Stripped contract

[Girlstar30]

I like to use DVC Resale Market’s seller’s calculator to ballpark pricing. The high end always seems too high for pricing though, so I multiply it by 0.9.

https://www.dvcresalemarket.com/selling/instant-sale/

I like this one better for what i paid

 

[Girlstar30]

February is great for the holidays because you can start walking so early! <evil villain cackle>

Lmaoooo thanks for the tip I already learned how to do it

 

[Chili327]

DVCROFR site seems to not be taking in any new data though. I’m not sure it is up to date anymore.

Hmm, I haven’t had the need for it lately, but I hope it’s not headed downhill. It’s a very valuable tool!!

 

[atthebeachclub]

Hmm, I haven’t had the need for it lately, but I hope it’s not headed downhill. It’s a very valuable tool!!

It’s seemed broken for months now.

Edit to add: it actually appears the pricing tool still works, just a lot of the other stuff is not working.

 

[ocdb8r1]

I’m personally not a fan because the market tends to overvalue stripped contracts. For the right price it’s ok.

On the other hand, the market undervalues loaded contracts. That’s why I prefer to wait for those.

This is my feeling as well.

I don't know that what was described in the original post is a "stripped" contract if it still has some 2025 points and all 2026 points. At minimum I wouldn't consider a contract "stripped" unless all current year (and previous year) points were gone.

Here is my thinking (and why I avoid stripped contracts)....

1) I value each current year or future year point that is missing (stripped) at $6-10 depending on the resort (as if you had those points and were not going to use them, you should be easily able to clear $6-10 in profit over the annual dues by renting them). As noted above, the market generally doesn't let you realise this much value from missing points (i.e. it's not common to get this much of a discount per point on stripped contracts vs. contracts with all their current and future year points);

2) With a stripped contract you are taking on DVC market risk - let's consider a contract stripped only of it's 2025 points. The earliest usage you have is 2026. You're taking on 12 months of market risk to buy that contract now. While there are ebbs and flows, the general trend is for reslae prices to go down over time. Why take on this risk for which you're not getting a (sufficient) discount? Why not just wait 12 months and buy a contract next year with full 2026 points? This risk is even greater for "fully stripped" contracts with no points for 2 years or more (this is part of the reason I have no idea why ANYONE would buy one of those atrocious Aulani contracts that have been on the market....some of which seem to have sold). Aside from general "market" risk, you're also taking on your own "personal" risk as anyone's financial/health/travel situation could change in a year.

3) Time value of money. Let's take a 100 point contract at AKV for a price of $100. That's 10k (plus the transaction costs). You can easily get 4% in a risk free 12 month CD - that's $400 or $4/point. Are you getting a $4/point discount for purchasing a contract today with no 2025 points? Are you getting a discount of $8+/point for a contract with no 2025 or 2026 points? Doubtful....and this is on top of the discounts you should be getting for points 1 and 2 above.

Yes, there are some arguments for jumping on a stripped contract now....but they usually aren't persuasive enough for me to overcome the economics above. Here are some of the most common I see:

a) this is the "perfect" contract for us (e.g. just the right amount of points, right use year, right resort....etc). I get it, but I also think people are hung up on what they think is "perfect". Between banking and borrowing you can often make a slightly smaller contract (than you "need") work....or, based on the economics above, consider buying a slightly larger contract based on what you'd save for waiting. In most cases, the market is sufficiently liquid to have a wide variety of contracts on offer at any given time.

b) I can alwasy borrow future years points for my next vacation (within the borrowing time limits). Yes, this can help you get quicker access to a vacation....but it doesn't change the economics above. At some point you're sacrificing any "stripped" points...delaying that sacrifice to tomorrow by borrowing today, doesn't measurably change the economics.

c) we need to buy NOW to get the purchase closed so we're all set for the 11-month reservation window. Ok, this one is the most persuasive to me depending on when you're buying compared to when the use year is (and effectively when you get access to your "first" set of points). I could understand the desire to purchase 60-90 days ahead of when you want to make a reservation with the 11-month priority window IF you will get access to points usable in that window shortly after closing (e.g. sitting here in Feb 2025 if you were to buy a April use year contract with no points until 2026 there is some valid consideration to be had for buying "now" so that as soon as you close you could make an April/May 2026 reservation). However, this doesn't change the economics above (meaning a contract with 2025 points should still be more valuable) AND this doesn't apply to fully stripped contracts without 2026 points....

