Resale Restriction Scenario

[JDirrim]

Talked to my guide. She said they had a meeting just yesterday going over the results of the latest survey and “most owners are very happy with the restrictions.” She also said if the restrictions wind up causing Riviera to be harder to book and it’s not working, “Disney will change them because that’s what Disney does.”

Bless her heart. Disney is lucky to have her.

BAHH HAHAHAHHA!!! This literally made me laugh out loud.

 

[kboo]

But if your circumstances change with job loss, divorce or health issues - things that no one really predicts or plans for - the resale restrictions may become your problem.

I also believe you misunderstand how ROFR works, but this will be a good test case. I don't think ROFR is going to prop up resale prices for Riviera if the restrictions are considered as draconian as I believe them to be.

I think you misunderstood my point. First - while I could be a 17 year old kid bragging here about how great my middle-aged life is, if you believe that I am essentially telling the truth about our assessment and purchases, you should also assume that I have factored in the chances of job loss, divorce or health issues into thinking about whether we'd be selling our RIV contract any time soon. I don't feel an obligation to tell you all about my life, and of course nothing in life is a given, but DH and I are both in recession-proof jobs, with enough saved for retirement and beyond that if we were to leave our DVC contracts to our kids, we'd make sure there was a financial provision so they wouldn't have to worry about paying MFs either. Divorce? We've been through a lot together, we are going on almost 30 years together, so while he may suddenly decide he wants to run away with someone he met online/in a chat room/on Tindr, I'd assess those chances at less than 1%. Health issues - well, true, we aren't getting any younger. Fortunately, we have good health insurance as well. I need to stay alive for 3.5 more years for my health insurance to cover DH for life, and my kids until they're 25, even if I pass before them. Although, DH makes more than I do, so even if I were to pass before then, I think he'd be ok, financially. And if I pass first, I'm really not gonna care about the resale restrictions!

ROFR: I never said ROFR would prop up resale prices. I said that ROFR was the "not so invisible hand" that leads to the market not working efficiently and transparently. Buyers and sellers price their offers and demands based in part on what might happen in ROFR. But everyone knows that ROFR is controlled by a drunken monkey, and so the uncertainty in the market creates inefficiencies that, in my view, leads to people paying more than they would in a market without ROFR. The big question, as you said, was whether buyers really think the restrictions are draconian. I'm betting that they will not, if what's happened with VGC, VGF and BLT (and CCV is a question mark) is any indication. While resale buyers there do know they can trade out, and do trade out, the majority of the informed buyers at those resorts buy to use their points primarily at their home resorts. While it's too early to tell with RIV, I think anyone who wants a chance at a tower studio or a studio of any size over certain very popular times, is going to have to own there. If you already own at BWV or BCV, you're not really the target demographic of RIV. If you always want 1br (and never studios or 2br), or if you only travel in the summer and have lots of flexibility, you're probably also not going to be a resale RIV buyer.

I will add that between the 1/19 restrictions on the L14 resorts, the crazy ROFR activity recently, and the DVC developer credits, Disney made RIV competitive with resale for almost all of the other WDW resorts. The exception would be if someone is looking for 100 points or less - then there's no developer credit and AKV and SSR are the winners in that comparison.

“most owners are very happy with the restrictions.”

Um... what?? No, of course I'm not happy with them; I just decided they were a risk of loss that I was willing to assume.

 

[KAT4DISNEY]

Um... what?? No, of course I'm not happy with them; I just decided they were a risk of loss that I was willing to assume.

I believe that came from the survey. And the info came from a guide. ie - take that for what it's worth. However for a business they will ultimately consider you to be happy enough if they sold to you.

 

[kboo]

I believe that came from the survey. And the info came from a guide. ie - take that for what it's worth. However for a business they will ultimately consider you to be happy enough if they sold to you.

It might be more accurate to say, "bought IN SPITE OF ... " sheesh.

 

[KAT4DISNEY]

It might be more accurate to say, "bought IN SPITE OF ... " sheesh.

It doen't matter to them is what I'm saying. They still made the sale of the resort points with different restrictions.

 

[summerw]

Sorry it was definitely from the survey and I agree that your purchase will be a silent confirmation to Disney of your acceptance, as will mine if we buy. Why would they think it’s a problem if people are still buying?

