Structuring a deal

[ChipTheRescueRanger]

Hi Team

Random question for you resale pros.

When looking to put an offer in do you take the total cost in to consideration or just the PPP.

As say a 200 contract at 83ppp when you add in dues and closing is say 19k.

Would you offer that or try 95ppp but seller pays dues and costs. both would work out at 19k

Id guess the 95ppp one looks more attractive to a seller. But if rejected would leave a lot less wiggle room.

Any advise appreciated

 

[chazas]

I suppose it depends on the seller, but if the economics from the buyer are otherwise equivalent they're getting a better deal on the lower price per point with buyer paying all fees and costs - because they're not paying a brokerage commission on the fees and costs.

 

[Shoktherapy]

Hi Team

Random question for you resale pros.

When looking to put an offer in do you take the total cost in to consideration or just the PPP.

As say a 200 contract at 83ppp when you add in dues and closing is say 19k.

Would you offer that or try 95ppp but seller pays dues and costs. both would work out at 19k

Id guess the 95ppp one looks more attractive to a seller. But if rejected would leave a lot less wiggle room.

Any advise appreciated

As in any financial deal I consider the entirety of the deal not jus the ppt. My last SSR contract was for 75 point contract fully loaded with points in ‘23 and beyond. Seller wanted $110 ppt. I offered $90 ppt buyer pays dues and closing. They countered with $105 ppt. I countered with $100 ppt but seller pays dues. They accepted. My theory is that the sellers are always more emotional than the buyers - or should be. That should give the buyer the advantage. Basically I made the same exact offer when you consider the total cost of the sale but for an extra $100 to the seller’s favor. At the end of the day all that matters is what are you paying for the contract. I will finance this at 0% interest on CC for the next 12 months then pay if off when my Stock Options vest in Jan. That way I cut out the interest and even minimize the closing costs. Never get “married” to a deal. Their are plenty of deals to be made - if you don’t get the price you want, move on.

 

[EYL]

Hi Team

Random question for you resale pros.

When looking to put an offer in do you take the total cost in to consideration or just the PPP.

As say a 200 contract at 83ppp when you add in dues and closing is say 19k.

Would you offer that or try 95ppp but seller pays dues and costs. both would work out at 19k

Id guess the 95ppp one looks more attractive to a seller. But if rejected would leave a lot less wiggle room.

Any advise appreciated

I've never sold a contract yet. But if I were selling, the $95pp may be less attractive to me even though it works out to the same final amount since I may have to pay more commission. I believe it's calculated on the base price. People sell for various reasons, but if I'm selling, then "something" happened and every penny might count.

 

[BuzzLightyr]

For some properties, don't forget the rofr considerations as dvd does not pay dues. A higher price per point on the contract could be better.

It's an emotional decision. They might be targeting a certain amount of price per point, where paying buyer fees is ignored.

Dues is usually a big component, and it depends on the time of year and contract. Loaded contracts where the seller already paid dues, I feel the seller views it as a sunk cost and I'd focus on a higher dollar per point. The exception is for a small amount of points left, if there are 6 points in the current UY, I'd offer to pay dues on the current year points I am getting because the dollar amount is small but for the seller feels like they are getting a better deal by recouping dues.

 

[tom1944]

For some properties, don't forget the rofr considerations as dvd does not pay dues. A higher price per point on the contract could be better.

It's an emotional decision. They might be targeting a certain amount of price per point, where paying buyer fees is ignored.

Dues is usually a big component, and it depends on the time of year and contract. Loaded contracts where the seller already paid dues, I feel the seller views it as a sunk cost and I'd focus on a higher dollar per point. The exception is for a small amount of points left, if there are 6 points in the current UY, I'd offer to pay dues on the current year points I am getting because the dollar amount is small but for the seller feels like they are getting a better deal by recouping dues.

I was going to ask about dues. I realize you can make any offer but I was wondering what people thought about a tipping point with paying or not paying dues
For example 2024 dues were paid in January for offers next fall I would expect that even if points for 2024 were available it would not be unusual to not reimburse for the 2024 dues.

 

[GrumpyInPhilly]

I was going to ask about dues. I realize you can make any offer but I was wondering what people thought about a tipping point with paying or not paying dues
For example 2024 dues were paid in January for offers next fall I would expect that even if points for 2024 were available it would not be unusual to not reimburse for the 2024 dues.

If it's early in the UY, I'd reimburse the dues. By mid-year, I'd only reimburse half. After that, no reimbursement.

 

[JackosinDIS]

I was going to ask about dues. I realize you can make any offer but I was wondering what people thought about a tipping point with paying or not paying dues
For example 2024 dues were paid in January for offers next fall I would expect that even if points for 2024 were available it would not be unusual to not reimburse for the 2024 dues.

I have had an offer accepted today where the Seller is paying the 2024 dues. There are 3/4 of the 2024 points remaining. I always start with seller paying as part of the negotiation.

 

[sndral]

For some properties, don't forget the rofr considerations as dvd does not pay dues. A higher price per point on the contract could be better.

It's an emotional decision. They might be targeting a certain amount of price per point, where paying buyer fees is ignored.

Dues is usually a big component, and it depends on the time of year and contract. Loaded contracts where the seller already paid dues, I feel the seller views it as a sunk cost and I'd focus on a higher dollar per point. The exception is for a small amount of points left, if there are 6 points in the current UY, I'd offer to pay dues on the current year points I am getting because the dollar amount is small but for the seller feels like they are getting a better deal by recouping dues.

If DVC exercises ROFR they step into the shoes of the buyer, so if the buyer agreed to reimburse the seller for the MFs they’ve paid - for example buyer reimburses seller for the 2024 MFs the seller paid in Jan. - then DVC must likewise reimburse the seller for those MFs.
Some owners pay their MFs on a monthly basis, so their perspective may be different.
DVC, when selling direct prorates the dues, if you buy early in the calendar year you’ll pay more MFs v. if you buy direct later in the year.
Owners who’ve owned a long time may prefer lower pp & buyer reimburse for MFs because they’ll need to report their profit from their sale on their taxes, but not MFs reimbursement.
I’ve never sold, but when I’ve bought the resale market expectation seemed to be that buyer reimburses for MFs, but it’s certainly negotiable, especially when the market is as slow as it is ATM.