Right of First Refusal? Clarification, please?

[UnderTheMistletoe]

Hi all-

Can someone explain the right of first refusal to me?

Thanks!

 

[Deb & Bill]

If Disney feels the resale price agreed upon by the buyer and reseller is too low, they will buy it back at that price and the buyer will need to find another contract to purchase. Or if the contract is small an they want those points, or the contract is not stripped, they may buy it back.

 

[tjkraz]

Buyer and seller agree to terms of deal on a resale contract. Deal must then go to DVC for review. If the deal is particularly attractive to DVC, they can purchase the contract at the agreed-upon terms.

Seller gets money from DVC. Resale agent gets commission. Buyer gets nothing. There is no financial loss to the buyer, but he/she must start all over again looking for another contract.

DVC sells points at the sold-out resorts (all except SSR) for a flat $95 each. Financially it's in their interest to buy-back the contract if the sale price is significantly below that. In other words, it's a given they would ROFR on BoardWalk points at $70 each when they can almost immediately re-sell for $95. But the reality is there's no magic formula you can use to say XXX per point will pass ROFR while YYY will not.

 

[Darkside]

Actually, first right of refusal is way that Disney can maintain the value and prices of DVCs. This is in everyones interest. If for some reason you had to sell your DVC, you know that your DVC value will always be there. This system does work, especially when you see the older DVCs like BWV keep the prices at $95 per point. In the past I have seen many timeshares get sold for nothing and what it creates is a downward price trend for that timeshare. This is one of the main reasons I bought from Disney instead of another timeshare like Fairfield Resorts.

 

[MinnieGirl33]

Actually, first right of refusal is way that Disney can maintain the value and prices of DVCs. This is in everyones interest. If for some reason you had to sell your DVC, you know that your DVC value will always be there. This system does work, especially when you see the older DVCs like BWV keep the prices at $95 per point. In the past I have seen many timeshares get sold for nothing and what it creates is a downward price trend for that timeshare. This is one of the main reasons I bought from Disney instead of another timeshare like Fairfield Resorts.

While it may be a pain for a buyer, it most definately protects current members investment value.

 

[salmoneous]

While it may be a pain for a buyer, it most definately protects current members investment value.

I have a slightly different view on this, and wonder if I'm missing something.

I don't see ROFR as being the thing propping up DVC value. To me, what's propping up the values are all those people willing to pay Disney $95/point for the old resorts. From what I can tell, ROFR is used when Disney can turn a profit on the deal. Disney has a waitlist of people willing to pay $95/point - why wouldn't they use ROFR to buy contracts that allow them to make a quick profit after transaction costs?

 

[RobDoc]

This may be a "chicken or the egg" type of scenario. One reason buyers are willing to purchase sold out resorts from Disney may also be that resales are not significantly cheaper. Of course there always those who don't even know about resales - but DVC isn't exactly advertising the fact that they are selling the other resorts.

IMO, resale values have been propped up by the threat of ROFR- both by those selling (realizing Disney will support some level of pricing) and by those buying (realizing that Disney will purchase an offer deemed to be "too low").

In addition, at this point, the market has certainly influenced purchase of the smaller onsite resorts to their current level of purchase and yet DVC has not raised their sale pricing for those resorts- keeping them at $95. Another factor may be that many resales are now listed stripped of points but are still grabbed by buyers.

Interesting phenomenon, with no definitive explanation as to the real cause. I suspect there are several factors at play.