Why are resale dues split based on points?

[achinforsomebacon]

Based on what I've seen, most resale sites split the current year dues based on points. So if the current owner hasn't used any 2021 points, the buyer would end up paying all 2021 dues. If half of the points are used, dues are split 50/50. This doesn't make sense to me since dues are paid on a calendar year basis.

Take a June UY contract that closes on 6/1. No 2020 points remaining and all 2021 points remaining. The seller has the ability to make use of the resorts for 4.5 months of the 2021 dues year (1/15/21-6/1/21). They could have used all of their 2020 points in May for all we know. Why wouldn't the dues be split 37.5/62.5 based on the calendar year split? I think this is how it's handled for direct purchases. Why is resale different?

 

[fordchevyguy]

Everything is negotiable

 

[supersnoop]

Dues are billed by calendar year, but the fees are based on the number of points. It seems fair to reimburse the seller for dues based on the points remaining. That said, they say you figure it is how Disney bills direct dues when a contract closes.

 

[we"reofftoneverland]

Based on what I've seen, most resale sites split the current year dues based on points. So if the current owner hasn't used any 2021 points, the buyer would end up paying all 2021 dues. If half of the points are used, dues are split 50/50. This doesn't make sense to me since dues are paid on a calendar year basis.

Take a June UY contract that closes on 6/1. No 2020 points remaining and all 2021 points remaining. The seller has the ability to make use of the resorts for 4.5 months of the 2021 dues year (1/15/21-6/1/21). They could have used all of their 2020 points in May for all we know. Why wouldn't the dues be split 37.5/62.5 based on the calendar year split? I think this is how it's handled for direct purchases. Why is resale different?

I never reimburse for dues already paid. You do not know if you will even get to use those points. Don’t let brokers bully you into doing this.

adding that we have purchased 5 resale contracts.

 

[JETSDAD]

Just factor it into the overall price/value of the contract. Can you use the points? Is the overall price still inline with other available contracts? Is it a good deal overall? People get too hung up on how much under list price they can get a contract, reimbursement of dues, broker fees, etc rather than simply looking at the overall value of the contract and whether or not it makes sense as a package.

 

[achinforsomebacon]

Everything is negotiable

I 100% agree with this, but I think the negotiations start in the wrong place. This makes it seem like the seller is conceding something when really it's just getting to the split where it should be. It's all perception and how the brokers play the game. It all gets factored into the offer, but I think sellers are being misguided by brokers.

 

[AaronEuth]

Everything is negotiable, and each buyer and seller make their own decisions. However dues, to me, are a more accurate representation of the remaining usage the buyer is paying for, at least when using the standard of any future use year having the dues prorated.

Consider a Feb BLT contract, with full 2020 points banked into 2021, full 2021 points and full 2022 points. Vs a Feb BLT with no 2020, no 2021, and all 2022 borrowed and gone. Obviously, these two contracts should command a different price. What should the difference be? If only we had a nice numerical way to represent the usage the new owner will have access too at the resort. If we went according to years remaining then they would both be the same, so that doesn't work. But if we use dues as our variable, all of a sudden it's easy to quantify the usage remaining at the loaded contract vs the stripped.

 

[Ginamarie]

Usually, it seems fair to pay dues based on the number of points you're using from the use year. I don't really see a problem with it. In my case, we bought a contract that had some leftover 2020 points but the seller wasn't looking for the dues on the 2020 points. I had to pay the 2021 dues upfront to the title company since we closed in December, but paid nothing towards the 2020 dues. This worked to my benefit because I've already booked a trip this year with the 2020 points.

 

[we"reofftoneverland]

Everything is negotiable, and each buyer and seller make their own decisions. However dues, to me, are a more accurate representation of the remaining usage the buyer is paying for, at least when using the standard of any future use year having the dues prorated.

