Thoughts on Lowball Offer

[MICKIMINI]

Listening to us DVC owners we really need to beware of our confirmation bias. I dont actually think this because of my own cognitive bias issues but we could be heading for a very bad recession. That amazingly great deal on 300 points at your dream resort might really start stressing you out come dues time.

Any broker who's telling you the market is fine is probably grasping at straws or full of BS. DVC is a luxury product that will be the first thing people will try to sell to solve cash flow issues and I even suspect many people will just walk away when they are underwater on their loans.

We're a bit older and positioned ourselves with LOTS of sacrifice over decades. Everyone here has to make their own decisions based on their own situations. DH and I have been buying and selling for 25 years. We sold 3 contracts last year and bought 3 contracts. We buy low and loaded and sell high and always have contracts so we can enjoy our stays and gift points. Many here are DVC veterans who buy/sell on a regular basis so our back and forth may sound alarming to someone new. Good reminder!

 

[a742246]

During the great recession of 2008, DVC resale didn't hit their lowest price until 2010-2011.

 

[stfxkid]

Sounds like a seller in distress.

While I am happy for stfxkid, I also hope there aren't too many Members out there who will end up selling due to economic distress.

If they were really distressed it would have been for immediate close not delayed untill december.

 

[ABE4DISNEY]

During the great recession of 2008, DVC resale didn't hit their lowest price until 2010-2011.

Totally agree with this ^^.

2009-2011-- In these three years there were so many contracts available and I saw many OKW's getting through at $50. There were even some passing in the 30's.

 

[kniquy]

I just feel Aulani really should be priced where Vero and other offsite resorts are at. The huge maintenance fees and the really high point values are just so high. Anyway the market will decide as always.

Where you think the value is and where it actually will be are two different things. You are trying to compare a newer resort to ones which will expire in 2042, so a lot less life to those contracts. As for low ball offers, it can't hurt. For one you don't know how desperate the sellers are. Maybe they need to dumb the contract ASAP because of job loss or other situations. Even if a seller accepts your low-ball offer there is a chance (although slim) that DVC will take it in ROFR, so you can't be too far off from where the resort is selling at.

My recent experience buying Poly was that a low ball offer could be countered. There was a 100 pt poly contract i wanted, sellers had it listed high at $165 pp, market sales were around $145-$155 at the time. So I offered $140. Sounds low compared to asking. The sellers came back at $150 and I told them the best i could do was $145 and they accepted. So $20pp less than what they are asking but really in line with where sales were.

I would say most people selling will have an idea of what they should get if they have a good agent working with them. So if Aulani is selling mid 80's to mid 90's then you can't go offering $50-60pp. Maybe if it was an obscenely large contract. You can try and see where you can get but after a few refusals of offers you may want to reconsider what you are offering.

 

[Noah_t]

Sounds like a seller in distress.

While I am happy for stfxkid, I also hope there aren't too many Members out there who will end up selling due to economic distress.

Yes I have been complaining about the price of gas for many years. Now it's down to what I think is "more fair" and I really wish I was still complaining about the high price of fuel.

 

[DisMomKY]

I told my husband I’m about to say forget it buy a camper and stay at fort wilderness

 

[E2ME2]

Totally agree with this ^^.

We purchased BWV in 2009 for $73ish.
SSR in 2010 and 2011--both for $60. In these two years there were so many contracts available and I saw many OKW's getting through at $50. There were even some passing in the 30's.

True - but SSR Direct Price in 2011 was only $99.
Not nearly as drastic a net difference between Direct & Resale as there is now. I know, mathematically it's a 40% difference, but only a $39 net diffference. Today SSR, unbelievably, goes for $165 Direct, and I just bought resale at $88.89/Pt - so percentage savings was ~46%, but a net of > $75/Pt.

 

[pirate33]

We're a little strange as well - we really enjoy split stays. Got to get a few days in at each favorite place when we can.

Well then I’m a little strange too. Plus rooms with different views are also a different experience (e.g., BLT lake or theme park; VGF lake or monorail view (aka standard)). Plus one gets a clean room with fresh linens upon changing which is a plus. Moving is a hassle to be sure but generally worth it to me.

 

[pirate33]

Wow--what a reply!!

Having now bought four contracts and sold one (and indulging in some generalization), the brokers present a different spin to buyer and seller. I take it all with a grain of salt. Don’t DVC brokers represent both sides? That’s an inherent conflict but for a small transaction (i.e., a DVC contract compared to a house) one just has to take a buyer (or seller) beware approach.

 

[ABE4DISNEY]

True - but SSR Direct Price in 2011 was only $99.
Not nearly as drastic a net difference between Direct & Resale as there is now. I know, mathematically it's a 40% difference, but only a $39 net diffference. Today SSR, unbelievably, goes for $165 Direct, and I just bought resale at $88.89/Pt - so percentage savings was ~46%, but a net of > $75/Pt.

Never thought of it that way....excellent point.

But I think Disney's direct prices jumped the shark about 5 years ago and are INSANE for most of the resorts. That's Kool Aid I am not drinking.

 

[KAT4DISNEY]

Sounds like a seller in distress.

While I am happy for stfxkid, I also hope there aren't too many Members out there who will end up selling due to economic distress.

