ROFR Question-NEED ADVICE

[PamNC]

Hi there everyone. I'm in the research phase of buying into DVC and I'm comparing going through Disney vs. resale. We don't book that far out - so it doesn't matter where I buy. Okay, that said, here is my question. I was talking to my guide yesterday. He knows I'm comparing these two avenues. I told him about 2 resales that I'm interested in: HHI for $70 a point and Old Key West at $74. He said neither one would pass ROFR. He went on to say they were reselling these all day long at $89 a point. I then told him that I had heard of people passing at these prices and he then said this: "They are passing, BUT it's probably a stripped contract or a contract with points about to expire. Also, you have to watch for past due membership dues on resales."

Okay - I just want to ask - is this true. Are the ones passing at these prices truly stripped or "unclean" contracts? The two I'm looking at are totally clean...all points coming soon. Nothing stripped, borrowed, nothing. He says because of that, they won't pass.

What do you experts think? Also, can folks who have passed recently let me know what you paid per point, where, and the status of the points.

Thanks!

PamNC

 

[bobbiwoz]

Beca has done a wonderful job organizing ROFR information in this thread:

http://www.disboards.com/showthread.php?t=720134

I would expect to pay more than the amounts you've listed for the resorts you mention, but, you may be lucky. An "unbelievable" BWV contract passed recently.


Bobbi

 

[CarolMN]

That's your guide's opinion - and from what I've read here, not one that is shared by many current DVC members. You'll be very interested in reading this thread for some specific answers to your questions:

Anyone made it through (or not made it through) ROFR recently?

Best wishes -

P.S. Oops - posted same thread and you beat me!

 

[JimMIA]

I told him about 2 resales that I'm interested in: HHI for $70 a point and Old Key West at $74. He said neither one would pass ROFR. He went on to say they were reselling these all day long at $89 a point. I then told him that I had heard of people passing at these prices and he then said this: "They are passing, BUT it's probably a stripped contract or a contract with points about to expire. Also, you have to watch for past due membership dues on resales."

Hi Pam. I'm going to be polite and say he is mistaken. Go here http://www.disboards.com/showthread.php?t=720134 and click on the last page for Beca's latest ROFR information. You will also be able to see examples of what has passed and whether or not they were stripped contracts. I think you will find few stripped OKW or HH contracts. The only ROFRs you will find there on OKW or HH are $65 at OKW and $69 at Hilton. Also check with your resale agent; they have a much clearer picture of ROFR than that guide does.

Okay - I just want to ask - is this true. Are the ones passing at these prices truly stripped or "unclean" contracts? The two I'm looking at are totally clean...all points coming soon. Nothing stripped, borrowed, nothing. He says because of that, they won't pass.

What do you experts think? Also, can folks who have passed recently let me know what you paid per point, where, and the status of the points.

We just closed a week ago on an OKW contract at $73. It was 310 points, with 149 '04 points included at no cost and all '05 points coming...certainly not stripped. You WILL see some stripped contracts on the resale boards, but most of the ones I've seen have been SSR. Some people are paying considerably higher prices for OKW than we paid, but those are either small contracts or the people are paying too much, IMHO.

Remember that only a couple of months ago DVC was emailing existing OKW owners offering thousands of points for add-on in virtually every use year. They seemed to have about 10,000 points to dispose of, and they surely did not get rid of all of them. It is always risky to try to predict ROFR, and the threshholds may move up a little when they raise SSR prices in June, but it seems to me $74 should pass. Your resale broker would have a much better grasp of that.

 

[PamNC]

You guys are great - I'm going to check out the thread and do some more research. I had a feeling he was "mistaken."

PamNC

 

[senecabeach]

Ditto...JimMIA, CarolMN,bobiwoz...

Seems to me your guide is mistaken..
Beca's thread will give you some insight as to the process and also the wait time, closing timeframes, frustrations, successes and failures of resales.

Check out all the info..and Best of Luck in whatever you decide!!

 

[2infinityandbeyond]

Is a "stripped" contract one that has no current points available or is it something else?

 

[marthasolar]

We have bought and sold through the Timeshare store at a much cheaper cost than buying through DVC. Whatever our bid has been at it has passed. The contract is what you get. All you have to watch for is who pays for the dues and remember that you pay for the entire year. You miss on the perks that DVC gives at times and they have their own financing but if you have the cash I have not had any problems with outsiders

 

[JimMIA]

Is a "stripped" contract one that has no current points available or is it something else?

I think a better definition would be a contract which does not have its full complement of points. Obviously contracts can be stripped to various degrees, some missing some points, others stripped not only of this year's points but borrowed from next year as well.