Consider a Feb BLT contract, with full 2020 points banked into 2021, full 2021 points and full 2022 points. Vs a Feb BLT with no 2020, no 2021, and all 2022 borrowed and gone. Obviously, these two contracts should command a different price. What should the difference be? If only we had a nice numerical way to represent the usage the new owner will have access too at the resort. If we went according to years remaining then they would both be the same, so that doesn't work. But if we use dues as our variable, all of a sudden it's easy to quantify the usage remaining at the loaded contract vs the stripped.

Brokers already price contracts with “extra” points higher. It is already built in. But there are a couple of brokers who also try to pressure buyers into “reimbursing”— I.e. pay extra- for those points. As a buyer, if you want to pay extra, fine, but the idea that it is something you have to do is only pushed by certain brokers. Part of the problem with this is that you may never get to use those points, or you may be forced to use them in a way that is more than a hassle than they are worth. It is not like they are wild card points that you can use anytime anywhere. Those points have restrictions and limited shelf life. Obviously it wasn’t that easy for the seller to use them or they wouldn’t still be on the contract. Obviously it wasn’t that easy for the seller to rent them out or they wouldn’t still be on the contract. If the seller has already Paid the dues on the points, they have already paid the dues on the points, case closed.

 

[we"reofftoneverland]

Usually, it seems fair to pay dues based on the number of points you're using from the use year. I don't really see a problem with it. In my case, we bought a contract that had some leftover 2020 points but the seller wasn't looking for the dues on the 2020 points. I had to pay the 2021 dues upfront to the title company since we closed in December, but paid nothing towards the 2020 dues. This worked to my benefit because I've already booked a trip this year with the 2020 points.

This is different. The seller had not paid the dues that is why you had to pay the the dues at closing to the title company.

 

[Ginamarie]

This is different. The seller had not paid the dues that is why you had to pay the the dues at closing to the title company.

Correct.
Like I said, my seller wasn't looking for reimbursement on the 187 points that were left on the 2020 contract. Honestly though, I got a really good price on my contract, so I may have been willing to pay those dues if he had asked for them. In the end, you just need to make sure that the final purchase price is one that you're comfortable with once you factor in all of the dues, closing costs, purchase price, etc.

 

[Ruttangel]

I wouldn't get too hung up on this, just work out your target price for a loaded/current/stripped contract.
Get a quote from the broker including all closing costs and work out your true purchase price per point.

Haggle accordingly.

 

[Sandisw]

With the exception of last summer when I bought BLT, I have never paid based on points but calendar year. I have also used this method when selling.

I bought BLT last June but paid all 2020 dues because it came with banked 2018, 2019 and all 2020 points for the December UY. Considering I figured I should pay 6 months, I want going to quibble over about $350 extra since a years dues was about $700 for the 100 points.

Other than that it’s negotiable and as already shared, consider it all in your offer!

 

[lovethesun12]

Brokers already price contracts with “extra” points higher. It is already built in. But there are a couple of brokers who also try to pressure buyers into “reimbursing”— I.e. pay extra- for those points. As a buyer, if you want to pay extra, fine, but the idea that it is something you have to do is only pushed by certain brokers.

Interesting. Could you possibly explain exactly how a couple brokers pressure into reimbursing? Do they assume you are paying for prior use year dues and build it into the contract without specifying it or something? Or price it extra high? Sorry if the questions sound silly but this is new to me and I'm curious. I recently put in an offer (a little on the lowball side but I think it was reasonable) on a loaded contract and it was totally shut down by the broker.

 

[Eric Smith]

Based on what I've seen, most resale sites split the current year dues based on points. So if the current owner hasn't used any 2021 points, the buyer would end up paying all 2021 dues. If half of the points are used, dues are split 50/50. This doesn't make sense to me since dues are paid on a calendar year basis.

