What value would you put on banked Points? Or deductions for stripped?

[PapaCharles]

I'm looking for opinions/thoughts anyone has as we look for contracts.

Thanks

 

[JETSDAD]

I'm in the final stretch of buying my first contract and went resale. I think people seem to put too little emphasis on loaded and/or stripped points. For instance, I am buying a fully loaded contract with all the 2015 and 2016 pts available plus the normal going forward. The plan is to rent out the 2015/16 pts using a broker. The 2015 pts we will be able to rent out for $13PP and the 2016 (banked into 2017 UY) at $14PP. By not having to pay any dues on those 2 years worth of pts I am making $27PP...even though I paid top of the mark for the contract ($89PP for AKV) in the end I will be at $62PP. I don't need those points for my own vacations (though it will be very tempting!!) and will just start using the 2017 pts for my vacations.

 

[PapaCharles]

I'm in the final stretch of buying my first contract and went resale. I think people seem to put too little emphasis on loaded and/or stripped points. For instance, I am buying a fully loaded contract with all the 2015 and 2016 pts available plus the normal going forward. The plan is to rent out the 2015/16 pts using a broker. The 2015 pts we will be able to rent out for $13PP and the 2016 (banked into 2017 UY) at $14PP. By not having to pay any dues on those 2 years worth of pts I am making $27PP...even though I paid top of the mark for the contract ($89PP for AKV) in the end I will be at $62PP. I don't need those points for my own vacations (though it will be very tempting!!) and will just start using the 2017 pts for my vacations.

Do you have same thoughts if you were going to use the points?

 

[JETSDAD]

I think that having a loaded contract can allow you to buyer a smaller contract to start or allow more/longer vacations or larger rooms that you may not otherwise be able to do. With myself, if we decided to use the pts we could do an extra vacation this year, then next year use the 2016 pts along with some 2017 pts....then bank the remaining 2017 pts into the 2018 UY. If we did it this way we could spread the loaded pts out over quite a few years to come. The spread between loaded and stripped contracts does not seem to be great enough to bother with a stripped contract IMO.

 

[JETSDAD]

Another way to look at it if you are planning on using the points is to look at the spread between the price on loaded and stripped contracts and divide that amount by the number of points you will be getting in addition to the 2017 and forward pts. I'd guess the difference will be around $10-15PP on the contract so if you have a loaded contract you could be around $5-7.50PP on the pts you would be using....that's a very nice price compared even to renting.

 

[ziravan]

The resale market puts a $3-5 value on loaded points. The real world value of those points are at least $12/point.

On a 100 point contract, that's at least an additional $700 worth of value to find a loaded contract over a non-loaded one and twice that over a stripped contract.

Is it worth leaving $700 plus on the table to go with a stripped contract?

Sometimes. My resale contract was neither stripped nor loaded, it had the equivalent of current year points. I had decided to only go with loaded contracts but I was able to negotiate a pretty good deal on the contract I found for BCV at $84/point. That was a few years ago but it was a good deal then, too.

 

[CarolMN]

Depends on when they expire and if the buyer thinks closing will occur with enough time to use them. Personally, I'd estimate 90 days to close and get in the system and then want at least 6 months to use them before they expire. Otherwise, I would not value them highly. Of course, that might mean my offer will be less than someone else's. I'd rather wait than count on using points that will expire relatively soon. Renting is an option, but not always a good alternative for an inexperienced owner, especially if one is under the guyn to use or lose points).

 

[PapaCharles]

Depends on when they expire and if the buyer thinks closing will occur with enough time to use them. Personally, I'd estimate 90 days to close and get in the system and then want at least 6 months to use them before they expire. Otherwise, I would not value them highly. Of course, that might mean my offer will be less than someone else's. I'd rather wait than count on using points that will expire relatively soon. Renting is an option, but not always a good alternative for an inexperienced owner, especially if one is under the guyn to use or lose points).

Thanks Carol, follow up question then..
If it met your 90 day criteria and then had 6 months + to use, what would you value them?

 

[ziravan]

Thanks Carol, follow up question then..
If it met your 90 day criteria and then had 6 months + to use, what would you value them?

I would value them at $12/point but I would OFFER the market convention of $3-5/point more for them.

The difference is a key way to turn good deals into great deals. But that will probably take patience. I guess the real question is this: what's your appetite for patience?

What's patience (or lack of it) worth to you?

 

[CarolMN]

Thanks Carol, follow up question then..
If it met your 90 day criteria and then had 6 months + to use, what would you value them?

This my opinion - one among many, I'm sure:

Probably a dollar or two less than the rate the brokers are willing to pay for points tendered to them at 7 months. That assumes the seller is not requesting the buyer to pay MF on those points.

If the buyer is expected to pay or reimburse for MF, I'd value the banked or missing points at the broker rate less Maintenance Fees.

 

[dvcdream4fld]

It's simple. If you rented DVC points at market valve then you will pay $12-16 per point. Therefore, DVC resale contracts with points available where you don't pay additional annual fees is simply a reduction of the purchase per point cost. For example, if you purchase a 100 point contract for $100 per point and it has a 100 banked points. I would assume the actual purchase cost is reduced by the value of the banked points or $100-$12 or $88 per point purchase cost (assuming these points can be used before expiration).

 

[ziravan]

It's simple. If you rented DVC points at market valve then you will pay $12-16 per point. Therefore, DVC resale contracts with points available where you don't pay additional annual fees is simply a reduction of the purchase per point cost. For example, if you purchase a 100 point contract for $100 per point and it has a 100 banked points. I would assume the actual purchase cost is reduced by the value of the banked points or $100-$12 or $88 per point purchase cost (assuming these points can be used before expiration).

But that's not how the resale market works.

If a loaded contract is selling for $100/point then stripped ones will be selling right beside it for $96

The market doesn't normally price in the full value of loaded points. It's a market inefficiency that works in favor of a savvy buyer.

 

[ziravan]

Now.

From a negotiating standpoint, since there is value to capture from a loaded contract, I'd negotiate very aggressively on stripped contracts, less so on loaded.

 

[BillPA]

Don't forget the dues, if you have to pay for them that would reduce the value to you between $5.60-8.00 a point depending on which resort.