Why is renting points so "cheap"

[bullpup12564]

Hello. I am a new DVC member and recently found this board by accident. I currnetly started with a small add-on and am in the process of getting a larger contract since I see the value of staying at a deluxe resort for the price of a moderate.

I notice a lot of people buy and sell points in the rental board for around $10/point. The last time I stayed in the wilderness lodge "regular" room it was 1500 for 5 nights. For a renter this must me great deal getting a room from 60 -100 points but for the seller I am curious if it is also a great deal.

I know that if the points are not used in the sellers account they get lost so any value is better then none. The question is are they really that many point sellers compared to the renters here that keeps the price at the ten dollar range and is 10-11 point a good deal for everyone. I am curious and any thought s would be helpful.

 

[crisi]

There are a number of factors that go into price. One is suppy and demand. One is the established price - the price for points was established some time ago for $10. A big one is the cost. To people who bought their points ten (even five) years ago, $10 a point still produces a tidy profit. Another is the rationale for renting. If someone wants to make money off points, they will look for the highest price they can get. But a lot of DVCers aren't renting points for profit. They are renting points because they want to get some money for some vacation dollars, because they have "extra" points this year they don't want to waste and anything above the "dues" is gravy to them, or because the points have become distressed when they've needed to cancel a trip.

You can't compare renting points to a regular room either. There is more trust involved - people are willing to pay a premium for dealing direct with Disney. There is the "weekend markup" at DVC resorts. The cancellation policies on point rentals tend to be much less flexible than Disney. And DVC owners can't give specials like this falls "free dining" promotion. All that makes a room on points less valuable than one direct from Disney.

 

[littlestar]

Renting points takes trust. With Disney, you don't have to worry about not having a room when you show up. Plus with Disney you can cancel. Pretty much once you rent points, it's a done deal.

 

[LordAthens]

And DVC owners can't give specials like this falls "free dining" promotion.

Not to derail the topic, but what is this free dining promotion you're talking about?

 

[spiceycat]

this summer for the fall season WDW has a special that if your brought their package - room and tickets - they would pay for the meals.

they will do that occasionally.

most of my points were paid for long ago. So the only thing I am paying is the $3.85 ($3.03 w/o taxes) per point (OKW). So $10 a point makes sense to me.

Now there are renters who will try (unsuccessfully) to get this board to raise the price.

however if you want to charge more go to

www.redweek.com

there you list your own price.

 

[mydogdrew]

It's 100% supply and demand. When I rent it's at least $12-$13. We can do this because BWV std view allows more "value" to renters and there are certain times of the year when demand for rooms in that location is very high from 7-11 months. In fact, I know we could get even more. However, SSR owners don't have as many options. They will always get the lower end of the scale due to the availability of rooms there. DVC has been very successful marketing add-on's with incentives to current owners. Many have purchased points that they don't really need and these end up on the rent board further depressing rental prices at that resort. Now, some of these folks are trying to unload these add-on's and are finding no takers given the current incentive. At some point, DVC is going to have a hard time buying back these contracts via ROFR (I think they have their hands full just selling the new development inventory - let alone the ROFR resales). The more dramatic and frequesnt the developer discounts, the harder it will become to "raise" prices back to the pre-incentive levels.

 

[Lewisc]

$10/point is a good deal for the renter 5 days a week but not really a good deal on weekends. The cancellation terms on a rental contract aren't as liberal as booking directly with Disney, you don't get daily maid service and you really have to make your reservation much further in advance than if you booked with Disney. A few years ago I rented points to stay at BCV. I made sure to make my arrangements more than 7 months before my trip. Normally I make my reservations 3-4 months in advance. I may fine tune my dates after SW extends their schedule and I see what days give me the best airline fares. You really don't have that flexibility when you rent points.

A DVC member can probably maximize their income if they book a reservation for a popular week at the 11 month window and then sell the reservation. People renting on this board are trying to cover their expenses and not squeeze every possible dime out of the transaction.

 

[Johnnie Fedora]

1) Some DVCers fear the hassle of having to make multiple calls to DVC chasing down reservations for fickle rentees. Therefore, they price the cost/point low to rent them fast and easy.

2) Some simply do not know what they are doing, and it is obvious from the way they post on the R/T board.