Could also be someone who thinks prices are going to plummet so they are pricing it to make certain it sells before that happens. At least that is how I might think. Hard to say.

 

[DougEMG]

Could also be someone who thinks prices are going to plummet so they are pricing it to make certain it sells before that happens. At least that is how I might think. Hard to say.

I agree, I think most of the new sellers trying to get out now are because they think that prices will crash.

In previous down turns it was 1-2 years after the start of the down turn before DVC prices bottomed out. Lots of DVC owners are real Disney fans and aren't going to want to sell until they are forced to which is why I think there is such a lag between the downturn and the price bottom.

Once things start to open back up, I think you will see resale prices start to stabilize.

 

[hlhlaw07]

Back when I was actively lowballing contracts, I liked to use the instant sale tool on www.dvcresalemarket.com website as a good guide post for what was really too low as to avoid competing with the broker. Although with their instant sale the seller ends up having to pay all the fees associated with the sale so you really can match their instant offer price and pay for closing and still be ahead of the broker. Their valuations in that tool are rather enlightening. I put a Poly contract (similar to the one asked about up thread) and they value it at $146/point but their instant sale offer is $105/point. So to me, $120 on a Poly isn’t really lowballing and they know it. They just aren’t willing to admit the market has turned.

 

[EM Lawrence]

With these instant sales, how do they keep them from all getting taken in ROFR?

 

[Mumof4mice]

Back when I was actively lowballing contracts, I liked to use the instant sale tool on www.dvcresalemarket.com website as a good guide post for what was really too low as to avoid competing with the broker. Although with their instant sale the seller ends up having to pay all the fees associated with the sale so you really can match their instant offer price and pay for closing and still be ahead of the broker. Their valuations in that tool are rather enlightening. I put a Poly contract (similar to the one asked about up thread) and they value it at $146/point but their instant sale offer is $105/point. So to me, $120 on a Poly isn’t really lowballing and they know it. They just aren’t willing to admit the market has turned.

Yes, that calculator is an useful tool. Don't worry about ROFR. I had 4 out of 5 contracts (bought at or below the calculator price) pass ROFR in a hot market in 2018. The "worst" deal was the one that was taken.

2021/2022 will be fun for those looking to add on!

 

[hlhlaw07]

With these instant sales, how do they keep them from all getting taken in ROFR?

Well, the $105/point example is probably that low because they know Disney isn’t likely to ROFR right now. Back before there was a pandemic and when the market was really smoking hot, the instant sale offers were higher, but were still about $30-40/point below the suggested listed price.

When I was in the market for a VGF contract back in 2018, the listings were around $170-180. The instant sale price was around $140 depending on the points available on the contract. I offered $148/pt for one that was listed as $175 based on the instant sale numbers and was admonished by the broker. But my offer was accepted without counter. And it passed ROFR.

They are likely trying to get as much profit as they can through their instant sales right now because even though the brokers like to say that something won’t make it through ROFR to encourage you to bid higher, they do in fact recognize the likelihood of Disney ROFR’ing much right now is pretty minimal.

 

[hlhlaw07]

Yes, that calculator is an useful tool. Don't worry about ROFR. I had 3 out of 4 contracts (bought at or below the calculator price) pass ROFR in a hot market in 2018. The "worst" deal was the one that was taken.

2021/2022 will be fun for those looking to add on!

Ah yes, the infamous @Mumof4mice lowball offers. You were my original inspiration to start lowballing VGF contracts in 2018. Got one for $148 ($27 below asking) and another amazing deal for $133 which unfortunately made it through ROFR but the seller never returned closing documents. That one that got away still burns. By the time I got my money back on that one the market had majorly turned and Disney actually started ROFR’ing VGF and I lost two more contracts at $150/point to ROFR. The value was no longer there, so I settled for a BLT contract.

 

[Mumof4mice]

Ah yes, the infamous @Mumof4mice lowball offers. You were my original inspiration to start lowballing VGF contracts in 2018. Got one for $148 ($27 below asking) and another amazing deal for $133 which unfortunately made it through ROFR but the seller never returned closing documents. That one that got away still burns. By the time I got my money back on that one the market had majorly turned and Disney actually started ROFR’ing VGF and I lost two more contracts at $150/point to ROFR. The value was no longer there, so I settled for a BLT contract.

Hahaha after I was done buying I enjoyed following your lowballing efforts and was pulling for you! Are you in the market for more points?

 

[hlhlaw07]

Hahaha after I was done buying I enjoyed following your lowballing efforts and was pulling for you! Are you in the market for more points?

Not at the moment! But if amazing deals start popping up, I might not be able to resist. Right now I have 4 contracts between SSR, VGF, and BLT for 520 points total. So, I don’t really NEED anymore points, although it wouldn’t take much convincing for me to start thinking I need more VGF points since my last couple attempts ended in disaster. After I finally got my money back in the one the seller backed out of, I had the unfortunate timing of my $150/pt VGF contract being submitted right around the time they finally started taking them back. And to kick me when I was down, Disney took 57 days before they took it in ROFR.

But eventually, who knows. I still follow all the ROFR threads and every so often I think about getting some more points. I did buy some Disney stock when it plummeted down into the $80 range. That gave me a good enough “getting a deal fix” to stay away from the resale listings. I generally never browse those any more, because that inevitably leads me to want to throw out an offer.