I’m all for Poly resale but the family is drooling over the Riviera. Shouldn’t have shown them the video. oops.

 

[Frederic Civish]

Sorry it was definitely from the survey and I agree that your purchase will be a silent confirmation to Disney of your acceptance, as will mine if we buy. Why would they think it’s a problem if people are still buying?

I’m all for Poly resale but the family is drooling over the Riviera. Shouldn’t have shown them the video. oops.

If you want Riviera, then go for it. It is a beautiful resort and as long as you never have to sell it, in the next 50 years, you should really enjoy it.

And if you can't sell it, because the Resale restrictions make it economically unfeasible, why then you can always rent out your points, instead of selling them, and get your money back that way. In fact, I think maybe Disney is trying to create a stronger Rental Market for Riviera, since more people will be unwilling to sell, and they will rent out, instead, to get their money. It should be a very desirable rental property. I'm just not sure what Disney plans to get out of that. People who rent will get the benefit of Riviera without having to put up with Disney's crapping on the owners. Of course, as more and more people rent, they will do it early (so they can charge the most) and be booking the 7 to 11 month window and taking all the most desirable rooms and categories, which won't leave as much for you owners, unless you can also plan 11 months in advance.

I want Riviera but I won't buy. I was going to. I had (and still have) $25,000 saved as a down payment, so I was going to buy a nice amount of points. But then Disney decided to treat owners like they are criminals who are doing shady dealings under the table and 'cheating' Disney. So, have bought Direct before (325 points at Poly) but I will probably will never buy Direct again. As long as Disney is going to try to damage the value and use of my DVC memberships, why should I pay their premium price? I will just keep buying on the Resale Market. It is much cheaper and less of a loss if Disney decides to restrict things even more.

 

[summerw]

If you want Riviera, then go for it. It is a beautiful resort and as long as you never have to sell it, in the next 50 years, you should really enjoy it.

And if you can't sell it, because the Resale restrictions make it economically unfeasible, why then you can always rent out your points, instead of selling them, and get your money back that way. In fact, I think maybe Disney is trying to create a stronger Rental Market for Riviera, since more people will be unwilling to sell, and they will rent out, instead, to get their money. It should be a very desirable rental property. I'm just not sure what Disney plans to get out of that. People who rent will get the benefit of Riviera without having to put up with Disney's crapping on the owners. Of course, as more and more people rent, they will do it early (so they can charge the most) and be booking the 7 to 11 month window and taking all the most desirable rooms and categories, which won't leave as much for you owners, unless you can also plan 11 months in advance.

I want Riviera but I won't buy. I was going to. I had (and still have) $25,000 saved as a down payment, so I was going to buy a nice amount of points. But then Disney decided to treat owners like they are criminals who are doing shady dealings under the table and 'cheating' Disney. So, have bought Direct before (325 points at Poly) but I will probably will never buy Direct again. As long as Disney is going to try to damage the value and use of my DVC memberships, why should I pay their premium price? I will just keep buying on the Resale Market. It is much cheaper and less of a loss if Disney decides to restrict things even more.

Thank you for your post. I’m sure we will be happy. The restrictions have made me feel less enthusiastic about my purchase for sure.

I have a few hesitations about the Riviera though. Transportation is a big part of why a Disney resort feels deluxe to me. I drive to Disneyland all the time so we love the boats at the Poly and the monorail. I hope the Skyliner is as enjoyable. Also, the points jump to premium view is not small.


It’s ironic that Disney’s change is driving you to the thing they are hoping to discourage. And I’m sure you’ll be happy saving the money.

 

[kboo]

I’m all for Poly resale but the family is drooling over the Riviera. Shouldn’t have shown them the video. oops.

Ha, well definitely don't take them to the model rooms at SSR! People seem to have a love it/hate it reaction to the galley kitchen. It does look a little awkward without the island, but having stayed at BLT where the island was mainly something I bumped into while trying to go in/out of the kitchen, I liked the more open feeling of the kitchen. And the split bath in the 2nd bedroom was nice too.

