Scared to death by the restrictions on resale pts thread

[bom_noite]

Ouch!

I'm the original poster (I assume that is what OP stands for). I am new to the boards because we are trying to buy in to dvc for the first time. I guarantee you that I'm not a shill (although I have no idea what that is so I guess I could be lying)...

You are officially ok with me after your explanation.

Allow me to explain my situation. We are actually in the process of SELLING our original contract only to turn around and buy a resale (with more points). Long story, but, it makes financial sense. If everything go's through we walk away with more points at our favorite resort and pay nothing out of pocket.

I actually tried to pitch the same deal to my DVC Guide and they turned me down. Thus, if I had any fear on what you are saying I would hold off. Keep in mind what the speculation on those other threads are:

1) This may be a scare tactic - I think DVC has priced themselves out of the game personally.

I am convinced that this is what is generating all this discussion. When the "spread" 'tween DVC and resale was $20 to $25, DVC could add a discount here and a perk there to even out the score. It is becoming impossible for them when the spread is $40 to $60.

I actually worked with WDW (as a contractor years ago). Disney is a big company and I can tell you they are somewhat sensitive to profits. This is what leads me to believe they may do something.

2) If they did anything it may be grandfathered in.

3) If they did anything it would most likely be in the form of advanced perks to those who pay the extra price to buy through them - and - not degraded privileges to those who do not.

4) If they do anything too drastic they will in turn devalue resales and and they would lose a portion of their sales pitch. In addition over 100,000 existing members be angry with them.

If they did anything too drastic Orlando has 20 lawyers who would love to challenge them with a class-action. It really matters not if DVC is on firm ground or not - anyone can submit a lawsuit. And, the WSJ and Orlando Sentinal will be more then happy to report on it. That does not help future sales one iota.

I think existing members will also be a bit disillusioned with them and say: "Hey, you changed the rules once - not sure I trust you to buy an add-on in the future".

DVC will have to be very sensitive to all of these things. If they are not careful then the whole plan backfires on them!

For these reasons I think the grandfathering argument is a stronger one.

5) While the grandfather route makes more sense (in my opinion) I think they could also offer resale folks a chance to "upgrade" their second class contract. If they did that - it is now a business decision you would have to make.

6) If you do buy resale you will then immediately be a member. And, as a member you will have the ability to buy additional points through DVC - they will NEVER deny you that privilege. And, they usually have a discount or perk they will throw on top of it.

7) But, there is a chance that I am wrong on all of the above.

Our primary motivation for the Buy then Sell decision is this: Have the advantage of the 11 Month booking window. Time was I could make a reservation 3 months in advance and get what I wanted. But, every time they add a new member I have a new competitor for a reservation.

And, in my humble opinion, it is not going to get better: Once Hawaii comes on-line you will have a ton of "mainlanders" who just cannot afford the flights to Hawaii once a year - so - they are now using their points to book at WDW.

So, my personal advice to you is this: whether you end up buying through resale or DVC get the Home Resort you covet. That, to me is equally important to the DVC vs. Resale dilemma!

If you are still nervous I would offer up the following suggestions:

1) Buy through DVC and say: I want xx resort - but cannot afford a 150 point contract. Sell me 75 at my desired resort or I am forced to go to the resale market.

If they balk or say "ohhhhhhh resales are bad - they will be 2nd class in a few years", I would counter: "look - I am trying to buy through you - work with me!"

2) If you do buy resale maybe start with a few smaller contracts - then see what shakes out in the next few years. Smaller contracts are always easier to sell then mid-size or large contracts. And, no matter what they do I believe that will always be the case.

A person with a "legal" DVC contract will say: I just want 50, 75 or 100 points and I am willing to give in to the 2nd class status on a small add-on. I do not see that changing much no matter what they do. By buying multiple small contracts you increase your flexibility when trying to unload.

