Selling DVC

[LJERRY]

I am so thankful for these boards. We are wanting to sell our 200 points at BLT, however, we just purchased them a year ago, so there is a lot of time left on this contract! I will contact the TSS today to seek their advise.
My parents are buying a condo in Orlando, which we will be free to visit any time we like. Not to mention that my dad is trying to talk dh into doing the same...it's not a bad idea, actually, but at this point I would rather just sell the vacation club and use theirs and save that monthly payment!

 

[Slakk]

I just listed three contracts with TSS - we have sold a few others through them and they have done a good job. We have two small fully loaded contracts that I think will sell quickly and a larger one that will probably take some time. None of ours are stripped and would be a good value so hopefully they will sell.

It does frustrate me to see there is not much of a swing points wise from a full contract to a stripped and I have even thought of stripping them and lowering the price $5 LOL.

We used to have over 500 points and will now be down to one 50 point contract that we will keep for perks (assuming DVC keeps any).

 

[silmarg]

It does frustrate me to see there is not much of a swing points wise from a full contract to a stripped and I have even thought of stripping them and lowering the price $5 LOL.

I agree, the difference between a loaded and a stripped contract does not make sense to me either.

As a buyer, I won't buy a stripped contact... but from a selling point of view, I dont think sellers are fairly compensated for their loaded contracts.

And to me it seems ROFR doesnt compensate for the stripped vs loaded factor either.

 

[BWV Dreamin]

I agree, the difference between a loaded and a stripped contract does not make sense to me either.

As a buyer, I won't buy a stripped contact... but from a selling point of view, I dont think sellers are fairly compensated for their loaded contracts.

And to me it seems ROFR doesnt compensate for the stripped vs loaded factor either.

I just sold a stripped contract (no points available till 2011). I listed it with another broker...it did not move for about a month. Re-listed it with TSS, dropped the price $5/pt. It sold within 2 hours of posting the listing....

 

[Slakk]

I just sold a stripped contract (no points available till 2011). I listed it with another broker...it did not move for about a month. Re-listed it with TSS, dropped the price $5/pt. It sold within 2 hours of posting the listing....

and see I am selling two loaded contracts with 2009 points and I will be lucky to get $5 more than a stripped. You just proved the point. I would be better off taking the 2009 points and transferring them even at $10 a point then what I am going to get.

But instead I am banking on them selling fast and at my price - they are a steal as far as I am concerned. But if they don't sell quick I will yank the 2009 points LOL! In fat one has a small ressie attached for next month which would have added the majority of the 2008 points (banked). I almost cancelled but decided it won't close before then anyway and I won't get that money from them anyway.

We just don't plan to use DVC anymore, we have APs and will keep a small contract and go back to CRO when we decided to visit.

 

[MAGICX2]

I am starting to see posts here about people selling their contracts VERY quickly. Just how low are you listing these contracts and, for those of you who are listing below the $73 per point mark, are your contracts paid off? If we took the "suggested sales price" of $72 that the TSS gave us we would still have to bring $1800 to the closing! There is no way our budget could take that kind of hit.

At what we currently have it listed at we will already have to bring to closing an amount that will be stretching us thin. This is due to the 10% commission TSS charges. Why is the commission so high by the way? I know that, in Ohio at least, the average real estate commission is between 4-6%. Why is this so much higher?

BTW...I was told that a contract with 2009 points intact is not considered a "loaded" contract. A contract that had 2008 points would be considered loaded, but 2009 points are almost expected.

 

[ACDSNY]

I am still waiting to even get a nibble on my listing, 4 weeks and counting.

The size of your contact can make a big difference too. It seems a 100 point or lower contract sells quicker if it's price right.

In addition, the price per point isn't everything, you need to consider MFs and closing costs. Typically if the seller used the 2009 and/or 2010 points they also pay the MFs; therefore, the price between a contract with points and one without may only be around $2-3 different.

 

[Slakk]

I am starting to see posts here about people selling their contracts VERY quickly. Just how low are you listing these contracts and, for those of you who are listing below the $73 per point mark, are your contracts paid off? If we took the "suggested sales price" of $72 that the TSS gave us we would still have to bring $1800 to the closing! There is no way our budget could take that kind of hit.

At what we currently have it listed at we will already have to bring to closing an amount that will be stretching us thin. This is due to the 10% commission TSS charges. Why is the commission so high by the way? I know that, in Ohio at least, the average real estate commission is between 4-6%. Why is this so much higher?

BTW...I was told that a contract with 2009 points intact is not considered a "loaded" contract. A contract that had 2008 points would be considered loaded, but 2009 points are almost expected.