In fact, I think maybe Disney is trying to create a stronger Rental Market for Riviera, since more people will be unwilling to sell, and they will rent out, instead, to get their money. It should be a very desirable rental property. I'm just not sure what Disney plans to get out of that.

I'm sure Disney would prefer distressed owners to keep paying interest on their mortgages and keep paying MFs. That's still a better outcome than foerclosure, the ROFR process, etc. One of the resale contracts I bought took a long time to close, because the sellers had to come up with money to close. We were actually the backup buyer, because the first buyer fell through - despite a full price offer (we got it for $10pp less than asking), I think the buyer needed financing, which was going to take a while. We were paying cash. At this point, the seller/original owner, who had bought direct, had already stopped paying MFs and mortgage for almost a year, as Disney-someone had already put a lien on it. I'm pretty sure that rather than have to go through all of that, if the original owner could have found a way to make it work to rent points to cover their mortgage and MFs, Disney would have preferred that.

 

[kboo]

@summerw, I was in the camp of, "I'll pick up some cheap resale RIV points later" because of the resale restriction, but given the price point and comparison between adding on at BLT resale vs. buying RIV direct, the extra $ was worth it to me, largely to have home resort advantage for up to 50 years at an EP/HS resort. As for resale, if we bought more BLT and had to sell anywhere close to 2042, it's anyone's guess what that would mean, since BCV/BWV/BRV would be out of the system then. A resale buyer of the L14 15-20 years from now may also be looking at being functionally restricted to their home resort.

 

[katandmouse]

@summerw, I was in the camp of, "I'll pick up some cheap resale RIV points later" because of the resale restriction, but given the price point and comparison between adding on at BLT resale vs. buying RIV direct, the extra $ was worth it to me, largely to have home resort advantage for up to 50 years at an EP/HS resort. As for resale, if we bought more BLT and had to sell anywhere close to 2042, it's anyone's guess what that would mean, since BCV/BWV/BRV would be out of the system then. A resale buyer of the L14 15-20 years from now may also be looking at being functionally restricted to their home resort.

Yes, true. I think these resale restrictions will really end up affecting everyone, not just Riviera owners.

 

[Jason@dvcstore]

This analogy does make sense, but if this was truly DVC's concern then why don't they put in a buy back clause in all contracts-- they buy your contract back at a certain percentage of current direct prices -- then DVC is free to resell the points at direct price.

This would completely eliminate the resale market, people could still get out of their contracts when life gets in the way. BUT -- this would mean DVC is sitting on a ton of points until they sell them for their absurdly high cost (such as the PVB contract i just bought for $14500 which direct would have cost me $23500 (heck no would I pay that!)

If they sat on points then they would not have anyone paying the maintenance fees. So essentially the resale market is what is keeping the resorts going, we "evil" resale purchasers are paying the maintenance fees.

Are you saying Disney should insert a clause that says "If you ever want to no longer be a member then we will buy your property back from you at XX% of our list price on the date you decide to sell?" So basically owners would have to take a risk not knowing that if percentage would be higher or lower than fair market value. Disney would also be taking a risk as well because they have to buy it back automatically even if that amount is fair to Disney or not.

I think that scenario is too risky to Disney. Having ROFR on the contracts currently gives the right to do what they want when they want. I have said it before and I will say it again the way to eliminate the resale market is to figure out why members are selling and trying to reduce the number of members selling. If everyone purchased and never sold that would indeed eliminate the resale market.

 

[kniquy]

I think that scenario is too risky to Disney.

It is definitely risky and then DVC would be sitting on tens of thousands of points with no one paying the dues -they certainly don't want this to happen- this is probably why they will never step in to eliminate the resale market. The are just trying to create a large enough gap with all their resale restrictions to make people cave and spend thousands more on a direct contract because the "perks" are worth it.

Believe me I love the resale market (have bought 2 resales contracts) and would not and could not afford to buy direct.

 

[sky2823]

I believe this restriction will be modified in some way shape or form in the very very near future. Whether they didn’t want to spill the beans on DVC 2 before copper creek was sold, wanted to test the consumer or even just a mistake.

I think riviera will be awesome. I probably won’t buy as I think it’s so huge and there will be enough availability at 7 months to suit my needs. However, it has enough to offer where I think people will love it.