3) You may consider buying in via a small 50 point resale contract - then - as a member start adding on through DVC over time. You may not be aware, but, as a member you can almost add-on at any resort by just calling your guide and starting the paperwork. If BLT is where you want to stay, then, I see 3 or 4 smaller contracts on the Timeshare Store now.

I understand your concerns and if I was crass - my apologies. I hope this helps you in your decision making process.

 

[kdzgon]

That is an awfully interesting question, isn't it?

(FWIW, this one doesn't feel like a shill to me.)

I am with you on this - while this might not come to pass I believe at a minimum it is being actively evaluated. I trust my source quite a bit and while I was told the "powers that be" are being very tight-lipped, I was also told the likelihood of resale restrictions if not elimination is a very real possibility. More info is supposed to be released ~November, but the changes are slated for ~January.

Part of the catalyst is some unscrupulous resellers, but I suspect part of it is just poor management decisions that have not been thought through enough. After all, these are the same geniuses that are raising the cost of SSR points to $120!

As to Disney being worried about "killing" the resale market, if they take it over that becomes a non-issue. I understand there are quite a number of people that ask the guides if they can purchase a slightly cheaper resale contract through Disney instead.

I know this: message board or no, I would feel pretty badly if I was advising other posters to ignore the "ridiculous rumors" if indeed they end up being even partially true. If these restrictions come to pass, Disney will not be the first timeshare company to have done this or a similar change.

 

[Brian Noble]

If these restrictions come to pass, Disney will not be the first timeshare company to have done this or a similar change.

True, but all of the restrictions I've examined carefully are all bark and no bite. If you look hard at them, they turn out to have little or no value in most cases. And, that's not surprising, because *someone* has to pay for the perks that people *do* get. That someone can't be the general ownership, without running afoul of the legal restrictions on timeshares in most states. That leaves either the management company (which can't bill it to the owners for the same reasons) or the development/sales arm (which *can* fold it into the purchase price). Guess who usually pays? Exactly---sales, via purchase prices that marks pay when buying from the developer.

But, those development/sales guys are clever, and desirous of profit, and so the amount they actually pay out is small indeed at the end of the day---and usually any perks are "subject to change without notice". Because, if sales dry up, so does the revenue to pay for the perks.

At the end of the day, if you follow the money, it's almost inevitable that any distinctions have to end up being of little or no value, or they are not sustainable. But they are "shiny objects" that effectively distract people from the real value proposition, and so are surprisingly effective on the sales floor.

 

[rondesj]

restriction is not that hard to believe. It can be done slowly over time, just as this forum has done with trading points with the 50 post minimum post to be able to trade. Disney could apply slow changes to their rules and add more and more restriction so not to scare people off as they would if the changes were made quickly and more noticable

 

[Jason@dvcstore]

Plus, if they did make such changes they would almost certainly grandfather existing owners and/or allow them to become an insider by buying more points. One would still end up better off overall from the resale. Also, as I mentioned previously, the things they'd likely take away might be doing you a favor anyway.

I agree with Dean.

Jason

 

[Dean]

It has been suggested to me by someone in a position to know more that indeed there are changes coming in this area. We'll see. It does make sense that this is where DVC should have been years ago and it is reasonable for them to protect themselves now, even at the expense of those looking to buy or sell aftermarket. My question is more to how it might be done than if. The benign thing to do would be to either set a SHORT TERM cutoff date going forward grandfathering current members OR to leave everyone out and allow them to opt in for a price or add on. It should be fun and would likely make the reallocation and valet threads pale in comparison if it does happen.

 

[dbs1228]

Just does not seem right to put restrictions on buying resale, I can see getting extra "perks" for buying direct but as Dean said lets see how it will be done (if it is done). Most of my points are direct, my only resale is SSR bought for 11 month window for THV. I did 2 tours, 1 in 2006 and 1 in Feb and both times the guides did a big pitch on the ability to sell (resale values) and ROFR. This was a big selling point for us, not that we would consider selling anytime in the near future, but the peace of mind that resale is stronger then most timeshares and if we had to we could.

