Where is bottom?

[Cfabar1]

There was another thread discussing broker "customer service" and such, but related to this conversation I think many agents have been very lackadaisical both in customer service, but also in "working" for the market. I had a realization that a month ago I made some offers on contracts that were rejected (with our without a counter) as being much "too low"; there are now contracts listed with the same brokers for the same or less than my offer. Has anyone bothered to reach out to me to point this out? Nope. Tells me they have no system for tracking this and/or don't care. Seems like wasted sales prospecting. The whole model is focused on getting the listings and then sitting back and expecting the sales to come in on their own.

Of course, I now the market has moved on (greatly) in the past month and wouldn't pay what I offered a month ago....but would seem there is a real missed opportunity for some facilitation here.

I personally think some of their model is built on not negotiating, or admitting their prices are too high. I’ve had deals where I offered to come up within $1000 of where they were, and was told “well that’s showered they were yesterday so there’s no point in asking”. If the contract sits, it sits seems to be the attitude, which seems to be preferable to lowering prices - I think, because the brokers own many of the contracts anyways and they can trade them, strip them, rent them, etc.

 

[MFMont]

I think some of the big ones will stay but I do think they might not need as many people. Especially if sales slow. As prices fall sales might actually improve.

DVC direct has priced itself so high right now it is really absurd that most families would even consider it. Especially with the 150 point buy in. That’s the best differentiator the resales can offer is small contracts. Second best differentiator they can offer is huge savings.

I think the brokers are trying to get creative and hold on, and trying to react to the market, but old habits die hard and I think they are not doing their clients any favors with listing at the prices they are offering. Before their prices felt moored in reality. Now, not so much.

I think this particular market is just very slow to react as DVC resales is just such a small niche market that lags real world circumstances. Last year at this time I needed BWV points for two trips this year and it was important to match my use year. I had three loaded BWV contracts ROFR'd at between $138 to $146pp taken. Time became an issue so I was stuck paying $150pp just to get the contract in hand (all 4 of these contracts were fully loaded). This year, I would not pay more than $100pp for a fully loaded BWV contract. Think of that from an owners perspective of losing 30 to 40% value in a year. The problem for the owners though is this is likely to get worse as the year goes unless Disney steps in. It doesn't seem likely that they will until the contracts are just so low that they can't pass them up. This reminds me of the 2011 DVC market when I bought my first points. This go around, I am going to grab enough that I won't have to repeat the soul sucking experience of spending $4k cash on a room because I ran out of points as I did for last February.

 

[Matty B13]

The problem for the owners though is this is likely to get worse as the year goes unless Disney steps in. It doesn't seem likely that they will until the contracts are just so low that they can't pass them up. This reminds me of the 2011 DVC market when I bought my first points.

Problem for 2042 Resorts is the current direct price for them, I think DVC would have to lower the direct price to get them sold or offer huge discounts. Even if you can get BWV for around $100/point resale, are you going to pay DVC $240/point?

 

[naman1221]

Problem for 2042 Resorts is the current direct price for them, I think DVC would have to lower the direct price to get them sold or offer huge discounts. Even if you can get BWV for around $100/point resale, are you going to pay DVC $240/point?

I think there will always be people who buy Direct - just because they get caught up in the Disney magic. The number will proceed to drop definitely. The only reason I found out the resale market existed was because I went home and researched - a lot of people do not do that.

 

[kboo]

Yes, or they realized they can no longer afford to sell. If they are still making payments they would likely have to bring cash to close. It changes the calculus from “I’d love to quit paying these maintenance fees” to “the maintenance fees are much more affordable than what I will have to pay to get rid of this turkey”.

We had that happen with a contract we bought. It sailed through ROFR but closing was delayed because, sadly, the sellers had to come up with cash to close. I think they listed when they realized that selling and bringing some cash to closing was preferable to having a foreclosure on their credit history.

....

Of course, I know the market has moved on (greatly) in the past month and wouldn't pay what I offered a month ago....but would seem there is a real missed opportunity for some facilitation here.

One of the brokers from dvcstore.com was truly responsive and did reach out to facilitate a deal.

Problem for 2042 Resorts is the current direct price for them, I think DVC would have to lower the direct price to get them sold or offer huge discounts. Even if you can get BWV for around $100/point resale, are you going to pay DVC $240/point?

I think the point is, DVC doesn't really care to sell those points. They are interested in selling the shiny new resort, only want to have some points available in case someone wants a small add-on. For sure I would save 14,000$ for a 100 point contract, but if I only wanted 25 points to use every other year (5 nights in a standard studio at BWV) I (well, not I personally, but I could see some people) willing to pay a $3500 spread to have unrestricted points in the account right away and not have to deal with ROFR.

 

[Brian Noble]

I think the point is, DVC doesn't really care to sell those points. They are interested in selling the shiny new resort, only want to have some points available in case someone wants a small add-on.

That's exactly right. It is probably much more profitable to build and sell a new resort than to ROFR current ones, even in this market.

 

[Matty B13]

I think I didn't add the point that I don't see DVC getting very aggressive buying back points at 2042 Resorts, especially if they already have a large glut of them they bought back last year. They might grab one or two contracts to partially support the current resale prices, but they can't buy enough points to keep them inflated at current levels.

 

[kboo]

That's exactly right. It is probably much more profitable to build and sell a new resort than to ROFR current ones, even in this market.

don't forget financing new sales... I know most of the people on this board remind folks not to finance, but the people who need cash to close are people who are underwater on their loan.

 

[Brian Noble]

I figure financing is a wash, no matter where the inventory comes from. People either borrow for the purchase or they don't.

