So many stripped resales…

[sethschroeder]

I don’t even glance any further at the listing if it doesn’t have at least full points.

How much value $$$ do you give per point that is banked or in the current year?

If you are stating its the $110 price point for BWV divided by 19 years thats $5.79 per point. You can easily get $16-$20 per point for any point you can rent out (minus the MFs).

Seems like another potential downside to selling stripped contracts.

Where is the downside? Rent out last year (instead of banking), this year, and next year all for $18/points. $54/point on the contract used up. Pay for the MFs of roughly $27/point for the 3 years of points. You now have made $27/point you are selling. Even if you list it $5 below the median price you are $22/point ahead.

Seems like a waste of time to me so I priced the contract correctly and sold it at another broker in 7 min.

Its not a waste if your goal is to come out ahead the most financially. If you don't care about the extra $1k-$3k on a 150 point contract then you don't care.

The other broker is actually smart and looking out for your best financial interest. The one who said nothing is just cashing a check and little else.

 

[VGCgroupie]

Can someone explain to me what is meant by "stripped down" contract? If I understand it it means that the seller has used all the points for this year and possibly future points?

Correct

 

[Mouseforward]

Its not a waste if your goal is to come out ahead the most financially. If you don't care about the extra $1k-$3k on a 150 point contract then you don't care.

The other broker is actually smart and looking out for your best financial interest. The one who said nothing is just cashing a check and little else.

No, the broker who wanted to rent it was going to cash in, they get eight dollars a point which is way more than their commission on the sale of the contract. So for the hundred point contract they would’ve made it $800 renting plus the commission on the contract at 150 ish a point stripped.

In addition, I would’ve had to wait since I wouldn’t book an appointment within 60 days for fear of it not renting and being stuck in holding. Realistically, it would’ve put a six month hold on closing the contract.

Instead, I listed and sold instantly at 165 a point.

 

[VGCgroupie]

No, the broker who wanted to rent it was going to cash in, they get eight dollars a point which is way more than their commission on the sale of the contract. So for the hundred point contract they would’ve made it $800 renting plus the commission on the contract at 150 ish a point stripped.

In addition, I would’ve had to wait since I wouldn’t book an appointment within 60 days for fear of it, not renting and being stuck in holding. Realistically, it would’ve put a six month hold on closing the contract.

Instead, I listed and sold instantly at 165 a point.

Agree. I wouldnt want the hassle of renting then selling. If Im going to sell Im going to sell now. The quicker it sells the better for many reasons.

 

[airjay75]

Where is the downside? Rent out last year (instead of banking), this year, and next year all for $18/points. $54/point on the contract used up. Pay for the MFs of roughly $27/point for the 3 years of points. You now have made $27/point you are selling. Even if you list it $5 below the median price you are $22/point ahead.

At least according to the site sponsor's online pricing tool, they suggest a difference of $24/point in the listing price between a fully loaded and fully stripped contract. Maybe their pricing is off, but let's just assume they are suggesting those list prices because, on average, that's going to be the spread on those types of contracts (my guess is, they suggest a list price above where they think the contract will settle regardless of the contract type). So, if you net the $27/point you've suggested by renting out 3 years worth of points, yes, you have made out with en extra $3/point. If you end up with the $22/point, then you have not.

If those numbers suggested by the site sponsor are correct (I honestly don't know if they are, I just don't know what else to use as an estimate), I think I'd prefer to take my chances with a fully loaded contract because I think the universe of potential buyers will be larger and you will have an easier time getting a buyer to come up to your asking prices.

If the site sponsor is wildly off, and the spread between fully loaded and fully stripped contracts is more like $10/point, well, then, yes, the strategy you have suggested starts to look a lot more attractive from an economic standpoint.

 

[sethschroeder]

At least according to the site sponsor's online pricing tool, they suggest a difference of $24/point in the listing price between a fully loaded and fully stripped contract. Maybe their pricing is off, but let's just assume they are suggesting those list prices because, on average, that's going to be the spread on those types of contracts (my guess is, they suggest a list price above where they think the contract will settle regardless of the contract type). So, if you net the $27/point you've suggested by renting out 3 years worth of points, yes, you have made out with en extra $3/point. If you end up with the $22/point, then you have not.

If those numbers suggested by the site sponsor are correct (I honestly don't know if they are, I just don't know what else to use as an estimate), I think I'd prefer to take my chances with a fully loaded contract because I think the universe of potential buyers will be larger and you will have an easier time getting a buyer to come up to your asking prices.

If the site sponsor is wildly off, and the spread between fully loaded and fully stripped contracts is more like $10/point, well, then, yes, the strategy you have suggested starts to look a lot more attractive from an economic standpoint.

