Why the price discrepancies?

[shpdem]

I've been shopping fidelity, other sites, and tss, but I don't understand why there is so many pricing differences between companies.

 

[chukdotcom]

I've been shopping fidelity, ***************s.com, and tss, but I don't understand why there is so many pricing differences between companies.

The sellers set the price. They can price at whatever they want.

 

[sndral]

I found the range in pricing to be fascinating when I was shopping, for example, right now for AKV there's a 230 pointer stripped contract for $73 per point all the way up to a 160 pointer for $122 per point. Stripped contracts are obviously worth less, smaller contracts supposedly command more per point, but some obviously overpriced listings I theorize are based on what the owner needs to get in order to not have to bring money to the table - but that is just a theory. Contracts that can't close before a given date (the stripped 230 pointer for $73, for example can't close before 6/2104) are not attractive to people wanting to book a vacation near term, so those contracts have fewer potential buyers and may be priced to reflect that.
I've also noticed some brokers have a lot more stripped contracts for sale than the past, not sure if that's because sellers are smarter and trying to maximize value before they sell, or something else. It has been a bit of a seller's market, but since listings are up I suspect we're shifting to more of a buyers market and those stripped contracts may have to be attractively priced to compete against a comparable loaded contract.
The list prices are only what the buyer is asking, you can always offer what your own research suggests is reasonable and keep offering until you find a seller willing to accept your offer.

 

[Nabas]

Certain listing agents tend to exercise great sway on the asking price and tend to base it on the latest market trends. These site tend to represent what might be considered current market value.

Other listing agents tend to let the seller set the price. Based on the seller's knowledge of the market, that means these sites can have listings that are too high or too low. On these sites, some listings are over 6 months old.

 

[MiramarQE]

Have you contacted the brokers or are you just looking at the posted contracts?

Our experience indicated the brokers you mentioned are not really very good at keeping their websites up-to-date with the current contract inventory. You need to get on their email list to get the current contracts - there should be less variability - but having just gone through the process (we should close next week or so) I can tell you there are sellers out there with unreasonable (relative to the market) expectations - both ways. But it's their property, no one can force them to accept a price - unfortunately on the low side should you find that buyer that is asking $10/pt under the market Disney can take the contract and you have to start over.

 

[supersnoop]

Two thoughts on this:

First, the irony of pricing stripped contracts. If you can't close until June, the contract is worth less now, but the value increases as you get closer to that date. It's less "stripped" the longer it's on the market. I don't expect those prices to drop, but I do expect them to sit on the market for a long time, then selling when they become attractive again.

And, i'm told that one of the brokers requires a six-month exclusive listing agreement. Being exclusive for that long, I would think they have less incentive to pressure an owner to lower the price. On another site with 275+ listings, I only count 6 listings older than 6 months.

So, to get the best deal, you should be able to aggressively negotiate a stripped contract well in advance, but your negotiating power will diminish over time.

 

[sndral]

Two thoughts on this:

First, the irony of pricing stripped contracts. If you can't close until June, the contract is worth less now, but the value increases as you get closer to that date. It's less "stripped" the longer it's on the market. I don't expect those prices to drop, but I do expect them to sit on the market for a long time, then selling when they become attractive again.

And, i'm told that one of the brokers requires a six-month exclusive listing agreement. Being exclusive for that long, I would think they have less incentive to pressure an owner to lower the price. On another site with 275+ listings, I only count 6 listings older than 6 months.

So, to get the best deal, you should be able to aggressively negotiate a stripped contract well in advance, but your negotiating power will diminish over time.

Yes, unless the owners re-strip the contract to rent the pts..
Whether or not prices rise or drop is the million dollar question - the flip side of the coin is if you expect prices to drop, then negotiating a stripped contract may lock you into a higher price than market value 6 months from now.
At some point the earlier expiring contracts will lose value simply because ultimately they will be worth zero, unless DVC offers extensions as they did w/ OKW. Rationally each year a contract should lose a little value, but that hasn't happened, IMO, perhaps because DVC is adding value by building new resorts thus more options for the same pts., but also more competition to use those pts..

 

[chukdotcom]

Yes, unless the owners re-strip the contract to rent the pts..
Whether or not prices rise or drop is the million dollar question - the flip side of the coin is if you expect prices to drop, then negotiating a stripped contract may lock you into a higher price than market value 6 months from now.
At some point the earlier expiring contracts will lose value simply because ultimately they will be worth zero, unless DVC offers extensions as they did w/ OKW. Rationally each year a contract should lose a little value, but that hasn't happened, IMO, perhaps because DVC is adding value by building new resorts thus more options for the same pts., but also more competition to use those pts..

How did the extension with OKW work? What did the owners have to pay to extend?

 

[Sur]

I'll agree with that. I did a few add ons, small point contracts, with points gone from the current year. Some though I should offer less, $10 or so p/p. Then DVD raised direct prices, resales went up, and this year, contracts with full current points, are $25-35 more p/p for same contracts (sold not asking).

I won't suggest not to buy "stripped" contracts again...sometimes it works out better.

 

[Deb & Bill]

How did the extension with OKW work? What did the owners have to pay to extend?

For the first few months, owners could extend for $15 a point. Then it increased to $20 a point for a few more months and then it was upped to $25 a point where it is now.