Take a June UY contract that closes on 6/1. No 2020 points remaining and all 2021 points remaining. The seller has the ability to make use of the resorts for 4.5 months of the 2021 dues year (1/15/21-6/1/21). They could have used all of their 2020 points in May for all we know. Why wouldn't the dues be split 37.5/62.5 based on the calendar year split? I think this is how it's handled for direct purchases. Why is resale different?

You end up paying the dues on all the points that you will get based on how they list it. I don't know if direct splits dues based on when in your year you end up buying. I don't see why they would do that.

 

[we"reofftoneverland]

Interesting. Could you possibly explain exactly how a couple brokers pressure into reimbursing? Do they assume you are paying for prior use year dues and build it into the contract without specifying it or something? Or price it extra high? Sorry if the questions sound silly but this is new to me and I'm curious. I recently put in an offer (a little on the lowball side but I think it was reasonable) on a loaded contract and it was totally shut down by the broker.

In my experience they just try to force it. We walk away from those brokers. They act like you are unreasonable if you make an offer that does not include it and reject the offer without even running it by the seller. Or they don’t mention it and tack it on at the end when you get the contract like it is part of the sale. Or they put it on their website as if it is just part of the price, as if it is a fait accompli, so that people who do not know better assume they have to pay it. It is a car-salesman like tactic where they just try to act like “that is just how it is done,” when in fact that is not true. It is not a typical real estate deal, by law the brokers are supposed to be working for both the seller and buyer and not trying to pull one over on you. It tends to be the brokers who demand larger commissions— obviously they are trying to cover that. Remember that as a buyer you are paying the commission too. Yes, it comes out of the sellers proceeds, but that is just a formality. It is built into the price you pay.

 

[lovethesun12]

In my experience they just try to force it. We walk away from those brokers. They act like you are unreasonable if you make an offer that does not include it and reject the offer without even running it by the seller. Or they don’t mention it and tack it on at the end when you get the contract like it is part of the sale. Or they put it on their website as if it is just part of the price, as if it is a fait accompli, so that people who do not know better assume they have to pay it. It is a car-salesman like tactic where they just try to act like “that is just how it is done,” when in fact that is not true. It is not a typical real estate deal, by law the brokers are supposed to be working for both the seller and buyer and not trying to pull one over on you. It tends to be the brokers who demand larger commissions— obviously they are trying to cover that. Remember that as a buyer you are paying the commission too. Yes, it comes out of the sellers proceeds, but that is just a formality. It is built into the price you pay.

That makes sense. Thanks

 

[CmdrThor]

Never pay for banked points. They aren't worth as much due to their impending expiration. For my last contract I offered the full asking price, but did not offer to pay 2021 dues. There were full 2021 points available and 75% of 2020 points banked to 2021. The seller countered at splitting the 2021 dues. I accepted because I knew my offer was already on the razor edge of what might be taken by ROFR. Mine passed and I saw some that were effectively only a few dollars under considering dues and closing costs get taken so I am happy.

 

[Sandisw]

You end up paying the dues on all the points that you will get based on how they list it. I don't know if direct splits dues based on when in your year you end up buying. I don't see why they would do that.

When you buy direct, you only pay dues from the date you sign the contract for that calendar year,

So, if you were buying today, you’d pay 2021 dues for a little under 10 months. UY doesn’t matter since you always get current UY points.

 

[Lorana]

Just adding I agree with this sentiment. I have a SEP UY. Which means if I'm purchasing a contract with no current UY points (2020) and thus no points until SEP (2021), I make my offer on prorated dues. Because dues are not based on UY, they are based on calendar year. If I have no points until September, I shouldn't pay 12 months of dues. I should, at most, pay for 4 months of dues. If I'm getting 2020 points as well as 2021 points, then I'm more willing to pay the dues since I'm getting "12 months worth of points" I could use.

Now, as many have pointed out, there are a number of brokers out there who push back on making an offer that works this way, in which case I lower the amount of pp cost I'm willing to pay to equal the dues I'm being asked to pay. But a good broker will include your negotiation around dues as part of the offer.