Stripped, loaded, can someone explain further for me?

[SL6827]

Ok, so I am assuming a contract that has no points on it would be considered stripped. And one with every years points on it considered loaded. But what is one that might have just one years worth of points on it called? What about two years worth? Thanks.

 

[gharter]

People use these terms to mean different things. I think of a completely stripped contract as one that has no points this year or next year (they already borrowed those points - think no points to use for 2 years unless you borrow the following years (2019) points next year in 2018).
And a loaded contract as one that has all of this years points plus last years points banked to be used this year (think double points this year 2016 and 2017).

 

[sndral]

I don't think there's a term used for the normal or average contract.
In my mind fully stripped would be no last year points, no this year points, and no next year points because they've been borrowed and already used.
A fully loaded contract would have the last years points banked into this year plus all of this years points - so double points in the current use year, and next years points haven't been touched.
Most contracts fall somewhere between these two extremes.
Use year can have a big impact on how valuable those points are to you. For example I bought a fully loaded AKV contract a couple of years ago in that it had pervious years points, current points and next years points, BUT the sellers had not banked the previous years points and it was beyond the banking deadline so last years points were useless to me as we actually didn't close soon enough to even try to cobble together a trip to use those expiring points.
The two times I have purchased DVC I focused on price and whether I would have access to the points for my next planned vacation.
A loaded contract w/ last years points banked into the current use year may have no value to someone who isn't planning a trip before the end of the use year when the banked points would expire (unless they want to mess w/ trying to rent those banked points.)
A stripped contract for a lower price where the buyer isn't expected to pay MFs may be perfect for a buyer who isn't planning a trip for a year or two.

 

[MrInfinity]

Yeah, as gharter says these are not official terms just things people use in different ways. When buying resale, I think of a normal / standard contract as one that includes the upcoming points. This is my baseline. If buying a Dec UY, I would start my base pricing by looking at contracts that include the upcoming Dec 2017 points. When you buy direct, you also get the current UY points... Disney calls this a bonus and uses it as a sales tactic. If a resale contract has those, I tend to call that loaded. Like, if that Dec contract had Dec 2016 points. Note you'd want to bank those before the sale so they don't pass the banking deadline or expire by the time you close! It's possible (but rare) that it could also have 2015 points banked into 2016, and expiring very soon... But those are so rare I consider them a bonus that is only worth something if you can use them before they expire. If a contract wasn't getting the upcoming points, I'd call that stripped. And if the upcoming points are spent, and the future year points are borrowed and spent, I wouldn't really even look at those contracts since they won't get new points till Dec 2019 and would be quite useless to me! I would call these gutted / likely to sit on the market for a year or so unless someone lets them go dirt cheap.

So for me...
Normal... Includes all or most upcoming points
Loaded... Includes upcoming points plus all or most of the current points (ideally, banked)
Stripped... Upcoming points are spent, but you can still borrow

 

[Toreby]

My definition:

Fully loaded = last year plus this year's pts available
Loaded = this year's pts available
Stripped = this year's points gone
Fully stripped = this year's and next year's pts gone.

Most contracts are partially something.

 

[ELMC]

People use these terms to mean different things.

This is exactly right. You need to be careful when using these terms or when reading someone else's post that uses these terms, because they don't mean the same thing to all people. Read on...

My definition:

Fully loaded = last year plus this year's pts available
Loaded = this year's pts available
Stripped = this year's points gone
Fully stripped = this year's and next year's pts gone.

Most contracts are partially something.

Here's an example where it can get confusing. When Toreby says "last year" I'm not sure if he means last Use Year or last calendar year. If he's referring to Use Year then I agree with him completely. But if he's referring to calendar year then he's actually missing a year's worth of points.

For example, I recently bought a DEC VB contract that had 2015 points banked into the current 2016 UY. It also had current 2016 points as well as 2017 points coming on December 1 of this year. To me that contract is fully loaded because it has three year's worth of points in one calendar year. So by my definition, early UY contracts can never be fully loaded because you can't get three year's worth of points in one calendar year.