3) Some may "get a good feeling" by providing complete strangers with deluxe accomodations at "All-Star prices.

4) Some may simply be lazy.

5) Some may have a habit of making poor money choices.

6) Some may not realize that Disney raises their room rates 5-8% every year.

To obtain a fair price on the R/T board ($12-15/pt for Sun-Thurs points, IMO) takes a little planning, but it can be done.

Note to self: If I need some extra points, all I have to do is post a sob story on the R/T board and someone will transfer them to me for $8-9.

 

[Chuck S]

1) Some DVCers fear the hassle of having to make multiple calls to DVC chasing down reservations for fickle rentees. Therefore, they price the cost/point low to rent them fast and easy.

2) Some simply do not know what they are doing, and it is obvious from the way they post on the R/T board.

3) Some may "get a good feeling" by providing complete strangers with deluxe accomodations at "All-Star prices.

4) Some may simply be lazy.

5) Some may have a habit of making poor money choices.

6) Some may not realize that Disney raises their room rates 5-8% every year.

To obtain a fair price on the R/T board ($12-15/pt for Sun-Thurs points, IMO) takes a little planning, but it can be done.

Note to self: If I need some extra points, all I have to do is post a sob story on the R/T board and someone will transfer them to me for $8-9.

I think everyone realizes cash room rates usually go up every year. The bottom line is that renting is a private contract, and is subject to whatever terms and conditions the parties involved wish to impose. And they realize that there are risks on both sides not associated with cash ressies through Disney. Folks are free to rent at whatever rate they deem appropriate and are happy with and it is not anyone else's concern.

 

[spiceycat]

the only time I charged more for a reservation was Thanksgiving - my brother cancelled on me at the last minute and I was mad.

I really didn't want to rent this reservation. so I only gave myself 10 days to do it.

but I can't complaint I got a great person from this site to rent it.

 

[CarolMN]

(snip)..... SSR owners .....(snip).......... Many have purchased points that they don't really need and these end up on the rent board further depressing rental prices at that resort. Now, some of these folks are trying to unload these add-on's and are finding no takers given the current incentive. At some point, DVC is going to have a hard time buying back these contracts via ROFR (I think they have their hands full just selling the new development inventory - let alone the ROFR resales). The more dramatic and frequesnt the developer discounts, the harder it will become to "raise" prices back to the pre-incentive levels.

Not sure I follow your logic re DVC having hard time buying back add on SSR contracts via ROFR due to need to sell new inventory.

Most here would say the current incentive to buy (15% discount, etc.) is a better deal than many of the stripped add on SSR contracts currently available via resale. So IMHO, the resale contracts will either get low ball offers or none at all. Until their is a bonafide offer, DVC does not enter the picture. Again IMHO, no need for DVC to consider stepping in unless the number of SSR resale contracts becomes a lot larger than it is now AND the sales price is well below $70 per point.

I'm basing that on a 120 point SSR add on that has no points until 2007. I assume buyer would pay closing costs, but seller would pay all 2005 and 2006 maintenance fees. No 2006 points means contract is worth at least $1200 less than one with 2006 points.

I can get points from Disney and not pay closing for $83.5. So 120 * $83.5 is $10,020. Subtracting $500 for closing costs (just a guess) and $1200 (for no 2006 points) from that I get $8320. Dividing that by 120, I get $69.33 per point. (Not even considering that Disney would give many buyers 2005 points, too. Subtract even more if you want to becasue of that).

Would DVC buy it back at $69? Maybe, maybe not. But at that price, the buyer really hasn't saved any money over going direct and has no points to use until 2007, so IMHO, a savvy buyer would offer a lot less than $69 per point. Anyway, 83 - 69 = 14 per point. Isn't that about the spread between resale and direct from Disney for buy backs of the sold out resorts?

FWIW, I don't think the stripped SSR contracts are going to get many (if any) offers until closer to 2007 and the few that they do get will be low enough so that Disney can buy them back and either lose or gain at the same rate as the other DVC resort resale buybacks.

JMHO. YMMV.

Best wishes -

 

[mydogdrew]

Not sure I follow your logic re DVC having hard time buying back add on SSR contracts via ROFR due to need to sell new inventory.