It will be interesting.......

 

[JimMIA]

I did 2 tours, 1 in 2006 and 1 in Feb and both times the guides did a big pitch on the ability to sell (resale values) and ROFR. This was a big selling point for us, not that we would consider selling anytime in the near future, but the peace of mind that resale is stronger then most timeshares and if we had to we could.

It will be interesting.......

I think that is changing pretty dramatically because DVC is not using ROFR much any more. Personally, I hope they resume ROFR once they work their way through all the contracts they're taking back through foreclosure and givebacks, but we'll see.

In many ways, DVC is getting to be just another timeshare...especially as far as the financial aspects go. I think the spread between resale and direct is already so great that it makes no sense to purchase direct. I can't think of any intellectually-honest reason to recommend a direct purchase today.

 

[TLSnell1981]

Well, we have been considering adding on again, via resale. There's no reason to buy direct...NONE!!! If this is were Disney is headed, we won't buy any more points...PERIOD!! We only use our points for DVC, but I'm losing faith (and trust) in Disney.

 

[hollis]

I don't think I'd ever care for RCI trading. But treating direct and resales points differently? You've got to be kidding me.

 

[Chuck S]

I don't think I'd ever care for RCI trading. But treating direct and resales points differently? You've got to be kidding me.

I wouldn't be surprised to see it at some point. Many other timeshares do differentiate perks and privileges between direct buyers and resale buyers.

 

[Brian Noble]

I think that is changing pretty dramatically because DVC is not using ROFR much any more. Personally, I hope they resume ROFR once they work their way through all the contracts they're taking back through foreclosure and givebacks, but we'll see.

Remember---ROFR doesn't set the market price. It only determines who gets the contract. You still need a willing third-party buyer. In an opaque market, ROFR has some positive effects on value. But, in an efficient one, it actually depresses values slightly, because the rightsholder doesn't have to bid competitively. And DVC has a fairly efficient resale market....

In other words, the only one benefitting from ROFR is, (surprise!) the Mouse.

 

[dianeschlicht]

I keep wondering why DVC doesn't just take over the resale market anyway. Lots of timeshares offer a service to sell contracts for owners. Of course, that is also why they prices end up being so low for some of those contracts.

Count me as another one who is surprised that DVC hasn't done this yet.

 

[BWV Dreamin]

It has been suggested to me by someone in a position to know more that indeed there are changes coming in this area. We'll see. It does make sense that this is where DVC should have been years ago and it is reasonable for them to protect themselves now, even at the expense of those looking to buy or sell aftermarket. My question is more to how it might be done than if. The benign thing to do would be to either set a SHORT TERM cutoff date going forward grandfathering current members OR to leave everyone out and allow them to opt in for a price or add on. It should be fun and would likely make the reallocation and valet threads pale in comparison if it does happen.

You are too funny Dean!!!

 

[littlestar]

This is not a nice rumor in a bad economy. With DVC it's always been nice knowing in the back of your mind that you could exit if you had a job loss or a death in the family that changes your circumstances and get some money back out of the purchase.

So if this rumor is true, if you buy retail or resale you could end up being screwed if you need to sell. I would never say it couldn't happen because look what Marriott did. I wish I didn't even own Marriott, although I like staying at their resorts. I took Marriott off my signature because i don't know what to expect out of them anymore.

 

[Dean]

Just does not seem right to put restrictions on buying resale, I can see getting extra "perks" for buying direct but as Dean said lets see how it will be done (if it is done). Most of my points are direct, my only resale is SSR bought for 11 month window for THV. I did 2 tours, 1 in 2006 and 1 in Feb and both times the guides did a big pitch on the ability to sell (resale values) and ROFR. This was a big selling point for us, not that we would consider selling anytime in the near future, but the peace of mind that resale is stronger then most timeshares and if we had to we could.

It will be interesting.......

Why not? I ask for an answer other than an emotional one. IMO they should have done so years ago as it only makes sense from a business decision. Regardless, my info suggests such changes ARE coming.