Rather than focusing on terms, I think it's more productive to focus on the points that are available. Right now we are in the 2017 use year for FEB, MAR, APR, and JUN. We are in the 2016 UY for AUG, SEPT, OCT, and DEC. I would concentrate on buying a contract that has the current UY points available. If you're buying a DEC contract and no points are available until December 1, 2017, you are technically buying a contract that is stripped.

 

[Toreby]

I should have been more specific, but yes I meant use year points.

 

[ELMC]

I should have been more specific, but yes I meant use year points.

Thanks for clarifying. In that case I agree with your definitions. But I'm sure there are others that think differently, which is why I caution people not to get too hung up on labels. I mean, the word "year" means two different things when it comes to DVC, so how much faith can you put in the accuracy of words?

 

[GrumpyInPhilly]

This is exactly right. You need to be careful when using these terms or when reading someone else's post that uses these terms, because they don't mean the same thing to all people. Read on...



Here's an example where it can get confusing. When Toreby says "last year" I'm not sure if he means last Use Year or last calendar year. If he's referring to Use Year then I agree with him completely. But if he's referring to calendar year then he's actually missing a year's worth of points.

For example, I recently bought a DEC VB contract that had 2015 points banked into the current 2016 UY. It also had current 2016 points as well as 2017 points coming on December 1 of this year. To me that contract is fully loaded because it has three year's worth of points in one calendar year. So by my definition, early UY contracts can never be fully loaded because you can't get three year's worth of points in one calendar year.

Rather than focusing on terms, I think it's more productive to focus on the points that are available. Right now we are in the 2017 use year for FEB, MAR, APR, and JUN. We are in the 2016 UY for AUG, SEPT, OCT, and DEC. I would concentrate on buying a contract that has the current UY points available. If you're buying a DEC contract and no points are available until December 1, 2017, you are technically buying a contract that is stripped.

I purchased the following contract on 2/4/15:

150 points. February use year. 300 points currently available (150 + 150 banked points from 2014 allocation, banked points need to be used by 2/1/16) and 150 points coming on 2/1/16.

I consider it fully loaded even though I didn't get the future year points until the next calendar year. I don't understand how could it have been more loaded. I had an entire year to use the banked points.

 

[ELMC]

I purchased the following contract on 2/4/15:

150 points. February use year. 300 points currently available (150 + 150 banked points from 2014 allocation, banked points need to be used by 2/1/16) and 150 points coming on 2/1/16.

I consider it fully loaded even though I didn't get the future year points until the next calendar year. I don't understand how could it have been more loaded. I had an entire year to use the banked points.

You are correct, it could not have been more loaded. This is a perfect example of why I say to not get hung up on the terminology. My reason is because the terms mean different things to different people. But your example makes me want to change my reasoning to include the fact that the terms apply differently to different use years. Here's why:

There is a big difference between a fully loaded early UY contract and a fully loaded late UY contract. This is because in the early UY contracts the maximum amount of points you could have in any given year you buy in is two. In your case, the banked 2014 points and the current 2015 points.

Here's where the value differential comes into play. Standard practice is for resale buyers to reimburse maintenance fees, so for the purpose of this example I'm going to assume that you did. So you paid one year's worth of fees and got two year's worth of points. From 2016 on out you will be on a 1:1 ratio - one year's worth of fees for one year's worth of points.

Now let's say that you bought an OCT UY contract on that same day and it was a "fully loaded" contract. In that case you are still in the 2014 UY so you would have gotten 2013 banked points, current 2014 points, and the 2015 points coming that October. So your "fully loaded" FEB contract had 300 points, but a "fully loaded" OCT contract would actually have 450. Assuming you also reimbursed maintenance fees, you would have gotten three year's worth of points for one year's worth of dues. And then starting in 2016 you would be on the same 1:1 ratio. That's 150 "free" points when compared to the February contract.

Now, it's quite possible that the contracts may have been priced differently based on the number of banked points, but it is widely agreed upon that contract prices do not accurately reflect the full value of banked points, which is why it is typically more cost effective to buy a loaded contract vs. a stripped one.

 

[GrumpyInPhilly]

Now that you've showed by example the UY difference to me, I get it.

