Who Has Counter-Offered An Exercized RoFR?

[rinkwide]

Has anyone gotten a resale to go through after Disney indicated their intent to exercise? How did the counter-offer process work?

I ask because I'll be trying to "steal" a VB contract in the next year or so. My purchase offers will be extremely low as to help offset the high fees at Vero. It may take a while but I'll eventually find distressed sellers who need to sell immediately. In such a case, I'm expecting RoFR will be an issue to understand, plan for and work around.

 

[Deep-Thots]

I had asked this question of my resale agent/realtor (TSS) not too long ago because I was worried about my SSR resale being scooped up by DVC exercising its ROFR.

Justin explained to me that what usually happens in instances of DVC exercising ROFR is that the seller usually just accepts Disney's offer, effectively cutting out the interested buyer. He said that most sellers opt for this choice because they can close the deal with DVC within 5 days. It's often not worth the seller's time and/or effort to wait around for a counter-offer from an interested buyer (who may have changed his/her mind during the waiting process, anyway) -- particularly if, as you suggest, the seller needs the money in a hurry.

So, based on this info, I wouldn't count on snatching up a low-balled Vero contract any time soon.

Just my $.01. But good luck.

 

[mel&me]

You can't counter offer once Disney has exercised there ROFR.
The seller accepted the offer from buyer so seller is happy. Now Disney comes in and says they will pay that amount per point. The seller already accepted the price so it is a done deal.

 

[mel&me]

Just an added note. That is why resale's don't start any lower than the current market rate. If people could just counter offer they would. Buyers would keep trying to low ball and just counter offer until they got through with the best deal.

 

[calypso*a*go-go]

Sorry mel&me -- I beg to differ.

We purchased our resale with a counter-offer. The key is letting the seller know immediately after the buyer-seller agreement has been submitted to DVC for ROFR that you are willing to increase your offer if it doesn't clear. Unless the seller is absolutely desperate, they would be crazy to turn down the offer for more money.

From what I have seen most contracts hit the market due to lack of use vs. financial problems.

Give it a shot rinkwide...just be prepared to wait everything out!

 

[jarestel]

Originally posted by calypso*a*go-go
Unless the seller is absolutely desperate, they would be crazy to turn down the offer for more money.

As a recent seller, I would disagree to a point here. If the counteroffer isn't worthwhile to the seller, there's no incentive to do this. An extra dollar or 2 per point on a 300 point contract really isn't that attractive ( we're only talking $300-$600 on a contract that sells for 20K or so ), unless the seller is desperate for the cash. ( which would make me wonder why they accepted the first offer anyway ) I would have passed on any counteroffer that didn't substantially increase the bottom line. A buck or 2 wouldn't have been enough to make me want to start the process all over again. But all situations are different and if you find a seller who has to have a few hundred dollars more , this might work. I suspect most sellers are mainly interested in getting the deal done, rather than squeezing every possible penny out of the deal. But sellers are motivated by different things, so you never know. It's definitely possible to counter-offer a ROFR from Disney as you know from your own experience, but I don't think it's very common.

 

[Deep-Thots]

Originally posted by calypso*a*go-go
Sorry mel&me -- I beg to differ.

We purchased our resale with a counter-offer. The key is letting the seller know immediately after the buyer-seller agreement has been submitted to DVC for ROFR that you are willing to increase your offer if it doesn't clear.

I asked Justin (TSS) about this (because I think I'd seen you post on this earlier), and he said that frequently, the realtors aren't even aware that ROFR has been exercised, and it's too late for them to do anything about it by then. At any rate, he didn't seem enthusiastic about pursuing this possibility.

My personal read on it was that it would take way more effort than the realtors are willing to put into a sale that would only net them additional commission on $500 or $600.

 

[todsue99]

Originally posted by Deep-Thots
I asked Justin (TSS) about this (because I think I'd seen you post on this earlier), and he said that frequently, the realtors aren't even aware that ROFR has been exercised, and it's too late for them to do anything about it by then. At any rate, he didn't seem enthusiastic about pursuing this possibility.

My personal read on it was that it would take way more effort than the realtors are willing to put into a sale that would only net them additional commission on $500 or $600.