 

[RamblinWreck]

I have only been to WDW twice and both times were in late August, a.k.a. Satan’s Armpit. Also, my youngest got Covid on our last visit and gave it to myself and my husband. And yes, I just bought my first DVC contract to return many more times

We’re usually there in late June!

It’s hot, but it’s manageable. The rain is the bigger issue to me!

 

[Mexacajun]

I figure financing is a wash, no matter where the inventory comes from. People either borrow for the purchase or they don't.

What do you mean by this? Generally curious.

 

[AnnaKristoff2013]

as being much "too low"; there are now contracts listed with the same brokers for the same or less than my offer. Has anyone bothered to reach out to me to point this out? Nope. Tells me they have no system for tracking this and/or don't care. Seems like wasted sales prospecting.

I noticed this too. This is especially true of the board sponsor. I made a bunch of offers a few months ago, and even let the agents know to "please let me know if you get a similar contract at this price point." I think all the DVC brokers have been "coasting" for a long time during a hot dvc market where they had to do very little legwork.

 

[AnnaKristoff2013]

I think there will always be people who buy Direct - just because they get caught up in the Disney magic. The number will proceed to drop definitely. The only reason I found out the resale market existed was because I went home and researched - a lot of people do not do that.

People may always buy direct, but I have a hard time believing there are many people who will buy direct at $240 per point when Boardwalk has 15 years left, or 12, or 10. At some point Disney's going to have to lower the direct pricing on the 2042 resorts, or move to a policy of never ROFR'ing them ever under any circumstances.

 

[sethschroeder]

Has anyone bothered to reach out to me to point this out? Nope. Tells me they have no system for tracking this and/or don't care. Seems like wasted sales prospecting. The whole model is focused on getting the listings and then sitting back and expecting the sales to come in on their own.

My thought is they legally don't want to go down that road. Its easier to just do it how they are doing it today.

Once you start tracking that and offering that you need to start allowing opt outs and terms when people are reaching out stating what you are going to do with the info.

Their business being in Florida doesn't preclude them from laws in other areas of the US or world with how they deal with data if they start working with those people.

Honestly though I wonder if this is a good business opportunity. Provide a lower fee offering where buyers post what they want to buy and sellers then come in with a locked in deal essentially even.

 

[tjkraz]

I think I didn't add the point that I don't see DVC getting very aggressive buying back points at 2042 Resorts, especially if they already have a large glut of them they bought back last year. They might grab one or two contracts to partially support the current resale prices, but they can't buy enough points to keep them inflated at current levels.

The top 4 resorts ROFRed last year were OKW, SSR, AKV and BLT.

(IMO, OKW is the resort that makes the most sense for ROFR since Disney probably wants to get more extended owners on the books.)

Short term contracts are a persistent threat now. When 2042 finally arrives, they'll have to contend with cheap SSR contracts that only have 12 years left and AKV / OKW with 15. DVC will have to stay committed to building new resorts with high appeal (location, quality, etc.) while pushing the 50 years of ownership and perks of buying direct.

And hanging over all of this is the idea that *currently* Disney seems to have moved past the thinking that "bodies in parks" was the be-all, end-all. Today we've got park pass attendance restrictions and no AP sales, combined with some pretty significant price increases on DVC points.

20+ years ago DVC was viewed as a great way to bouy the theme parks during slower periods. And it seemed to work during the Great Recession. Disney was forced to do some discounting, but overall attendance barely missed a beat. Now we're at a point where around 20% of all Disney operated lodging at WDW is DVC. Maybe, just maybe, Disney has decided they're content selling fewer DVC points at a higher profit margin.

 

[AnnaKristoff2013]

My thought is they legally don't want to go down that road. Its easier to just do it how they are doing it today.

Once you start tracking that and offering that you need to start allowing opt outs and terms when people are reaching out stating what you are going to do with the info.

Their business being in Florida doesn't preclude them from laws in other areas of the US or world with how they deal with data if they start working with those people.

Honestly though I wonder if this is a good business opportunity. Provide a lower fee offering where buyers post what they want to buy and sellers then come in with a locked in deal essentially even.

I get plenty of "spam" from the dvc brokers I've interacted with, so I don't think this it it. I just haven't had anyone actually reach out with the specific contract I told them I'm interested in. (Which is fine, I found the contracts elsewhere at a better price). But it does seem like a missed opportunity for the brokers.

 

[RichVIII]

People may always buy direct, but I have a hard time believing there are many people who will buy direct at $240 per point when Boardwalk has 15 years left, or 12, or 10. At some point Disney's going to have to lower the direct pricing on the 2042 resorts, or move to a policy of never ROFR'ing them ever under any circumstances.

I think some of this a mind-game with new buyers. It makes the currently selling resorts look so much cheaper so we should buy now. And look, value goes up over time.

 

[sethschroeder]

People may always buy direct, but I have a hard time believing there are many people who will buy direct at $240 per point when Boardwalk has 15 years left, or 12, or 10. At some point Disney's going to have to lower the direct pricing on the 2042 resorts, or move to a policy of never ROFR'ing them ever under any circumstances.

Honestly I think what potentially is going to happen is once you get to about 5-7 years out DVC will start hoarding points from a discount and then roll out a offer with 2-3 years left to sell you a BWV 2.0 with points in BWV 1.0 for the remaining time.

Also in 10 years does Disney have even less cash rooms in Deluxe and use the DVC turnover as the contracts run out as a way to build out a increase in supply of cash rooms without building more cash rooms.

 

[Brian Noble]

What do you mean by this? Generally curious.

I was talking about this in the context of whether Disney would prefer to sell “new” or “old” resorts.

 

[ocdb8r1]

My thought is they legally don't want to go down that road. Its easier to just do it how they are doing it today.

The only data protected in any state is "personal" data...which they have no problem collecting to send out endless generic emails and texts to me to check out their website.