Use value of contract?

[PoppyJ]

I know this is subjective but I'm thinking about selling a resale contract I purchased just a couple years ago to buy more direct points and consolidate my use year. (I regret buying two different use years because it turns out we do want to combine our points occasionally)

To present this to my husband, I'm trying to figure out what value to give to the points we have used.

I am figuring purchase price of the resale contract we purchased - value of points we used = price we should sell at to "break even"

We don't need to sell these points so we would only sell if we could get something close to a break even point.

We purchased a loaded 100 point contract. We rented out one years points at $16/point.

We then used three years points, so 300 points. Say I also value these points at $16/point.

Then we would have gotten a use value of 400 points x $16/point = $6,400

Hypothetically, let's say I purchased the contract for $20,000.

$20,000 - $6,400 = $13,600

So a "break even" point would be to sell the contract for $13,600 (or slightly more to account for sellers fees)?

How do you calculate your "use value"?

Or do you not bother and I am overthinking this...

 

[pianomanzano]

I'm going through something similar (not consolidating UYs, but wanting to sell a recently purchased resale for direct points--those VGF incentives are tempting!).

I think it's hard to put a dollar value on the points I used myself although a common way is to spread out the purchase price over the years you own + the dues for that year. So if a contract had 20 years left and you paid $20k, each year's worth of points would be $1k+dues on those points. For us, we're looking at it strictly from a "what price do I need to sell at to breakeven (that a buyer is willing to accept)" standpoint, independent of how I used points or how much in dues I paid.

 

[momtwoboys]

I know this is subjective but I'm thinking about selling a resale contract I purchased just a couple years ago to buy more direct points and consolidate my use year. (I regret buying two different use years because it turns out we do want to combine our points occasionally)

To present this to my husband, I'm trying to figure out what value to give to the points we have used.

I am figuring purchase price of the resale contract we purchased - value of points we used = price we should sell at to "break even"

We don't need to sell these points so we would only sell if we could get something close to a break even point.

We purchased a loaded 100 point contract. We rented out one years points at $16/point.

We then used three years points, so 300 points. Say I also value these points at $16/point.

Then we would have gotten a use value of 400 points x $16/point = $6,400

Hypothetically, let's say I purchased the contract for $20,000.

$20,000 - $6,400 = $13,600

So a "break even" point would be to sell the contract for $13,600 (or slightly more to account for sellers fees)?

How do you calculate your "use value"?

Or do you not bother and I am overthinking this...

sellers fee would be $150.00 estoppel fee and the commission from the sale, after that would be what you net as proceeds.

 

[Sandisw]

I have sold several to get other contracts and to be honest, didn’t worry about an actual amount.

I was fortunate that only a few I sold lost money but I figured it was offset by the trips..but didn’t try to figure a $$ amount.

I don’t regret doing it because the reasons to sell and buy something else made a lot more sense for our long term goals.

Having said that, I’d start at what I could sell for and what my net was, then look at what I am buying and see how much it might cost and decide if it’s worth it, given the value of the trips and use of points already.

Good luck.

 

[Genie+]

Does the $16 include the extra money spent on dues?

For the rental, say you paid $7pp that year for dues, then your buy-in cost is reduced by $9.

 

[Sandisw]

Does the $16 include the extra money spent on dues?

For the rental, say you paid $7pp that year for dues, then your buy-in cost is reduced by $9.

Since they are going to buy other points doesn’t it sort of makes dues a wash in this situation as it’s trying to figure out a “value of those trips”

 

[Genie+]

Since they are going to buy other points doesn’t it sort of makes dues a wash in this situation as it’s trying to figure out a “value of those trips”

Not sure.

A very simple way would be divide the purchase price by years left on contract. Say $200 per point was paid on 100pt contract that had 40 years left on it. $200pp/40yrs = $5 per point per year toward buy-in cost. (Does not consider time value of money since over only a few years won’t be much). If 4yrs and 400pts of the contract were used, you could deduct $20pp off the purchase price. $5pp/py x 4 years = $20pp. Leaves the current value at $180pp.

The example included a rental point value of $16pp for a break even value, but I wouldn’t apply that yearly without deducting dues first because that is additional out of pocket money beyond purchase cost.

 

[lilsonicfan]

To me, the math only really makes a big difference if you paid a lot more per point when you purchased than the contract could sell for now.

So for me, I paid $80 per point for my SSR contract. It was loaded too so let's say that I rent one year and use two years, then decide to sell. If, in 2 years, the per point price has fallen to say $40, then that's a significant consideration for me in terms of a "loss" in that I would be wondering whether the 2 years of use, and 1 year of rental, had done much to make up for the $40 per point "loss". But, let's say in 2 years, the per point price is still in the $70 range, then I would just say I've really not "lost" much at all. Idk, to me, DVC math can be massaged many different ways to make sense, as long as it all works out for your family finances.

 

[Epcot Forever Forever]

the way to value the contract is what people will pay for it, not what you wish you made on it. Doing it any other way will lead to either a very lengthy (infinite?) wait for a buyer or you taking way too little for it.

