Why are small point contracts in demand?

[TexasTom]

Still looking for my first DVC resale contract.

I'm wondering why 25 pt contracts are so in demand even though the price is way high.

For example, the average resale price at Saratoga Springs is about $110 per point.

- 25 points contracts are listed from $129 to $145 per point.
- Add closing cost of about $500 ($20 per point)

So I could end up paying between $149 to $165 per point.

I would buy only if the price is near the average resale price.

So why would anyone pay such a high price for a small contract? Maybe they know something I don't.

 

[RichVIII]

It’s a digestible price, especially for cash purchases. Not everyone has 20k sitting around. A few k is a lot easier. Also easy to sell back at a premium.

 

[chalee94]

Also, Disney won't even sell such small contracts to new members.

But yes, it's a lot easier to drop a few grand on a contract for fun...once prices get into the territory of a nice late model used car, fewer people are comfortable with a luxury purchase of a fixed end-date timeshare...

 

[happythoughts & pixiedust]

Think of it like a bulk discount. The more nights you commit to buy every year, the cheaper the price. Disney does the same thing when they offer incentives on the new properties. The more points you buy from them, the bigger the incentives and the lower the price per point. Example - Riviera now costs over $200 per point if you buy a small contract from Disney direct. About six months ago it was possible to buy Riviera points direct from Disney for $155 per point if you bought 300 points or more.

 

[happythoughts & pixiedust]

Also, if you plan to resell your contract you will likely recoup that higher purchase price because people will continue paying a premium for small contracts.

If you hold the contract to expiration the ~35-40% higher per point purchase price isn't quite as painful as it looks because the present value of your annual dues commitment is higher than the initial purchase price. Ultimately, if you pay $45 more per point for a small SSR contract (~155), your equivalent nightly rate vs. an average priced contract (~110) is only about ~17% higher per night over the life of the contract. On a studio this amounts to $30-50 more per night depending on where you stay and in which season....and on a 25 point contract you're only going to be staying 1-2 nights a year.

Most people will probably decide it's worth it to pay the equivalent of $60-100 extra per year if they only want a 25 point contract when the alternative is to shell out thousands for something they won't use or have no DVC at all.

 

[EM Lawrence]

For people who want to pay cash, the smaller outlay of cash on the low point contracts is nice, and you can just add on over time as you have the money on hand. But honestly, some of them end up being so close to direct pricing, it hardly seems worth the bother to go through the resale process.

 

[LAX]

I think the smaller contracts are less common than the bigger ones (supply vs. demand). Plus, small contracts offer flexible for possible future downsizing. For example, if you have four 25-point contracts, one or two can be sold off if the need for size/length of accommodation go down in the future. But, if you have only one 100-point contract, it's either keeping it and trying to figure out what to do with the "extra" points, or selling.

LAX

 

[Chy]

Also if you aren’t a dvc member at all a small contract gets you in. You can now buy transfer points from other members - giving you more flexibility than renting but still low dvc pricing.

 

[Heather07438]

One Example:
Person bought first contract at SSR or AKV 100pts. They end up always borrowing 35-50pts for a few years in a row, so now there’s no points in their upcoming Use Year. They also love BW or BC but can never get dates or room they want. The solution is to pick up a 50pt.
Now they can take a 150pt trip 2 years out of 3, and on the off year they use the 50pt tripled up to 150 from banking and borrowing.
Id probably go this route myself at first. Start with just enough to get by, then add a small contract for more points and home resort advantages.

 

[MICKIMINI]

I think the smaller contracts are less common than the bigger ones (supply vs. demand). Plus, small contracts offer flexible for possible future downsizing. For example, if you have four 25-point contracts, one or two can be sold off if the need for size/length of accommodation go down in the future. But, if you have only one 100-point contract, it's either keeping it and trying to figure out what to do with the "extra" points, or selling.

LAX

Great points! We're adding small contracts with retirement in mind. I think you need to be at a certain age to think like this about DVC LOL! @LAX gets it regarding aging "gracefully" as a DVC Member!

 

[Ruttangel]

People usually don’t buy enough points.
Point charts can change and you may just need a few more points

 

[DVCSunDevil]

I think the higher price for those smaller contracts is for two reasons:
1. DVC doesn't even sell contracts that small
2. Many owners have slightly "outgrown" their contract and only need more points, but they don't need a ton of points

For example, the kids in a family may now be in the later teens. When the owners first bought their 250 point contract (for example) it was well enough points to stay for a week in a studio and there was enough room because their kids were younger. Now, that same family would prefer a 1BR so that there is more room to spread out. Taking BCV as an example, a 1BR in season 6 costs 269 points for a week. That family would only need 19 more points if that is the time of year they visit WDW. So those 25 point contracts are in high demand for people in that situation.

 

[havoc315]

Demand is because of the low total cost and flexibility. And supply is very low -- Disney doesn't sell a lot of low point contracts. It's that limited supply which drives up the price.