Most here would say the current incentive to buy (15% discount, etc.) is a better deal than many of the stripped add on SSR contracts currently available via resale. So IMHO, the resale contracts will either get low ball offers or none at all. Until their is a bonafide offer, DVC does not enter the picture. Again IMHO, no need for DVC to consider stepping in unless the number of SSR resale contracts becomes a lot larger than it is now AND the sales price is well below $70 per point.

I'm basing that on a 120 point SSR add on that has no points until 2007. I assume buyer would pay closing costs, but seller would pay all 2005 and 2006 maintenance fees. No 2006 points means contract is worth at least $1200 less than one with 2006 points.

I can get points from Disney and not pay closing for $83.5. So 120 * $83.5 is $10,020. Subtracting $500 for closing costs (just a guess) and $1200 (for no 2006 points) from that I get $8320. Dividing that by 120, I get $69.33 per point. (Not even considering that Disney would give many buyers 2005 points, too. Subtract even more if you want to becasue of that).

Would DVC buy it back at $69? Maybe, maybe not. But at that price, the buyer really hasn't saved any money over going direct and has no points to use until 2007, so IMHO, a savvy buyer would offer a lot less than $69 per point. Anyway, 83 - 69 = 14 per point. Isn't that about the spread between resale and direct from Disney for buy backs of the sold out resorts?

FWIW, I don't think the stripped SSR contracts are going to get many (if any) offers until closer to 2007 and the few that they do get will be low enough so that Disney can buy them back and either lose or gain at the same rate as the other DVC resort resale buybacks.

JMHO. YMMV.

Best wishes -

I think we are in agreement. Disney is going to have a more difficult time justifying buying back SSR contracts over time. Obviously, they would prefer to not ROFR any of them. My point is that the floor for SSR ROFR has to be dropping while they are still selling retail. That means fewer SSR resale transactions close (in the short-term) and more people renting out their SSR points.

 

[spiceycat]

I don't think so - this is a top resort.

I got spoiled long ago by OKW - so any of the others are nice and I like to visit them - but they aren't home.

I think several SSR members once they visit THEIR resort will feel the same about SSR as I do about OKW.

You own that resort. I think it will mean the same.

besides my guide says that SSR is still selling. this new incentive was to help the california sales get started????? (that last statement was a rumor)

 

[mydogdrew]

I don't think so - this is a top resort.

I got spoiled long ago by OKW - so any of the others are nice and I like to visit them - but they aren't home.

I think several SSR members once they visit THEIR resort will feel the same about SSR as I do about OKW.

You own that resort. I think it will mean the same.

besides my guide says that SSR is still selling. this new incentive was to help the california sales get started????? (that last statement was a rumor)

It is a top resort - it's just too big. BCV sold out before there was time to get many resales on the market. There are going to be so many SSR resales available before completion that market forces will determine value, not ROFR - DVC will only buy back the real fire sale deals. SSR is selling today for the lowest price since pre-construction. This sales incentive is indicative of slow sales. What your guide tells you is worth what you paid for the advice.

 

[Beca]

It is a top resort - it's just too big. BCV sold out before there was time to get many resales on the market. There are going to be so many SSR resales available before completion that market forces will determine value, not ROFR - DVC will only buy back the real fire sale deals. SSR is selling today for the lowest price since pre-construction. This sales incentive is indicative of slow sales. What your guide tells you is worth what you paid for the advice.

ITA....What does it say when even DVC is selling the sold-out resorts for almost $10 more per point (including latest incentive) than SSR? It is a weird place for DVC....one I am sure they never thought/wanted to be in....they have to ROFR the old properties to keep prices high. And, they want to ROFR to allow members add-ons...but, in order to ROFR they have to purchase at the low end of the "going" rate. The going rate at the sold out resorts is often higher than the incentive price of the current resort. That means in some cases DVC is paying more for contracts it is ROFR'ing that what they are selling SSR for!!! I'm sure this is a BIG surprise to them!! I think that DVC thought they could package and sell anything and people would buy it....but, more and more the buyers seem to be speaking with their pocket books. I spoke to my guide the other day and asked "What if" I were to get on the waitlist for BCV...how long would it take. He told me at LEAST a year!!! He then reminded me that I can get SSR for almost $10 cheaper per point with 12 extra years. I don't care. Obviously my sentiments are echoed by many.