Side note: does anyone know if the gondolas will stop during lightening yet?

 

[KAT4DISNEY]

I want Riviera but I won't buy. I was going to. I had (and still have) $25,000 saved as a down payment, so I was going to buy a nice amount of points. But then Disney decided to treat owners like they are criminals who are doing shady dealings under the table and 'cheating' Disney. So, have bought Direct before (325 points at Poly) but I will probably will never buy Direct again. As long as Disney is going to try to damage the value and use of my DVC memberships, why should I pay their premium price? I will just keep buying on the Resale Market. It is much cheaper and less of a loss if Disney decides to restrict things even more.

I'm in the camp that had no intention to purchase Riviera although I have been know to change my mind....... The resale restrictions remove it as an option for me. I'm very unhappy with the direction that DVC is taking with that and their lock-off premium increases as well t and a purchase there is a confirmation to DVC that they can make sweeping changes such as this and owners won't care or won't care enough to not purchase. Even if I loved it I have enough other resorts that I'm very happy with and would not give them my ok on the changes via a purchase.

 

[dvcsince93]

While I will probably not buy at DRR, after reading all the posts, I do want to talk to DVC. I will likely buy direct again at some point. There seems to be a lot of frustration about the newest restrictions. While I see the emotions behind the frustrations, In looking at the numbers, the concerns may be a bit overblown.

In looking at possible problems for DRR sellers, it is interesting that, for the restrictions made in 2011, 2016 and 2018, any effect on resales was short lived and, despite the restrictions, the number of resales continued to increase over time. For the year leading up to the restrictions in 2011, resales averaged about 150/month. By the time that the restrictions were added in 2016, resales were up to about 250/month and when additional restrictions were added in 2018, they were about 350/month. Thus, the numbers over the years seem to suggest that sellers ability to make money off of DVC resales was not significantly harmed by previous restrictions. If the goal has been to kill the resale market- they failed…miserably.

It is also difficult to fully ascertain the role that the resale market plays in the DVC membership-somewhere between evil and all-powerful.

For example, about 20% of total contracts sold over the last few year have been resales. Seems big.

In looking at that number it is important to remember that every contract DVD sells increases the total number of contracts while every resale contract just changes who owns the existing contracts. So, while there were about 10K resales over the last two years, there were also 35K new contracts in the system. Currently the annual quantity of resale contracts for the sold out WDW resorts appear to stand at about 1-2% of the total contracts for the resort. Put another way, every year about 98-99 % of the existing contracts do not change hands, which makes resale look rather smaller.

On the other hand, you can quantify the total number of resale transactions over the years (10K in the last couple years and as many as 45K since 1992) in a way that makes it look big again.

Either way, without additional information such as how many direct buyers also buy resale, how many flippers there are and the average time that owners hold their contracts, you really can’t determine what percent of the DVC membership is resale. Disney undoubtedly has that info.

As to the problems for purchasers as discussed by OP, the possibility does exist that members would have problems using DRR resale points at the last minute. Not to be flip (pun intended) but it is something they will learn to deal with. As someone who owned OKW when it was the only WDW DVC resort and even when BWV came on board, the holiday demand was so high that they held a lottery to decide who got to reserve. Not fun and certainly not very flexible. I’m also sure that the people here all have horror stories of problems with changing plans with vacation providers other than DVC.

I would prefer that DVD didn’t screw with the basic BVTC agreement to mess with resale, as they made explicit rules and now they simply ignore the rules they made. And no, I don’t see them going back. I also don’t see it destroying the resale market or DVC.

 

[Madame]

While I will probably not buy at DRR, after reading all the posts, I do want to talk to DVC. I will likely buy direct again at some point. There seems to be a lot of frustration about the newest restrictions. While I see the emotions behind the frustrations, In looking at the numbers, the concerns may be a bit overblown.

In looking at possible problems for DRR sellers, it is interesting that, for the restrictions made in 2011, 2016 and 2018, any effect on resales was short lived and, despite the restrictions, the number of resales continued to increase over time. For the year leading up to the restrictions in 2011, resales averaged about 150/month. By the time that the restrictions were added in 2016, resales were up to about 250/month and when additional restrictions were added in 2018, they were about 350/month. Thus, the numbers over the years seem to suggest that sellers ability to make money off of DVC resales was not significantly harmed by previous restrictions. If the goal has been to kill the resale market- they failed…miserably.