If you look online now you will see a ton of stripped contracts. I know for my resorts I think only one listing of about the 20 on TSS has 2009 points and for the other resort it is so new their are only a couple and 2 are stripped until 2012 and the other 2 have 2010 points.

I think a fully loaded contract has the amount of points you would get if you bought through DVC anything else is just icing.

 

[Slakk]

I am starting to see posts here about people selling their contracts VERY quickly. Just how low are you listing these contracts and, for those of you who are listing below the $73 per point mark, are your contracts paid off? If we took the "suggested sales price" of $72 that the TSS gave us we would still have to bring $1800 to the closing! There is no way our budget could take that kind of hit.

At what we currently have it listed at we will already have to bring to closing an amount that will be stretching us thin. This is due to the 10% commission TSS charges. Why is the commission so high by the way? I know that, in Ohio at least, the average real estate commission is between 4-6%. Why is this so much higher?

BTW...I was told that a contract with 2009 points intact is not considered a "loaded" contract. A contract that had 2008 points would be considered loaded, but 2009 points are almost expected.

I think there are a lot of factors going into price and you need to align your contract to what you have. As I said I have some small contracts at a resort that have all their points intact. I saw a Sale Pending for the same size that is listed about $7 a point cheaper but mine has 2 years more points so I would think my extra points are worth the difference. If the market disagrees then I will simply transfer the points to someone and lower the price but still make my number.

I received a list from TSS of what has sold at what price but unless you know the size of the contract, the amount of points available and even the UY the number they give you is just a range. I find TSS to have the best prices and knowledge - but again make sure the number is not apples and oranges.

 

[BWV Dreamin]

I think from a sellers POV, there are two angles to use to try to separate your contract from everyone elses. First, you could bank points and sell it loaded asking only a couple of dollars more than just a regular current UY contract. This will sell your contract sooner as the buyer will get more points for his dollar. Seller gains only minimal money on the banked points but gets it sold quicker. Second, you could use or rent two years worth of points (stripped) leaving that third year available for the buyer to borrow, and sell it cheap. Your net should not be that much of a difference between the two. Again, the lower price catches the buyers eye. Who cares if it passes ROFR....you as the seller gets paid regardless.

Any amount due on a loan should have no bearing on what to price a resale contract. Ultimately it is the buyer who sets the price, not the seller as a contract is only worth what someone is willing to pay for it.

 

[silmarg]

Who cares if it passes ROFR....you as the seller gets paid regardless.

Any amount due on a loan should have no bearing on what to price a resale contract.

Ultimately it is the buyer who sets the price, not the seller as a contract is only worth what someone is willing to pay for it.

Amen sister (or brother - as the case may be).

If there were 10 Commandments to DVC Resales, these would be three of them.

 

[MAGICX2]

Any amount due on a loan should have no bearing on what to price a resale contract.

How can you say this? It has ALOT of bearing on what to price a resale contract. I don't know anyone that would price a resale contract at $65 a point that still owes enough that it would require them to bring THOUSANDS of dollars to the table. That is crazy. It has a lot of bearing on what a seller will price their resale contract at.
It may not have any bearing on what the buyer is willing to pay, but you can't say it has no bearing on the sales price. Why would someone who owes $100,000 on a home sell for $75,000?

 

[Jason@dvcstore]

I don't know anyone that would price a resale contract at $65 a point that still owes enough that it would require them to bring THOUSANDS of dollars to the table. That is crazy. It has a lot of bearing on what a seller will price their resale contract at.
It may not have any bearing on what the buyer is willing to pay, but you can't say it has no bearing on the sales price. Why would someone who owes $100,000 on a home sell for $75,000?

With my dealings at The Timeshare Store, Inc.® I have come across many people that will price a property at a price so they can sell it even if it requires them to bring THOUSANDS of dollars to the table.

I think silmarg is right on with this information:

Selling a DVC is way different that selling regular real estate as contracts are more less homogenious. One SSR 160 pt contract is very much like another 160pt contract. Available points, UY and price are the only variables from one contract to another - unlike regular real estate where location, size construction, layout and countless other variables will cause price differences, DVC has far fewer variables. Its for this reason that DVCs must be priced right to sell quickly and must be listed with the right broker (more so than other real estate).

I have yet to come across a buyer who is going to offer more for a property simply because we tell them the seller has a high mortgage and has to come out of pocket. The seller is pricing the property to sell and not based on what amount is owed on the mortgage in my opinion.