The opposite of stripped is a contract that comes with free points. You will occasionally see a contract with all '04 points available, and all '05 coming. That's a great contract...provided you can actually do something with the '04 points (bank, rent, or use).

Since this thread is about ROFR, it's worth noting that it is quite unclear whether the number of points currently available (or not) has anything to do with the ROFR decision. I suspect it does not; I would think Disney would be looking ahead at forward points, not at what is available right now.

 

[CarolMN]

Is a "stripped" contract one that has no current points available or is it something else?

"Stripped" generally means the contract has no current year points available and in addition, very few (or none) from the next use year. In other words, the current owner borrowed some or all of the next use year's points as well as using up all the current use year points.

Obviously, those contracts are worth less than those that have current year points available. Sometimes you can find contracts that even have banked points available in addition to the current year points.

Best wishes -

 

[Caskbill]

Is a "stripped" contract one that has no current points available or is it something else?

Yes, it can definitely be that, but it could be even worse by not only having no points available for the current year, but even having points borrowed from next year and already used. Someone buying a contract like that might not get any points until 2007.

Things to look for in a resale contract that affect the 'value' of the contract.

Good:
Points banked INTO the contract from the previous year

Semi-Bad (Restricted use which may result in loss of points if not able to be used)
Points that have been converted into reservation points
Points that have been converted into holding points
Any points in the account that were not banked and it's pass the banking deadlines

BAD:
Current year points that have already been used
Points borrowed from next year and already used

Negotiable:
Payment of Dues. This one is tricky because most people don't understand how dues apply. They are by calendar year, not use year, but there are ways to see who should pay dues on what.

Example: A contract has a August UY, no 2004 points left, and all 2005 points. The original owner paid all the January 2005 maintenance fees. They ask for reimbursement of ALL those fees stating ALL of the 2005 points are still available.

The error is that the fees they paid are partially for their 2004 points and partially for their 2005 points. In this case, 2004 goes from Aug 2004 thru July 2005, and 2005 UY goes Aug 2005 thru July 2006. The dues paid January 2005 cover 7-months of 2004 UY points, and 5-months of 2005 UY points, so the correct reimbursement would be 5/12ths of the annual fee. The new owner will end up paying the remaining 7/12ths of the 2005 points' dues on Jan 15th, 2006.

What many sellers conveniently forget, and that new buyers are not aware of, is that when first purchased from Disney, the buyers paid prorated dues based on how many months were left in the calendar year. In this example, let's assume the original buyer bought from Disney in August, 1998. At that time they paid 5/12ths of the annual dues for their 1998 points. Then in Jan 1999, they paid a full year's dues: But that amount was for 7/12ths of their 1998 dues, and 5/12ths of their 1999 dues. That's how the offset between calendar year dues and Use Year works.

If on the other hand, the contract had 7/12ths of the 2004 points banked into 2005, then the new owner will be getting the use of those points and to reimburse the full Jan 2005 dues already paid would be appropriate.

 

[JimMIA]

Caskbill's analysis, as usual, is very good. The only thing I would add is to the "Good" category: points available for the current use year which can still be banked are definitely a good thing.

If this year's points are not bankable, you have only the options of using them or renting them. By definition, if they are not bankable it is late in the use year and maybe too late for you to use them conveniently. And many owners, especially new owners, are not comfortable with renting points.

However, if the points are bankable, you don't have to worry; you just bank them and enjoy them next year.

 

[PamNC]

now my head is spinning. You guys are GOOD. I'm too right-brain to get this. Can anyone draw me a picture

PamNC

 

[Caskbill]

now my head is spinning. You guys are GOOD. I'm too right-brain to get this. Can anyone draw me a picture

PamNC

Don't worry, it starts to make sense after awhile.

If you purchase direct from Disney, everything will be presented upfront and should be pretty straight forward.

If you purchase resale, there are important considerations besides the asking price. (Price per point)

• These include all point status issues (Use Year month, banked points, borrowed, used, etc)
  
• And all financial issues: Price/point, closing costs, additional fees, maintenance fees (dues).

No one here knows of any secret formula used by Disney as to whether they'll use ROFR or not. Besides the above items, Disney probably also considers things such as which resort, and possibly might even look at if they have a waitlist of buyers for that resort. (That would be good business sense)

If you see a resale that's of interest to you, feel free to post, stating all the details.

We can all then give you some impressions on whether we think the deal is Good, Bad, or Ugly.

 

[PamNC]

Caskbill,

Hi there - thank you. I may take you up on that once I decide on a resale.

PamNC