I dont buy the gap is $24/point. Unless the tool has improved immensely I was never impressed with any of those tools in the past.

Maybe the market has corrected but it doesn't seem to be the consensus from people out there.

EDIT: Tried to look through the ROFR thread from last quarter and doesn't seem anyone is buying stripped contracts. I didn't see a single one but I might have missed it. I was trying to see if there was any sort of norm.

 

[airjay75]

I dont buy the gap is $24/point. Unless the tool has improved immensely I was never impressed with any of those tools in the past.

Maybe the market has corrected but it doesn't seem to be the consensus from people out there.

Yeah, it would be interesting to know what the gap actually is, and whether it varies by resort/UY/size, etc. Playing around with the tool on the site sponsor's website, every size contract I entered at any resort resulted in the same $24/point difference in listing price, so it is clearly automated. I'd be very interested to hear others' explanations/rationale/experience with why that is significantly wrong.

 

[davidhr]

I dont buy the gap is $24/point. Unless the tool has improved immensely I was never impressed with any of those tools in the past.

Maybe the market has corrected but it doesn't seem to be the consensus from people out there.

EDIT: Tried to look through the ROFR thread from last quarter and doesn't seem anyone is buying stripped contracts. I didn't see a single one but I might have missed it. I was trying to see if there was any sort of norm.

The ROFR thread is not representative of the market tbh

 

[sethschroeder]

The ROFR thread is not representative of the market tbh

Correct but I would think if anyone got a good deal on stripped contracts it would be that thread. So its not the whole market but its part of it and likely the part getting better deals but I could be wrong.

 

[davidhr]

Correct but I would think if anyone got a good deal on stripped contracts it would be that thread. So its not the whole market but its part of it and likely the part getting better deals but I could be wrong.

I haven’t read all the comments lately, but I don’t think anyone has claimed that stripped contracts are a good deal for the buyer. They are not.

They’re a good deal for the seller. That’s why I claimed the market overvalues stripped contracts and anyone selling (and wanting the max return) should strip their contracts.

 

[VGCgroupie]

Yeah, it would be interesting to know what the gap actually is, and whether it varies by resort/UY/size, etc. Playing around with the tool on the site sponsor's website, every size contract I entered at any resort resulted in the same $24/point difference in listing price, so it is clearly automated. I'd be very interested to hear others' explanations/rationale/experience with why that is significantly wrong.

I believe this number given by the tool is what they would tell you to list at if you are okay with not selling day one and then tell you another number if you want to sold day one, much like real estate agents do. Especially when they have the "buy it now" type sale as a way you calculate as well. It's automated yes, and rightfully so. DVCRM is not where we here on the boards typically buy because they sell high. That is amazing for sellers. There is no mistake though that they do move contracts even at the higher prices because most buyers aren't deal hunters here on the DIS.

 

[Mouseforward]

I just looked at my use year on DVC for less. I saw what was available, found one very similar to mine that was sitting for 30 days and went five dollars under it.

 

[HyperspaceMountainPilot]

Agree. I wouldnt want the hassle of renting then selling. If Im going to sell Im going to sell now. The quicker it sells the better for many reasons.

100%.

I get that it’s not true for every member, but the hassle of renting is not worth $5/pt or even $10/pt on most of my contracts (all under 200pts per contract) versus the value of my time….and that’s before you consider any risk of potentially delaying close 2-6 months in a period of tremendous economic uncertainty, decreased interest from foreign buyers, (as well as a period in which we may start seeing commercial renters mass dumping contracts), interest rate fluctuations, etc.

Then, for anybody who is not selling out entirely, you’ve now rented a ton of points (2-3 years worth) and may have to explain to Disney how it was within their definition of personal use.

 

[bookbabe626]

How much value $$$ do you give per point that is banked or in the current year?

If you are stating its the $110 price point for BWV divided by 19 years thats $5.79 per point. You can easily get $16-$20 per point for any point you can rent out (minus the MFs).

For the seller, maybe it's a better value, but for me as a buyer, I want points now. I don't want points a few years from now that I still had to pay for now. I have no intention of renting or selling, I only intend to use the points for myself or friends/family. And a buck or two difference, even up to a $5-10 difference, on the pp cost isn't going to change my mind in the least. Maybe $20 pp less? But even then, unlikely, since my goal of buying another contract is to have more points sooner rather than later. A stripped contract doesn't really further that goal.

 

[HyperspaceMountainPilot]

Speaking of, it always struck me as pretty gross when brokers tried to steer buyers towards stripped contracts like some sort of great deal/layaway plan. Given that stripped contracts are usually some of the worst values, it makes it more egregious to market them to the people who can least afford it.