 

[LittleBitGoofy]

If it's that small unicorn add-on contract that historically has been few and far between, then I don't mind the stripped contract.

If it's a larger, more common or my first contract then I will wait for loaded or double.

Is it rare? Do I want/need points now? If not, then I'm good with stripped for the right price. Otherwise, I'd hold out.

 

[Brian Noble]

also I figured we could do halloween in September or even August

You can also do October, becuase to avoid holding you have to cancel at least 31 days prior to check-in, and that means you are cancelling sometime in September, which is still within February's banking period.

If you cancelled an October stay in October, then it doesn't matter what UY the points are, because they go into Holding and expire at the end of the year.*

-----
*: Yes, I know there is a loophole to swap Holding points. However, I suspect that will be fixed sooner or later, so I am not personally counting on it.

 

[Ronaldo17]

We always look for loaded contracts when buying, they look better value IMO, and you can use them right away.

 

[PlutoNotPlanet]

Does anyone think the reported ROFR data is a little on the lower end? Some are a lot lower than broker-reported average, which could be bargain from sellers eager to sell

 

[Brian Noble]

You mean the thread here? Of course it is. It is reported by the most committed bargain hunters---a self-selecting population---and very few people come here to humble brag about average deals.

 

[BlueGreen5]

I’m personally not a fan because the market tends to overvalue stripped contracts. For the right price it’s ok.

On the other hand, the market undervalues loaded contracts. That’s why I prefer to wait for those.

You're 100% right on this. Brokers will also say things like "it won't make it past ROFR at that price." So, the ROFR monster - or the threat of it - artificially pushes the price of stripped contracts up as well.

 

[Ruttangel]

You should completely avoid fully stripped (current year and next year) and only consider partially stripped (current year) if price is compensated adequately

I would also personally avoid 2042 contracts that are stripped of current year as you could be down to 15 years left

 

[PlutoNotPlanet]

Partially used is not bad to me at all. Fully stripped down have opportunity cost.
However, to some people, stripped ones have lower upfront cost while you can still use by borrowing.
If it’s a contract hard to find, I personally will still go with it. Maybe ask if the seller can credit the prorated MF.
Trigger pulled so just a looking forward statement…

 

[PlutoNotPlanet]

We didn’t buy them because we knew we wanted points to use quickly.

Yes, most people, especially new members, start searching when they want points to use. Then, stripped contracts make no sense.

However, if you just want to add some optional points and the price is right, then sure.

Also, commenting on loaded points, I feel many times they are undervalued. Unless they are unbankable or expiring soon, they can be valued @$11+/pt if not $16 as rental value because MF has already been paid. But I know because the upfront cost is already so high, people don’t want to put grands down unless they really need it

 

[AstroBlasters]

You should completely avoid fully stripped (current year and next year) and only consider partially stripped (current year) if price is compensated adequately

I would also personally avoid 2042 contracts that are stripped of current year as you could be down to 15 years left

Only in DVC land do we use a thought process of “only 15” years…..

 

[grepes]

We purchased partially stripped at BLT (26/25, 160/26). Common contract at 160... Feb use year we wanted... I thought the price was good (10% under a healthy list). Definitely taking on market and personal risk getting on the contract early. BUT! We are adding to our family and are taking 2025 off from WDW... There is also added value that I won't be spending a few hours a day rummaging through resale listings... and I'll keep my life for not doing so while my wife tends to a newborn!

 

[Brian Noble]

Only in DVC land do we use a thought process of “only 15” years…..

Depending on one's age, it's material. I expect to still be in good health and traveling in 2042, if the Good Lord's willing and the creek don't rise.

 

[AstroBlasters]

Depending on one's age, it's material. I expect to still be in good health and traveling in 2042, if the Good Lord's willing and the creek don't rise.

It is material, but not to the point where I would advise someone to avoid any 2042 that is stripped of current UY points….

 

[Brian Noble]

Fair. Instead, it's a reason to avoid them entirely.

 

[Chili327]

It is material, but not to the point where I would advise someone to avoid any 2042 that is stripped of current UY points….

Fair. Instead, it's a reason to avoid them entirely.

Yes please, liquidate all your BWV contracts now before they are useless!!
So we can pick them up and enjoy them for the next decade and a half.