important number in a resale is not what they're asking, but what will clear ROFR.

You could make a reasonable offer and do all the financial stuff (deposits, etc) through a well-established, reputable closing company with experience in DVC transactions. Or, you could contact TTS, give them the info and ask them to contact the potential seller. If the price you were offered was ridiculously low, they can well afford the realtor commission and any deposits you make would be well-protected.

If you are interested in the deal, I wouldn't blow it off because the price seems too low at the outset. You can explore things without any risk, and then make a better decision.

ETA: You can also check and find out if, in fact, they actually own a DVC contract. Just check the Orange County, FL Controller's website.

 

[LisaS]

In my opinion, only the seller derives any benefit in a private sale of a DVC contract. The seller saves the 10% broker's commission by selling privately. The buyer does not benefit from this because Disney's ROFR sets the minimum price you must pay. If the seller shared some of his savings with you by selling at a lower price, Disney would step in and buy the contract in your place. So you are going to have to pay around $85/point to purchase a BWV contract whether from a private party or through a broker.

You get certain protections by purchasing through a reputable broker. I would be very wary of purchasing a DVC contract from a total stranger when I had nothing to gain by doing so.

 

[JimMIA]

As usual, Lisa's point is very well-taken. You have to pay what you have to pay -- or you've just made the seller and Disney very happy.

That's not to say your prospective seller means you harm...it just means you can't buy DVC on the cheap. You may be doing them a big favor by steering them toward a reputable resale specialist...or at least by paying the going price and letting them benefit. Unfortunately, there's no such thing as a free lunch.

 

[Paging Tom Morrow]

In my opinion, only the seller derives any benefit in a private sale of a DVC contract. The seller saves the 10% broker's commission by selling privately. The buyer does not benefit from this because Disney's ROFR sets the minimum price you must pay. If the seller shared some of his savings with you by selling at a lower price, Disney would step in and buy the contract in your place. So you are going to have to pay around $85/point to purchase a BWV contract whether from a private party or through a broker.

You get certain protections by purchasing through a reputable broker. I would be very wary of purchasing a DVC contract from a total stranger when I had nothing to gain by doing so.

I completely disagree. Just place money in escrow by using a closing company and you are just as protected as if you had purchased through a store. The fact that the seller doesn't pay a commission has no effect whatsoever on what you are paying and doesn't at all affect your sales process.

 

[Scotch]

I completely disagree. Just place money in escrow by using a closing company and you are just as protected as if you had purchased through a store. The fact that the seller doesn't pay a commission has no effect whatsoever on what you are paying and doesn't at all affect your sales process.

Yup. While trying to find just the right mix of points/use year for us, I've bought and sold two contracts privately (via ads) -- using a professional closing company each time to handle escrow and closing papers. In fact one time we used the same closing company used by the sponsor of this board. As buyers we were able to pay just a tad less than what we see being sold via brokers some times; since I've done my research we did pass ROFR. As sellers we saved 10% -- on a large contract that is a significant sum of money! There are many reputable professional closing companies -- visit the TUG boards for discussions of ones TUGgers frequently use. We've also bought via broker before, including the sponsor of this board. As a buyer, it is all a matter of finding the right contract/deal -- whether we buy from private owner directly or broker makes no difference to us as long as we use a professional third party closing agent. As a seller, I doubt I'd ever use a broker, as I'm comfortable selling on my own and saving the commissions.

 

[LisaS]

I completely disagree. Just place money in escrow by using a closing company and you are just as protected as if you had purchased through a store. The fact that the seller doesn't pay a commission has no effect whatsoever on what you are paying and doesn't at all affect your sales process.

The part of your post that I bolded is the point I was trying to make. The OP is the buyer here and I don't see how he/she benefits from buying from a private party. In a normal real estate transaction (where there is no ROFR in the picture) a buyer would expect to negotiate a lower price if a seller is selling privately and not paying a commission to a real estate agent. With DVC, ROFR sets a price floor for each resort and the buyer has to offer the going rate or Disney will take the contract. So the seller saves 10% and the buyer saves little or nothing over what they would pay if buying through a broker. At best they will pay the going rate per point and have the seller pay the closing costs and current-year dues, but it's possible to negotiate at least some of these things when buying through a broker as well.

The OP states that the seller has offered them "a very good deal". If it's lower than $84-$85/pt, it probably won't pass ROFR. That makes me wonder whether the seller is very knowledgeable about the ROFR process. Unless there was something special about this contract I don't see any compelling reason for a buyer to purchase through a private sale. And unless the OP offers a price at or over the current ROFR threshold for BWV, they aren't going to end up with this contract anyway.

So what are the advantages for the buyer here. What am I missing?

 

[ricthemic]

Thank you all, pardon my ignorance but what does ROFR mean and what is a TUG?

Thank you again

 

[LisaS]

Thank you all, pardon my ignorance but what does ROFR mean and what is a TUG?

ROFR = Right of First Refusal. When someone sells a DVC contract, they must submit the details of the purchase agreement to Disney for their review. Disney has the right to step in, in place of the original buyer, and buy back the contract themselves for the agreed price. So if the buyer and seller agree on a price that Disney feels is too low, Disney will step in and buy the contract. The seller gets the same deal they agreed to with the original buyer, but the original buyer is out of the deal.

According to the data on the DISboard's ROFR tracking thread, the minimum price it would take to clear ROFR on a BWV contract is $83-$85 per point -- $83-$84 is a bit "iffy", but $85 is almost certain to pass. So if your seller is offering to sell you a BWV contract for less than $83/point, you will not get that contract -- Disney will snatch it away and then resell it to people on the waiting list for $95/point.

Here is the ROFR thread: http://www.disboards.com/showthread.php?t=720134 It's HUGE and the most recent data is on the last few pages. The summary table hasn't been updated in a while. The last time was 1/26/07 and is in post #3042. Here is a link directly to that post: http://www.disboards.com/showpost.php?p=16636404&postcount=3042

So take a look at the latest roll-up and then scan through the posts that have been made since then for any other reports on passing ROFR on BWV and you will see what we mean about Disney setting a price floor for BWV.

 

[Scotch]

Thank you all, pardon my ignorance but what does ROFR mean and what is a TUG?

Thank you again

TUG refers to Timeshare Users Group. The home page is http://www.tug2.net/ and the free BBS page is http://www.tugbbs.com/forums/. The TUG BBS is like this board but it has a broader audience. Most DIS members seem to own membership/deeds to one timeshare organization -- DVC; whereas the typical TUG members own or have owned multiple timeshares located all over the world. Many DIS members are also members of TUG and participate on both boards.

 

[Paging Tom Morrow]

So what are the advantages for the buyer here. What am I missing?

The benefit is it not being listed and therefore having exclusivity for purchase opportunity. I purchased my BWV points through a private sale. The seller accepted my offer, which passed ROFR.

At that time, I had been on the waiting list at numerous resellers for months without a bite for similar contracts.