I keep wondering why DVC doesn't just take over the resale market anyway. Lots of timeshares offer a service to sell contracts for owners. Of course, that is also why they prices end up being so low for some of those contracts.

Count me as another one who is surprised that DVC hasn't done this yet.

There really isn't any money in resales and unless you differentiate between retail and resale OR unless you have no retail points to sell otherwise, you're simply competing with yourself at a much lower profit margin. Plus if they did go into the resale market, expect commissions of 35-40% with a starting point of retail price.

 

[Brian Noble]

So if this rumor is true, if you buy retail or resale you could end up being screwed if you need to sell.

Doubtful. Usually, the market prices these sorts of things very rationally. For example, when the OKW extension was offered, most of the dispassionate analyses suggested that the true value was somewhere between $5 and $10 per point (closer to $5), not the $15 being asked. Guess what? The resale market prices it between $5 and $10 (closer to $5). The resale markets that have collapsed are those where supply drastically outstrips demand, and many of the deeds available for resale have negative value compared to renting. For example, any Wyndham deed with MF/K above about $5.50 has a negative value, because you can rent reservations on the open market for less. The remainder aren't cheap because of the relatively meaningless VIP---they were cheap even when resale points could be qualified. The remainder are cheap because there is practically an infinite supply of them vs. the number of people looking to buy resale.

But, the resale market for deeds with strong residual value---e.g. Marriott Platinum weeks---still sell for decent prices, even though they are "restricted".

In most cases, the restrictions themselves are relatively valueless, and so the market should price them accordingly. There are a few exceptions---Diamond deeds in the Trust cannot be resold at all and remain in the Trust---but even there, if the underlying week still has value, it still has value. I expect most changes that Disney comes up with to be window dressing compared to the underlying value of the points vs. the open rental market. Some people will be driven to a developer purchase in the heat of the sales floor impulse purchase process, but the overall market should see it for what it is. For example, not being able to trade the points in RCI? Every Member should be so lucky. There is *no way* that you are getting an even trade (in terms of rental value) for all but the smallest handful of exchanges. Of course, we bottom-feeders who exchange in would be sad, but frankly we're last in the line of anyone who should expect anything.

The bigger threat to resale value in DVC contracts is IMO the rate at which new contracts are being sold. The Membership is growing---*quickly*---and at any time, some fraction of those people will want to sell. So, the raw pool of sellers is growing. Unless the potential buyers' market is also growing at the same rate, prices simply have to come down.

 

[cm8]

Just as you posted orignally if resales were restricted, Disney would have a hard time selling new contracts, because who would buy something they could not unload or sell if times got hard. IMO i believe the post you read on this is members who bought direct not knowing much about resales and are now justifying the higher prices they got stuck paying!

well said!

 

[hollis]

well said!

I certainly hope that is true.

 

[LIFERBABE]

Doubtful. Usually, the market prices these sorts of things very rationally. For example, when the OKW extension was offered, most of the dispassionate analyses suggested that the true value was somewhere between $5 and $10 per point (closer to $5), not the $15 being asked. Guess what? The resale market prices it between $5 and $10 (closer to $5).

Agree.

I remember those threads, where it was strongly believed that the extended OKW contracts would be valued at so much more. All along, DVD knew it was a cash grab from the owners who only paid $58 a point. Jim Lewis was pretty ticked about that on the 2006 MC and next thing you know.....OKW Extension!!! (sometimes you have to look past the fake smiles)
You really have to understand motivations and JL and co are out for cash. Nothing more!
If they can get paid, they will!! I would be pretty ticked if I had cut them a check to extend and then they abandoned ROFR and left those owners holding the bag. Dont think it cant happen with contract restrictions because it will.
I love my DVC, but my rose colored glasses fell off a long time ago
It works for me and WDW is not going anywhere and as long as CRO is charging $300 a night racks, the value of ownership will maintain.