Beca

 

[Jen D]

$10/point is a good deal for the renter 5 days a week but not really a good deal on weekends. The cancellation terms on a rental contract aren't as liberal as booking directly with Disney, you don't get daily maid service and you really have to make your reservation much further in advance than if you booked with Disney. A few years ago I rented points to stay at BCV. I made sure to make my arrangements more than 7 months before my trip. Normally I make my reservations 3-4 months in advance. I may fine tune my dates after SW extends their schedule and I see what days give me the best airline fares. You really don't have that flexibility when you rent points.

A DVC member can probably maximize their income if they book a reservation for a popular week at the 11 month window and then sell the reservation. People renting on this board are trying to cover their expenses and not squeeze every possible dime out of the transaction.

Agreed. As an occasional renter I feel it has to be a significant discount to make up for the significant drawbacks, risks and inconveniences of renting through a private owner.

I just can't believe that the low price is entirely due to the soft and gullible hearts of generous DIS'ers. I'm sure if enough people were willing to pay more than the going rate, it would be higher. I just think the marketplace is stalled at $10-11/per point because there are so many more DVC owners in the last few years and people renting their points. Informed buyers who are shopping for low rates know to come to the DIS... and people who don't know better who buy on E-Bay and elsewhere will eventually find their way here too.

 

[Beca]

As an occasional renter I feel it has to be a significant discount to make up for the significant drawbacks, risks and inconveniences of renting through a private owner.

.

But remember....the owners are taking significant risks as well...much more than renters. I don't know why, but I find this statement very odd...renting is full of negatives, risky and inconvenient...therefore, owners ought to let their deluxe rooms go at value prices?? The risk is a "two-way street". The owner is allowing you to stay in their "home", and they are responsible for any damage that DVC says you cause to the place....that's risky!!

I don't get it....but, then again....that's why I don't rent out my points!! I am MORE than happy to transfer them to another DVC member who is in need of extra points....they value my purchase as much as I do, and they become responsible for damage once the points are in their name. But, when I read posts like this....I realize renters may not be such a good idea.



Beca

 

[Jen D]

But remember....the owners are taking significant risks as well...much more than renters. I don't know why, but I find this statement very odd...renting is full of negatives, risky and inconvenient...therefore, owners ought to let their deluxe rooms go at value prices?? The risk is a "two-way street". The owner is allowing you to stay in their "home", and they are responsible for any damage that DVC says you cause to the place....that's risky!!

I don't get it....but, then again....that's why I don't rent out my points!! I am MORE than happy to transfer them to another DVC member who is in need of extra points....they value my purchase as much as I do, and they become responsible for damage once the points are in their name. But, when I read posts like this....I realize renters may not be such a good idea.



Beca

Well, I'm speaking from a renters point of view, not the owners. And when I say it is risky and inconvenient, I'm not comparing that to the experience of the owner, but the experience of renting directing through Disney. I agree that there are risks on both sides and it is in the owner's interest to rent their points for as much money as the market will bear. I'm just pointing out that from the point of view of someone looking for a room, it is much easier to have the peace of mind and convenient cancellation policies, not to mention maid service, offered through Disney, so if the prices were at an equivalent, the renters would always choose Disney. If an owner was offering less, then the renter is more likely to take the risk. The question for the shopping renter, and the owner setting the price, is how much or how little a markdown will make the transaction "worth it?"

I'm not sure I see how the owner's risk is higher than the renters... at the very least the risk is equal but with most agreements renters pay in full 120-180 days out and the owner is in complete control of the reservation. Most agreements are (rightfully) created to minimize risk for the owner.

I didn't mean to offend you and I certainly didn't intend to sound like I was "devaluing" your purchase. I'm not speaking about the value of DVC accomodations or DVC as a system but the specifics of the transaction of renting points.

Because I've posted on this subject twice in a couple days I'm coming off like some sort of wild-eyed renter looking to grab undervalued points and whatnot. I'm actually not... I rented once and while it was a 100% positive transaction, and the owner was wonderful, I don't have a lot of interest in renting again, primarily because I'm not comfortable with the cancellation restrictions. Right now I'm a prospective owner, and I don't forsee ever renting points out (although I'm glad the option is there if we ever need it.) I just have a sporting interest in these threads and sometimes feel the renters' POV is often underrepresented. Again, didn't mean to ruffle any feathers.