It's not new buyers purchasing those 25-50 point contracts..
It's existing owners who have found they could benefit from a few more points. Their family grew or they find they didn't quite purchase enough points for their needs.

So there is a very limited supply of low point contracts. But there is persistent demand from those who want to add-on.

 

[CSLucas]

We are in the process of buying a 60 pt contract (plus another 100 pt contract)- the higher price didn't bother us because honestly over the remaining 40+ years it isn't that much of a difference. We will add direct in 25 pt increments if we end up wanting more points, but for us it was about not having a huge initial investment in case we change our minds. The kids (3 and 5) love Disney now, but will they still love Disney when Europe is back on the table? The amount we will lose if we end up selling those contracts within a few years is pretty much equivalent to what we pay in accommodations at WDW right now anyways (we aren't interested in moderate or value resorts). I would imagine there are plenty of people like us who aren't die-hard Disney people but still see the value in DVC and want a small contract. Since Disney won't sell to us because of their 125 pt minimums, resellers have a lot more power to name their price

 

[cherylmc]

Most people will probably decide it's worth it to pay the equivalent of $60-100 extra per year if they only want a 25 point contract when the alternative is to shell out thousands for something they won't use or have no DVC at all.

THIS.

My only DVC contract is a 25pt Boulder Ridge purchased resale in 2009. I only visit WDW once every several years. I like the low cost of annual dues, and I can leverage OTU points and/or transfers if I choose to. (Also, I received a Blue Card, which I didn't know at the time would be additional value.) I was a new buyer who was only interested in making a small DVC investment. The 'premium' charged per point on the small contract was insignificant to me when compared with my other priorities. I did not even compare the price per point with larger contracts at the time of purchase. I found the home resort and UY I wanted and made the offer at asking price. It was a very small investment in the grand scheme of things.

Updated: After I posted, it occurred to me that over the past 11 years, I've most likely recouped whatever 'premium' I paid per point from DVC discounts on merchandise, tours, spa services and Tables in Wonderland (plus for quite a while, valet parking!)

 

[dvc lover 1970]

25 point contracts are not that common. They are sold as addons only for direct purchases.

 

[jarestel]

A few years back, a direct purchase of 25 points would qualify for member benefits. I imagine quite a few 25 point contracts are floating around in the DVC stratosphere. Of course, there is such a thing as too small of a contract and if I wasn't adding on to points I already owned at a resort, I'd find the 25 point standalone contract to be pretty useless. But they do seem to generate some interest on the resale market.

 

[Evita_W]

Still looking for my first DVC resale contract.

I'm wondering why 25 pt contracts are so in demand even though the price is way high.

For example, the average resale price at Saratoga Springs is about $110 per point.

- 25 points contracts are listed from $129 to $145 per point.
- Add closing cost of about $500 ($20 per point)

So I could end up paying between $149 to $165 per point.

I would buy only if the price is near the average resale price.

So why would anyone pay such a high price for a small contract? Maybe they know something I don't.

At that price per point, you can buy some resorts like Hilton Head, Vero Beach, OKW and Saratoga Springs direct from Disney. Granted I believe you would need to buy more than 25 points, but you would get the benefits of buying direct. I know because I was just looking at add-ons last night.

 

[MICKIMINI]

Keep shopping. We are in ROFR for $110 50 point SSR and just closed about 6 weeks ago on a 30 point HHI for $74 and closed in November on two 25 point OKW contracts at $100 each.

I've been able to buy "bundled" contracts three times over the years. The last two were the 25 point OKW from one seller with one closing saving 50%. Look for "twin" contracts and make your offer based on closing together. The cost to close on 25 or 50 is pretty much the same.

We have several larger contracts but keep finding good deals on small resales, so that is what we are buying. Some prices are beyond crazy but deals are out there! My strategy is being the first to jump on the contract with an offer and start negotiating. It doesn't always work, however your chances of getting it are greatly increased.

Good luck!

 

[kristenrice]

One Example:
Person bought first contract at SSR or AKV 100pts. They end up always borrowing 35-50pts for a few years in a row, so now there’s no points in their upcoming Use Year. They also love BW or BC but can never get dates or room they want. The solution is to pick up a 50pt.
Now they can take a 150pt trip 2 years out of 3, and on the off year they use the 50pt tripled up to 150 from banking and borrowing.
Id probably go this route myself at first. Start with just enough to get by, then add a small contract for more points and home resort advantages.

This sounds like us...

We bought a 100 point AKV contract in 2008 and then in 2011, we added a 50-pt HHI contract (direct) so that we could go there every three years. Now, we find that we actually prefer HHI but the 50 points is not quite enough to go every other year. We could really use another 25-30 points. A 1BR for our usual stay is 135 points and a 2BR is 155 so another 25-30 would give us 150-160 every 2 years. We are less than 2 months out from our next trip to HHI which was supposed to be LAST year, but got delayed thanks to "the disease". With the borrowing restriction that was put into place, we now have some leftover HHI points for 2022 so hopefully, we will be able to combine them with some AKV points and maybe make a trip down there again sooner than we had originally planned.