Check the prices of recent similar sales (within ~25 points and with similar point availability), add 5-10% to give some bargaining room, and list it with whichever broker floats your boat.

 

[jason423]

The sales price will be made up by whatever the market is. If what you are trying to do is to see if it would be reasonable to sell I think the basic equation would be something like initial contract price + total maintenance fees paid + any financing charges minus what it would have cost to take the vacations you had (rental price x points used) if you never bought the contract. If you could sell your contract for that number (adjusted up to cover broker fees) I think you could justify "getting your money back" so you can buy the direct contract with the use year you would like.

 

[PoppyJ]

I know I'll only be able to sell for whatever the market is now but my husband is a analytical, visual numbers guy so I need something to show him to make the decision.

I also feel like I could make up any calculation to favor what I know I want to do so I wanted some objective ideas to be fair.

I took all of the suggestions and averaged it. Interestingly enough, it's not far off of what has been selling per the ROFR thread. If we can get around the average I would feel good about it.

 

[Genie+]

I know I'll only be able to sell for whatever the market is now but my husband is a analytical, visual numbers guy so I need something to show him to make the decision.

I also feel like I could make up any calculation to favor what I know I want to do so I wanted some objective ideas to be fair.

I took all of the suggestions and averaged it. Interestingly enough, it's not far off of what has been selling per the ROFR thread. If we can get around the average I would feel good about it.

Good luck!

 

[PolyRob]

...my husband is a analytical, visual numbers guy so I need something to show him to make the decision.

I know membership extras are not guaranteed, but if you need to paint a positive picture to get your desired points I would factor the discounted annual pass prices...

Incredi-Pass is 1399
Sorcerer-Pass is 969

$430 savings (pre tax) for 2 people would cover an entire 100 point contracts dues annually at more than half the DVC resorts.

 

[Epcot Forever Forever]

I know I'll only be able to sell for whatever the market is now but my husband is a analytical, visual numbers guy so I need something to show him to make the decision.

I also feel like I could make up any calculation to favor what I know I want to do so I wanted some objective ideas to be fair.

I took all of the suggestions and averaged it. Interestingly enough, it's not far off of what has been selling per the ROFR thread. If we can get around the average I would feel good about it.

You can likely get the high end of the ROFR thread, that thread tends to attract stingier people than the market as a whole in my review. I’d look at the DVC Resale Market and Fidelity June sales averages.

 

[achinforsomebacon]

We're in a similar position with potentially flipping some resale for direct VGF (I feel like I've been saying this for months but haven't been able to pull the trigger yet). I've looked at it a number of ways.

I view the original purchase as a sunk cost and don't really factor it into the equation. If we weren't selling to buy, it would be different. To me it comes down to what's the net cost to sell and then buy direct. Is it worth $X to upgrade when you'll be getting consolidated years, direct benefits, ability to book all future resorts, possibly getting more years of use?

Or another way to think about it is you could do nothing and keep what you have or you could pay $X for the upgrade. Only you can decide if it's worth it since not everything has an exact value associated with it.

 

[Nursemanit]

Your math is unrelated to the actual market-driven resale price. Resale prices are not directly related to years/points remaining ( see the $ difference between BCV and BWV) so this is not a useful calculation. Just look at the current prices being asked for a similar amount of points at the same resort and same use year as some use years are more popular than others.

 

[jkips]

Your purchase is a sunk cost at this point. No use in going through and trying to figure out how much you might make or lose on a hypothetical sale. You should be focusing on how much you will get in a sale relative to how much you will have spend to buy the contract you want. That’s the decision you trying to make —- how much is having that same use year worth to you? You might have bought points for $80 that you can now net $100/pt on but if you are going to have to turn around and spend $200 for the direct points, the $20/pt profit you made on the secondary points is moot because you are are still going to be spending the $100/pt for the upgrade.

 

[Sandisw]

Your purchase is a sunk cost at this point. No use in going through and trying to figure out how much you might make or lose on a hypothetical sale. You should be focusing on how much you will get in a sale relative to how much you will have spend to buy the contract you want. That’s the decision you trying to make —- how much is having that same use year worth to you? You might have bought points for $80 that you can now net $100/pt on but if you are going to have to turn around and spent $200 for the direct point the $20/pt profit you made on the secondary points is moot because you are are still going to be spending the $100/pt for the upgrade.

This explains it better than how I did. For us, the extra has been worth it. We sold BWV in 2019 to offset the new purchase of RIV...the net result being around $8500 more. We added adult children and got more years.

Last year, we were buying 150 points at VGF but then decided to change our minds, sell 200 SSR for 300 VGF and it cost us about $10K more to do it vs. just keeping the 200 SSR and doing the 150 VGF.

We ended up with fewer points for more money, but we got longer use and more importantly...the main reason for doing it...was to swap out those SSR SAPs for points at actual resort we wanted to be able to book right at 11 months...

I just think DVC is too expensive to have something that is frustrating to use, especially when this is about the long term and not short term.

 

[PoppyJ]

You are all right. The deciding factor was ease of one use year for our plans and my need to get rid of one use year. We decided to proceed with our direct purchase and sell our resale points for the second use year. It is what will make us happy. Thanks!