 

[Deb & Bill]

But remember....the owners are taking significant risks as well...much more than renters. I don't know why, but I find this statement very odd...renting is full of negatives, risky and inconvenient...therefore, owners ought to let their deluxe rooms go at value prices?? The risk is a "two-way street". The owner is allowing you to stay in their "home", and they are responsible for any damage that DVC says you cause to the place....that's risky!!

I don't get it....but, then again....that's why I don't rent out my points!! I am MORE than happy to transfer them to another DVC member who is in need of extra points....they value my purchase as much as I do, and they become responsible for damage once the points are in their name. But, when I read posts like this....I realize renters may not be such a good idea.



Beca

Couldn't have said it better, Beca.

I see so many people who want a deluxe vacation at a less than value price. And they want the extremely difficult times and villas, NOW. I guess those non-owners wouldn't bother me so much if they were a bit more realistic with their requests. For example, requesting a Grand Villa for Christmas week in early November. Isn't there something in the FAQs about making far out requests? You know, the ones that make you roll your eyes and think "Get Real!! I couldn't even get that at this point in time."

 

[Beca]

Well, I'm speaking from a renters point of view, not the owners. And when I say it is risky and inconvenient, I'm not comparing that to the experience of the owner, but the experience of renting directing through Disney. I agree that there are risks on both sides and it is in the owner's interest to rent their points for as much money as the market will bear. I'm just pointing out that from the point of view of someone looking for a room, it is much easier to have the peace of mind and convenient cancellation policies, not to mention maid service, offered through Disney, so if the prices were at an equivalent, the renters would always choose Disney. If an owner was offering less, then the renter is more likely to take the risk. The question for the shopping renter, and the owner setting the price, is how much or how little a markdown will make the transaction "worth it?"

I'm not sure I see how the owner's risk is higher than the renters... at the very least the risk is equal but with most agreements renters pay in full 120-180 days out and the owner is in complete control of the reservation. Most agreements are (rightfully) created to minimize risk for the owner.

I didn't mean to offend you and I certainly didn't intend to sound like I was "devaluing" your purchase. I'm not speaking about the value of DVC accomodations or DVC as a system but the specifics of the transaction of renting points.

Because I've posted on this subject twice in a couple days I'm coming off like some sort of wild-eyed renter looking to grab undervalued points and whatnot. I'm actually not... I rented once and while it was a 100% positive transaction, and the owner was wonderful, I don't have a lot of interest in renting again, primarily because I'm not comfortable with the cancellation restrictions. Right now I'm a prospective owner, and I don't forsee ever renting points out (although I'm glad the option is there if we ever need it.) I just have a sporting interest in these threads and sometimes feel the renters' POV is often underrepresented. Again, didn't mean to ruffle any feathers.

Jen...thank you!!! Yes, my feathers were a little ruffled...but, not because I thought you were at all being "offensive"....rather, you were just being honest, and I really do appreciate reading posts like this.

But, the point at which renters think owners should discount points to make the arrangement worth the inconvenience of renting...for me, is just too much, and insulting. I have some antique jewelry that is VERY precious to me ...this includes my wedding ring (my ring is very distinctive...it is a 4+ carat solitaire from the turn of the century). I have been shopping in antique stores and been approached by dealers who want to buy my ring. They come up with what they think is a really great offer, but it never comes close to the appraisal of my ring (not that I would ever sell anyway). But, I always leave these encounters a little miffed. They approached me....and, then insulted me because they either think my ring is not worth as much as it is, or they think that I am an idiot who doesn't know the value of what I have, or they think that I might be in a desperate situation and will sell for cheap. I have told a few of them off. Now, when I am approached, I stop the person and say, "Don't bother...you can't afford it."

The point at debate here seems to be "what is a fairly discounted price"? I simply think getting a BCV studio for the same price as an All-Star room is not a fair price for the people who have tied up so much of their money in a pre-paid vacation plan. I think maybe a 25% discount off of the WDW CRO rate is a good deal....but a 50-60% discount is too much.

But, that is just me....and, why I choose not to rent.



Beca