That is really interesting, because my neighbor pushased a resale through the TTS and is in the process of another and when they bought the first one they went through the ROFR 3 times before Disney backed out of the deal. So yes it can be done, but it is up to the seller to wait for it to go through and it took a few months before it was done.

 

[Poorman]

Originally posted by mel&me
You can't counter offer once Disney has exercised there ROFR.
The seller accepted the offer from buyer so seller is happy. Now Disney comes in and says they will pay that amount per point. The seller already accepted the price so it is a done deal.

I beg to differ also, last year I added $2.00 pp to a 500 point contract after Disney did ROFR, the owner accepted it and it went through. After the owner accepts your offer tell your broker if Disney exercises ROFR you want to renegotiate, if it is for a few hunded dollars and the owner is in no hurry it may work.

 

[ronw]

This seems to be another area of DVC operations where theory (what is spelled out in the documents) and practice diverge. The ROFR gives DVC the right to assume the roll of the buyer in an agreed-upon CONTRACT. Theoretically, the seller has no option to refuse the DVC offer because the sales terms have already been specified in the signed contract. To decide not to sell to DVC would be a breach of that contract. It would seem it DVC really wanted the points it would be a done deal. If, however, they are only interested in keeping the resale value higher they simply threaten ROFR and allow the seller the chance to negotiate a higher price.

 

[calypso*a*go-go]

Whatever reason, it worked for me and I'm a happy camper!!!

 

[mel&me]

My info came from someone I know that bought a resale. The first one they put an offer on Disney exercised there ROFR. They wanted to counter offer and that is what they where told by agent. They did buy another resale at a later date. This is interesting to me I wonder if the resale agent had other motives for telling this to them. The resale they bought was through same agent.

 

[jarestel]

Originally posted by ronw
This seems to be another area of DVC operations where theory (what is spelled out in the documents) and practice diverge. The ROFR gives DVC the right to assume the roll of the buyer in an agreed-upon CONTRACT. Theoretically, the seller has no option to refuse the DVC offer because the sales terms have already been specified in the signed contract. To decide not to sell to DVC would be a breach of that contract. It would seem it DVC really wanted the points it would be a done deal. If, however, they are only interested in keeping the resale value higher they simply threaten ROFR and allow the seller the chance to negotiate a higher price.

This is an interesting theory, but I suspect in the majority of cases where Disney exercises ROFR, they really do buy the points, rather than just bluff the potential buyer into upping the offer. However, since the major DVC resale agents know pretty much where DVC steps in and buys, they advise sellers to price contracts in a range where both seller and potential buyer will both get what they want. So ROFR is probably not a factor in most instances unless the seller refuses to follow the advice of the resale agent on pricing, or accepts a low-ball offer.

 

[jarestel]

Originally posted by calypso*a*go-go
Whatever reason, it worked for me and I'm a happy camper!!!

Absolutely! I wasn't trying to discourage anyone from making counter-offers, just trying to point out that a few hundred bucks isn't that big of a deal to a seller, but it could be the deal breaker for a buyer if Disney steps in. Congratulations on your resale!

 

[JeffPort]

I am one of the fortunate DVC owners who successfully renegotiated with the seller when Disney stepped in to exercise its ROFR. The keys seem to be: (a) a cooperative broker, (b) prompt notice to the broker and buyer of DVC's intent to exercise ROFR [DVC contacted my broker directly] (c) very prompt notification to the seller of buyer's willingness to renegotiate, (d) buyer's willingness to offer a new price that sufficiently compensates seller/broker for the added delays and other inconveniences.

In reading each of my resale contracts, my understanding is that a seller has the right to change his/her mind and back away from a negotiated sale at any point prior to closing. The only duties that the seller would be responsible for in this scenario would be to return the earnest deposit back to the buyer and to pay the broker the complete broker fee.

If this is the case, when Disney steps in on a contract, the seller can simply tell Disney that he/she has decided not to sell the property at the agreed upon price. The seller cancels the contract, freeing the seller to re-list the property at a higher selling price. The seller still has a duty to pay the broker commission on the original contract, but the broker will usually cooperate because the seller is renegotiating through the same broker with a higher selling price -- which ultimately results in a higher commission to the broker.