Jason

 

[silmarg]

How can you say this? It has ALOT of bearing on what to price a resale contract. I don't know anyone that would price a resale contract at $65 a point that still owes enough that it would require them to bring THOUSANDS of dollars to the table. That is crazy. It has a lot of bearing on what a seller will price their resale contract at.
It may not have any bearing on what the buyer is willing to pay, but you can't say it has no bearing on the sales price. Why would someone who owes $100,000 on a home sell for $75,000?

A seller can list a house worth $75k for $100k. But it will never sell.

The bottom line is if a seller is underwater (where the loan is in excess of the property value) they have a few tough choices. They can:

• stop paying the loan and let the property get foreclosed (ethics and credit rating not withstanding)
• sell the property for fair market value (even if that means taking cash out of pocket at closing to satisfy the loan)
• do nothing (this means keep paying the loan or list the property for sale at a price it will never sell for)

Not everyone selling is selling from the same standpoint. Some are underwater and hopeful for a buyer who will get them out from under. Others may have paid in full and just want to convert their DVC into cash or are going thru a divorce. This seller will likely price theirs more aggressively - shutting the former seller from ever getting a bite.

I have bid aggressively (below asking price) on several SSR contracts in recent months. Most every bid was accepted with no counter offer. I think there are many sellers who want out and will take any reasonable bid (my bids have been ROFRd by DVD). The market is flooded w resale contracts - Fidelity has almost 400 SSR contracts for sale - so its a buyers market (provided DVD does not ROFR them). In fact, there have been SSR contracts for sale in the mid to low $60s at Fidelity for more than a month and have not sold. Its crazy.

 

[Lawshark]

Silmarg is dead on...and while it is no comfort to Magicx2...that's just the facts of life. If you owe more than the property is worth you simply have some hard choices to make. A seller's bad financial decisions are not the problem of the buyer.

I'm a real estate attorney who solely deals with residential real estate transactions...and there are a lot of sellers who are closing on the sale of their home at a price far below what they owe. It is not at all unusual to see them selling for at least $50,000 less than what they owe the bank.

There is a fourth option...although I do not deal with timeshare sales in any way and do not know if timeshare lenders will play ball...but you can see if your lender will let you engage in a short sale. In such a case the bank agrees to take less than a full payoff and release the mortgage on the property so that the sale can proceed. The lender will either forgive the remaining debt (meaning that will count as income to you) or they will have you sign a new (unsecured) note for the balance.

It is unfortunately quite common with real estate sales these days...not sure if it exists in the timeshare market.

 

[vicki_c]

I have yet to come across a buyer who is going to offer more for a property simply because we tell them the seller has a high mortgage and has to come out of pocket. The seller is pricing the property to sell and not based on what amount is owed on the mortgage in my opinion.

Jason

Right -- the fact that you might still owe money on your loan is of no concern to any potential purchaser - it's business, not charity. It's sad for the seller, but that's life. If you price your resale to ensure that you recoup all your costs, it will most likely never sell.

 

[hellerjw]

If the main goal of the seller is to unburden themselves from the DVC mortgage as quickly as possible, then taking a thousand or two loss on the deal isn't crazy at all. They can most likely pay that off in 6 months or less with the money they won't be paying out in mortgage and dues payments. However, setting a price too high could make the same contract languish on the market for far longer than those same 6 months where you would otherwise be debt free.

 

[MAGICX2]

With my dealings at The Timeshare Store, Inc.® I have come across many people that will price a property at a price so they can sell it even if it requires them to bring THOUSANDS of dollars to the table.

I think silmarg is right on with this information:



I have yet to come across a buyer who is going to offer more for a property simply because we tell them the seller has a high mortgage and has to come out of pocket. The seller is pricing the property to sell and not based on what amount is owed on the mortgage in my opinion.

Jason

I don't expect a buyer to offer more for a property "simply because" the seller has a high mortgage. What I meant was why would a seller consider selling a DVC contract for THOUSANDS less than they owe, unless they are in dire straights? Why wouldn't you just keep it?

A seller can list a house worth $75k for $100k. But it will never sell.

The bottom line is if a seller is underwater (where the loan is in excess of the property value) they have a few tough choices. They can:

• stop paying the loan and let the property get foreclosed (ethics and credit rating not withstanding)
• sell the property for fair market value (even if that means taking cash out of pocket at closing to satisfy the loan)
• do nothing (this means keep paying the loan or list the property for sale at a price it will never sell for)

Not everyone selling is selling from the same standpoint. Some are underwater and hopeful for a buyer who will get them out from under. Others may have paid in full and just want to convert their DVC into cash or are going thru a divorce. This seller will likely price theirs more aggressively - shutting the former seller from ever getting a bite.