I saw no advantage to giving Disney more money for a contract that I own now and wouldn't use the extra 15 years at all. So we did not extend. And many OKW owners did not extend. So in 2042, you will have a mix of expiration dates at OKW. What will they do then? Upgrade the individual units that are returned to them to resell. Then 15 years later, upgrade the remaining? Or tear down portions of the resort? Who knows? Who even cares? Not me.

 

[Sur]

Did you "decline" or just not respond? I've seen where a resale buyer had the option to extend when it passed ROFR.

 

[Deb & Bill]

Did you "decline" or just not respond? I've seen where a resale buyer had the option to extend when it passed ROFR.

Owners who declined were required to send a Quit Claim for the extension.

 

[Minniesgal]

For the first few months, owners could extend for $15 a point. Then it increased to $20 a point for a few more months and then it was upped to $25 a point where it is now. I saw no advantage to giving Disney more money for a contract that I own now and wouldn't use the extra 15 years at all. So we did not extend. And many OKW owners did not extend. So in 2042, you will have a mix of expiration dates at OKW. What will they do then? Upgrade the individual units that are returned to them to resell. Then 15 years later, upgrade the remaining? Or tear down portions of the resort? Who knows? Who even cares? Not me.

I think they will treat the unsold extension rooms like hotel rooms and rent them out. OKW is hugely popular with UK room market as they frequently offer it ther with free dining

 

[chalee94]

Did you "decline" or just not respond? I've seen where a resale buyer had the option to extend when it passed ROFR.

some OKW owners are holding out in hopes of exploiting a loophole to get the extra 15 years for nothing and i'm sure some just didn't bother to return the paperwork.

i would not be surprised if DVC were able to find a way to offer the deal to a new owner even if the former owner turned it down. it's a great deal for disney as they get cash now and owe nothing for another 25+ years...

 

[Sur]

I'm nervous to buy resale there due to the discrepancy (don't want a 2042 expiration). Someone suggested they could downsize the available number of rooms, renovate the other buildings, and resell the resort. Seems expensive for the remaining years left on the extension.

I just wouldn't want increased competition, as an owner, for such a small (remaining) resort. I really like it there, though...nice resort.

 

[DizBub]

I've been shopping fidelity, other sites, and tss, but I don't understand why there is so many pricing differences between companies.

If owners need to sell their contracts Disney will not buy them back directly but refers them to Fidelity. This is why Fidelity seems to have more reasonably priced contracts, they are probably "distressed". Plus Fidelity seems to not have a problem presenting lowball offers. Some of the other companies won't do this.

 

[htmlkid]

I agree, I've purchased through fidelity and got my contracts at insane prices but when I tried to list a contract for sale at a reasonable price with them for sale I received one low ball offer and after I refused that offer I never heard back from them again

 

[DizBub]

I agree, I've purchased through fidelity and got my contracts at insane prices but when I tried to list a contract for sale at a reasonable price with them for sale I received one low ball offer and after I refused that offer I never heard back from them again

I can see why people buy from Fidelity especially if they are looking for a great deal. Selling, not so much. We aren't looking to sell but if we ever do I would want to list with someone who wants to get the best price for me.

 

[bakerworld]

I agree, I've purchased through fidelity and got my contracts at insane prices but when I tried to list a contract for sale at a reasonable price with them for sale I received one low ball offer and after I refused that offer I never heard back from them again

IMO, resale = low ball offer.
Re-sale is a game and the winner is who buys low-ball and makes it thru ROFR. IMO that would be the only way playing the re-sale game would be worth the effort.

If you can only afford to purchase DVC via resale than you won't own long ... IMO

 

[Msmithmd]

IMO, resale = low ball offer. Re-sale is a game and the winner is who buys low-ball and makes it thru ROFR. IMO that would be the only way playing the re-sale game would be worth the effort. If you can only afford to purchase DVC via resale than you won't own long ... IMO

This is a fundamentally flawed argument.

Many wealthy people became wealthy because they were frugal and didn't make bad financial decisions.

One doesn't at all have to "lowball" a resale contract in order to make a very frugal purchase.

The price difference on retail versus resale is easily $60 pp on a common 160 point contract. (ie $9,600 purchasing 160 points at $70 pp versus $130 pp).

Bakerworld can make any justification they wish to feel better about their direct purchases. And I wouldn't knock anyone who chose to buy direct without knowing all the facts. Lots of folks (likely the majority) bought DVC without even considering the resale market. But suggesting that saving $9,600 isn't worth the effort on a 160 point contract isn't even a discussion worth having. It's just a ridiculous statement.

There are three good reasons to buy direct:

1. A brand new resort where there isn't a meaningful differential versus resale (currently VGF).

2. A very small add-on that you cannot find on the resale market (say 25-50 points at whatever resort).

3. A resort where resale contracts are in very high demand, price differential versus resale is relatively small, and where it is extremely difficult to find what you want resale (ie VGC).

Outside these instances, in my opinion a direct purchase is literally throwing money away for nothing. Others will certainly disagree, and they have that right.

But saying that a resale DVC purchase is just a game that is only worth it if you want to play "lowball" either means that bakerworld is trying to stir the pot and is being disingenuous, or means they truly don't grasp basic financial principles. Either way, I could not disagree with their thesis more strongly.