ROFR info

[Dean]

I thought I'd post this info. As some of you know, I'd had one of my contracts for sale privately. I had previously sold a 50 pt contract privately. The price was $18500 for 270 April points with all there for 2005 but none banked, borrowed or 2004 points Buyer was paying all closing and transfers and the maint fee. I felt this a fair price and will save me about $1000 over selling through a company at $72-73 pp. It would have been a fair deal to the seller also but DVC has decided to exercise their ROFR and buy it back.

 

[DebbieB]

Dean,

Which resort?

 

[Dean]

Dean,

Which resort?

OKW, just forgot to type it.

 

[cruise-o-matic]

Unfortunately for your buyer, Disney was looking at the raw #'s and saw an opportunity to snatch up some points w/o having to pay a commission.

 

[DebbieB]

The seller pays the commission regardless of ROFR.

 

[cruise-o-matic]

The seller pays the commission regardless of ROFR.

I should have clarified this. Dean's price of 18,500 came out to roughly $68.52 pp. If he would have sold it through a broker at the going price of $75 pp, the price would have been $20,250. Less 12% brokerage commision ($2,430), the net would have been $17,820. So by selling it "commision less", both buyer and seller come out ahead.

And in reality, it's the buyer who pays the commission since it's factored into the sales price. My Granddad sold his townhome FSBO about 10 years ago. He basically looked at the going price for townhomes in his community and discounted it by 6%. Saved the buyer about $10K, but ticked off his former neighbors b/c it skewed the comps.

 

[RobDoc]

I should have clarified this. Dean's price of 18,500 came out to roughly $68.52 pp. If he would have sold it through a broker at the going price of $75 pp, the price would have been $20,250. Less 12% brokerage commision ($2,430), the net would have been $17,820. So by selling it "commision less", both buyer and seller come out ahead.

And in reality, it's the buyer who pays the commission since it's factored into the sales price. ...

With ROFR, the resale transaction is often not in the favor of the buyer, since DVC may intervene and purchase themselves. The seller may come out ahead by not paying a commission and Disney may get a contract they can turn around quickly, but the potential buyer who made the offer now is back to square one with nothing to show for his investment of time and effort.

In this case, using the numbers provided and the reported current Timeshare Store commission of 10%, a purchase price of $75 per point ($20,250) minus the 10% commission, the net price to the seller would be
$18,225 - within $275 of the amount received. In this case, the seller would have gotten basically the same amount and the buyer would have gotten his DVC contract. Win/Win situation.

As long as DVC continues ROFR, I see little advantage for a buyer to consider a purchase directly from the seller - it appears it will usually cost the same as thru a broker. The seller achieves his goal (selling the timeshare) in either situation, but the buyer will always have to offer enough to pass ROFR. As long as brokered sales are available at ROFR, buyers have no reason not to take advantage of their services. The broker's commission won't cost the buyer any more than if he offered a ROFR amount directly to the buyer.

If brokered sales were typically going far above ROFR, a direct purchase would benefit buyers- but that is not the case at this time.

When Disney stops supporting resale prices thru ROFR, we will see prices truly determined by the market (as with most other timeshares) and prices will likely make a significant drop. When that time comes, purchases FSBO will benefit both buyer and seller , but as it presently stands, the buyer has little to gain by not enlisting the services of a resale broker.

.02

 

[aceshigh73]

So I have a stupid question then.....

Why, if you know Disney has a ROFR threshold, do you have to put the EXACT selling price on the form? Why cant you agree on a price of $18.5k but put $21k on the contract?

Granted, I have never seen a sales contract, etc from Disney, but it makes sense as im typing this!

 

[Scotch]

So I have a stupid question then.....

Why, if you know Disney has a ROFR threshold, do you have to put the EXACT selling price on the form? Why cant you agree on a price of $18.5k but put $21k on the contract?

Granted, I have never seen a sales contract, etc from Disney, but it makes sense as im typing this!

Uh, perhaps to avoid fraud (since doing so would be intentional misrepresentation of facts to prevent Disney to exercise its known right to buy at the *true* agreed upon terms).

 

[FamilyGuy]

Uh, perhaps to avoid fraud (since doing so would be intentional misrepresentation of facts to prevent Disney to exercise its known right to buy at the *true* agreed upon terms).

In addition to being a little on the fraudulent side (something that many people are not afraid to do these days, but I would not condone, endorse or practice in anyway), it would be harder to execute then is suggested above.

Not impossible, just would require alot of covering up. Particularly at the closing table, could you imagine explaining this to the closing company?....

 

[aceshigh73]

In addition to being a little on the fraudulent side (something that many people are not afraid to do these days, but I would not condone, endorse or practice in anyway), it would be harder to execute then is suggested above.

Not impossible, just would require alot of covering up. Particularly at the closing table, could you imagine explaining this to the closing company?....

Its probably easier than most people think....
1) agree on price... if its in ROFR zone.. up it some...
2) the difference in price is given back to the buyer after closing in a personal check or Money order of sorts...
Granted, there's some trust involved with the buyer/seller.. but if they want that sweet deal, they should go for it...

 

[DrTomorrow]

Well, aside from the legal problems (and I for one would NOT want to get on the wrong side of Disney Legal), the buyer is taking a real risk. After the "official" closing is complete, the buyer has no recourse if the seller decides not to kick back the agreed-upon difference. "Um, I knowingly participated in an illegal real estate transaction, defrauding not only Disney, but the State of Florida, and now the other party to this fraud won't honor the under-the-table agreement to kick back some of the purchase price." No, can't see that happening....

 

[Dean]

I doubt an OKW contract, with 270 points coming in April and no other points available, would bring $75 pp through a broker. Plus, we really don't know the true threshold of ROFR. IMO, this was truly a win win situation had it gone through. The buyer was well aware of ROFR and had the opportunity to increase the price accordingly prior to submission, they were wiling to take the chance to try to get a better deal. They made an active decision to take their chances, their choice. In addition to the savings on sale price, the buyer was using TT which charges only $250 for a closing rather than the $450 or so they would have paid if they had bought from a broker.

As for buying privately or through a broker, I see them as about the same from ease of transaction and risk. If I found what I wanted privately, I wouldn't hesitate to proceed as long as the contract were what I wanted. All the better if I'm saving a few $$$.