You certainly cannot count on this procedure ... there are quite a few variables and plenty of opportunities for something to go wrong in the process. If you really want a DVC property, you are best served in offering a price that you think will slip by DVCs ROFR review.

 

[calypso*a*go-go]

I would also like to point out that in our case, there was no broker involved. We were dealing directly with the seller and there was very open communication between us.

 

[Poorman]

Originally posted by JeffPort
I am one of the fortunate DVC owners who successfully renegotiated with the seller when Disney stepped in to exercise its ROFR. The keys seem to be: (a) a cooperative broker, (b) prompt notice to the broker and buyer of DVC's intent to exercise ROFR [DVC contacted my broker directly] (c) very prompt notification to the seller of buyer's willingness to renegotiate, (d) buyer's willingness to offer a new price that sufficiently compensates seller/broker for the added delays and other inconveniences.

In reading each of my resale contracts, my understanding is that a seller has the right to change his/her mind and back away from a negotiated sale at any point prior to closing. The only duties that the seller would be responsible for in this scenario would be to return the earnest deposit back to the buyer and to pay the broker the complete broker fee.

If this is the case, when Disney steps in on a contract, the seller can simply tell Disney that he/she has decided not to sell the property at the agreed upon price. The seller cancels the contract, freeing the seller to re-list the property at a higher selling price. The seller still has a duty to pay the broker commission on the original contract, but the broker will usually cooperate because the seller is renegotiating through the same broker with a higher selling price -- which ultimately results in a higher commission to the broker.

You certainly cannot count on this procedure ... there are quite a few variables and plenty of opportunities for something to go wrong in the process. If you really want a DVC property, you are best served in offering a price that you think will slip by DVCs ROFR review.

I never really thought about it but it sounds like that may be it.

BTW ,Pat Spell was my agent on two of my contracts. She was on the original DVC team before she went out selling for TTS. I believe she knows the in's and outs of DVC. She was the one that suggested I offer more if I really wanted the contract, and she set it up. I trust her because she knew that I would buy another contract and she would have had two sales instead of one.

 

[Dean]

I can tell you the specifics. In the past, maybe 5 years or more ago, DVC would actually ask you if you wanted to up your bid and resubmit else they were taking it. They have quit doing it this way, no doubt because it's a hassle and costs them money to start over with the ROFR process. It is definitely true that you can offer more money and DVC will reconsider. They aren't buying the contracts truly to resell but to keep the prices up to make it easier to sell retail contracts so they really don't care that much. At the current spread, they wouldn't really make any money on it anyway.

Here's the problem though. DVC lets the seller know and not the broker that they are excercising their ROFR. So by the time the broker and buyer find out, it's likely too late. So my suggestion is for a buyer who would give more for the contract being submitted to do the following. JUST after it's been submitted, within a week, contact the broker and tell them you'd be willing to increase the offer if DVC buys it back. Ask the broker to let the seller know this and to contact the broker right away if they hear from DVC they ARE buying it back. Then let DVC know this right away, get a new contract and resubmit.

 

[tjkraz]

Originally posted by mel&me
The first one they put an offer on Disney exercised there ROFR. They wanted to counter offer and that is what they where told by agent. They did buy another resale at a later date. This is interesting to me I wonder if the resale agent had other motives for telling this to them.

Interesting comment there, and it may have some validity. Let's think about this. Contract 1 gets hit with ROFR. Agent receives commission but prospective buyer still has no contract.

Contract 2 passes ROFR and buyer is satisfied. Agent receives commission on second contract.

If the buyer had been able to make a second offer on Contract 1, there would have never been a Contract 2.

Hmmmm...

 

[Dean]

Originally posted by tjkraz
Interesting comment there, and it may have some validity. Let's think about this. Contract 1 gets hit with ROFR. Agent receives commission but prospective buyer still has no contract.

Contract 2 passes ROFR and buyer is satisfied. Agent receives commission on second contract.

If the buyer had been able to make a second offer on Contract 1, there would have never been a Contract 2.

Hmmmm...

There's no question that the agent is better off selling two contracts for a slightly lower total. Still, intentionally misleading the buyer and/or seller or refusing to up the offer is certainly unethical and it might even be illegal.