It is also difficult to fully ascertain the role that the resale market plays in the DVC membership-somewhere between evil and all-powerful.

For example, about 20% of total contracts sold over the last few year have been resales. Seems big.

In looking at that number it is important to remember that every contract DVD sells increases the total number of contracts while every resale contract just changes who owns the existing contracts. So, while there were about 10K resales over the last two years, there were also 35K new contracts in the system. Currently the annual quantity of resale contracts for the sold out WDW resorts appear to stand at about 1-2% of the total contracts for the resort. Put another way, every year about 98-99 % of the existing contracts do not change hands, which makes resale look rather smaller.

On the other hand, you can quantify the total number of resale transactions over the years (10K in the last couple years and as many as 45K since 1992) in a way that makes it look big again.

Either way, without additional information such as how many direct buyers also buy resale, how many flippers there are and the average time that owners hold their contracts, you really can’t determine what percent of the DVC membership is resale. Disney undoubtedly has that info.

As to the problems for purchasers as discussed by OP, the possibility does exist that members would have problems using DRR resale points at the last minute. Not to be flip (pun intended) but it is something they will learn to deal with. As someone who owned OKW when it was the only WDW DVC resort and even when BWV came on board, the holiday demand was so high that they held a lottery to decide who got to reserve. Not fun and certainly not very flexible. I’m also sure that the people here all have horror stories of problems with changing plans with vacation providers other than DVC.

I would prefer that DVD didn’t screw with the basic BVTC agreement to mess with resale, as they made explicit rules and now they simply ignore the rules they made. And no, I don’t see them going back. I also don’t see it destroying the resale market or DVC.

You simply cannot compare previous restrictions to the new resale restrictions. Previous restrictions did not alter the functionality of point usage. It doesn’t matter to me who buys DRR direct, but resalers are going to be weighing the restrictions.

Just yesterday on FB someone posted « Help, I have 350 pts at CCV & lost my job. ». There were several helpful people who pointed him in the direction of resale sites & comments of «That’s the great thing about DVC; it holds its resale value»... I’m not buying DRR resale, and certainly not at a price high enough to get him out of hot water if he owned at DRR not CCV. It’ll be interesting to see how many will.

 

[dvcsince93]

While this restriction may be more signficant- all of the restrictions have altered your ability to use resale points as compared to direct purchase points. Its just that most people didn't care about the past restrictions as much as they care about this one.

Disney keeps trying to differentiate between direct points and resale points. This is just another step in that process. The basic reason for the resale market hasn't changed- People want to stay at Disney resorts, people want to save money. The new restrictions may effect the value but as long as there are people who want to be a part of DVC and people who make money from the resale market, it will exist.

I guess we will have to wait and see the ultimate resolution- to date it looks like there have been less than 100 CCV resales so it will be a while before DRR resales start.

 

[zavandor]

While this restriction may be more signficant- all of the restrictions have altered your ability to use resale points as compared to direct purchase points.

I disagree.
The first round of restrictions made resale owners a favor. Preventing them to use points on questionable exchanges pushed resale owners to use their points for DVC resorts which is the best value.
People willing to exchange for other destinations can still rent. For example I've booked a Universal resort for (the equivalent of) 9 points per night.
Nothing of value has been lost with the 2011 restrictions.

Perks in the 2016 restrictions can be of value for some, but a 75 points addon can get you those.

Those new restrictions are very significant, they take away the thing I like most of my DVC: trying different resorts every time I visit. Some buy the one resort where they want to stay every time, but for others like me it's not the way we use DVC. For me DRR resale is a no go from the beginning.
It is possible DRR will be in such high demand, like BCV and BWV that people will buy just to stay there. But the new restrictions are significant and they cut out a very large part of potential resale owners. And a smaller market should mean a lower price.

 

[Jason@dvcstore]

It is possible DRR will be in such high demand, like BCV and BWV that people will buy just to stay there.

That is the key question. If DRR has similar demand to BCV than the restrictions on resale won't matter.