I have bid aggressively (below asking price) on several SSR contracts in recent months. Most every bid was accepted with no counter offer. I think there are many sellers who want out and will take any reasonable bid (my bids have been ROFRd by DVD). The market is flooded w resale contracts - Fidelity has almost 400 SSR contracts for sale - so its a buyers market (provided DVD does not ROFR them). In fact, there have been SSR contracts for sale in the mid to low $60s at Fidelity for more than a month and have not sold. Its crazy.

This is what I am talking about! Doesn't anyone else think that selling DVC contracts for this low of an amount undermines the value of DVC as a whole? Why would anyone pay $75-80 per point (which in my mind is still a great deal compared to original prices) when they can get it for $60 per point. All this does is drive down the overall value of DVC.

Silmarg is dead on...and while it is no comfort to Magicx2...that's just the facts of life. If you owe more than the property is worth you simply have some hard choices to make. A seller's bad financial decisions are not the problem of the buyer.

Not all sellers are selling because of bad financial decisions. I am in a situation where we don't HAVE to sell, but we would like to. Yes, I want to get what I owe out of my contract and I am willing to bring some money to the table. However, I am not willing to bring thousands of dollars to the table just to get it done. Honestly, if someone is in such bad financial straights that they HAVE to sell their DVC, how can they afford to bring that much out of pocket anyway?

Right -- the fact that you might still owe money on your loan is of no concern to any potential purchaser - it's business, not charity. It's sad for the seller, but that's life. If you price your resale to ensure that you recoup all your costs, it will most likely never sell.

I never said that it should be of concern to the buyer. It really is none of their business nor should they care. I don't want to recoup "all my costs", just what I owe. If I wanted to recoup all my costs I would have to price my points at $90....never going to happen.
My biggest gripe is that the prices seem to be set by the broker, not the seller. Why wouldn't a seller want to get the most out of their points that they possibly can? So why don't the broker's suggest to everyone that they list their points at $80 per point instead of $70? Yes, you will have the occasional person that wants to get a quick sell and might price a little lower, but why wouldn't you want to get the most out of it you can?
I know that park tickets and DVC are two entirely different things, however, when Disney raises their park ticket prices the visitors don't say "Well, I am going to Universal because their tickets are cheaper." They pay it and they go. Because if they are going to go they are going to pay no matter how much those tickets are. Same thing with DVC. If everyones asking price went up, they would still pay it. Because if they are truely looking to buy, they would buy whether the average price was $80 or $70.
Brokers suggesting such low prices are not limited to just one company. Every company has suggested a selling price under $75 pp. What if they all suggested $77? In fact I was told by two companies that they wouldn't take a listing OVER $75. Why not say we won't list anything UNDER $75. If BP, Shell and Marathon all offered gas at $2.50 a gallon even though last week you just paid $1.75 wouldn't you still pay the $2.50 a gallon?

 

[MAGICX2]

If the main goal of the seller is to unburden themselves from the DVC mortgage as quickly as possible, then taking a thousand or two loss on the deal isn't crazy at all. They can most likely pay that off in 6 months or less with the money they won't be paying out in mortgage and dues payments. However, setting a price too high could make the same contract languish on the market for far longer than those same 6 months where you would otherwise be debt free.

I am not talking about a thousand or two, thats not unreasonable. At $70 per point several would still have to bring $3000+ to the table, and part of that would be to cover the commission.

 

[Brian Noble]

The problem is that the market is not made up of people who place the same value on it that you do. The market is made up of all sorts of people. What one seller thinks of as "undermining the value", another thinks of as a price they are willing to take. Trying to change "the market" is like trying to move the wind in another direction by taking a really deep breath, and blowing with all your might.

What you owe on your contract has literally nothing to do with what the market thinks it is worth. If you are unwilling to sell at that price, then you are unwilling to sell. If enough people agree with you, then demand will go down, and price will go up. If they don't it won't.

Brokers suggesting such low prices are not limited to just one company.

Are you seriously accusing brokers of colluding to fix the price *low*? That makes no sense at all. A broker gets paid on a percentage of the sale, so they have an incentive to offer at a higher price, rather than a lower one provided they think it will still sell at that price. On the other hand, a contract that never sells is of no use to the broker---worse than no use, because it requires work to list it.

There is some evidence that commission-based brokers price a little too aggressively in general (I vaguely recall reading this in Freakonomics, I think) to sell a bit more quickly than they otherwise might. But, if a broker tells you to pound sand above $75, what s/he is really saying is that s/he has enough business from sellers willing to sell at or below that mark.