Yes, I did get 2 years worth of points for 1 year MF.

Thanks for the detailed explanation.

 

[Dean]

Now that you've showed by example the UY difference to me, I get it.

Yes, I did get 2 years worth of points for 1 year MF.

Thanks for the detailed explanation.

If you reimbursed for this years points, it's unlikely you got 2 years worth of points for one years fee since the fees are for the calendar year and not the UY. For example, if you bought a Feb UY with all current and all future points and reimbursed the fees, you actually paid one month more than the points you got and paid/will pay fees on ALL points for present and future.

 

[GrumpyInPhilly]

If you reimbursed for this years points, it's unlikely you got 2 years worth of points for one years fee since the fees are for the calendar year and not the UY. For example, if you bought a Feb UY with all current and all future points and reimbursed the fees, you actually paid one month more than the points you got and paid/will pay fees on ALL points for present and future.

Maybe I still don't understand. I should have said I reimbursed for 1 year of maintenance fees at settlement in April 2015 and assumed that this was for the 2015 points. I didn't pay any fees directly to DVC until Jan 2016 which I assume were for 2016 points. I don't see how I could have paid for the 2014 points I received.

 

[Dean]

Maybe I still don't understand. I should have said I reimbursed for 1 year of maintenance fees at settlement in April 2015 and assumed that this was for the 2015 points. I didn't pay any fees directly to DVC until Jan 2016 which I assume were for 2016 points. I don't see how I could have paid for the 2014 points I received.

In 2015 if you bought April UY points getting all 2015 but not 2014 points and reimbursed the seller for that years dues, you overpaid by 3 months of dues. Dues would have been for 3 months of the 2014 points and 9 months of the 2015 points. Not a big deal for that situations.

 

[MrInfinity]

Whether or not you can get a contract with two sets of banked points leading to triple points being spendable w/in a half-year or so just has to do with the time of year you'll close the deal and the month of their UY. If you're buying an OCT contract in Oct, there is no way to get two sets of banked points. Just like buying the FEB contract in Feb. OTOH if you're buying a FEB contract in Aug or an OCT contract in Apr, either one of those could have two sets of banked points, one set of which would be expiring rather soon.

 

[KAT4DISNEY]

Whether or not you can get a contract with double-banked points leading to triple points being spendable w/in a half-year or so just has to do with the time of year you'll close the deal and the month of their UY. If you're buying an OCT contract in Oct, there is no way to get double-banked points. Just like buying the FEB contract in Feb. OTOH if you're buying a FEB contract in Aug or an OCT contract in Apr, either one of those could have double banked points, one set of which would be expiring rather soon.

Double banked sounds confusing. I can understand that you mean points that have been banked and will expire before the end of the current UY plus points that are banked into the upcoming UY but someone new might think that it meant points that had been banked more than once.

 

[Dean]

Interesting, so you look at it like your "Jan 2017" dues on a June UY contract are actually paying the dues on 5 months of 2016 points (Jan-May) and 7 months of 2017 points (Jun-Dec)?

Yes because that's how it's done. All you have to do is look at how you pay dues when you buy new such as CCR.

 

[MrInfinity]

Double banked sounds confusing. I can understand that you mean points that have been banked and will expire before the end of the current UY plus points that are banked into the upcoming UY but someone new might think that it meant points that had been banked more than once.

Yep. No points can be banked twice, but I'll edit it to say "two sets of banked points" instead.

 

[GrumpyInPhilly]

So when I paid MF in Jan 2017 for my Feb contract, I paid for 1 month of my 2016 UY & 11 months of my 2017 UY, is that correct?

 

[KAT4DISNEY]

So when I paid MF in Jan 2017 for my Feb contract, I paid for 1 month of my 2016 UY & 11 months of my 2017 UY, is that correct?

Yes.

One of the funny things with brokers that I've noticed is that as it gets later in the year they seem to start advising sellers to do current points with "no maintenance fees". Kind of throws their argument of "if you receive the points you pay the maintenance fees" out the window. But perhaps by that time buyers get more resistant to that since they'll also have to pay next years maintenance upon closing and they have a harder time with that argument.