Would you pay to have resale points be unrestricted?

[DonMacGregor]

Seller has the incentive know what it is so they can maximize their price sold. Why would you sell for well below current ROFR rates for similar contracts? On the flip side as a buyer you can either gamble and hope your contract passes below the ROFR or you can try to bid around it or slightly higher hoping for a pass.

This is a point that isn't stated often enough. DVD doesn't need to bid on contracts to move prices up. A seller, while having zero guarantee of success, is at least strongly motivated to list at or above the "current" ROFR level. If Disney is ROFR'ing ABC Villas at $150 per point, what seller in their right mind would offer a contract at $120 or $130 PP just to have it ROFR'ed, knowing it had a very good chance of also being taken had they offered at $140 or $145? No one is going to risk leaving money on the table, with Disney in play as a possible buyer. As a seller, you're going to, at the VERY least, list a contract at or above the current ROFR level to maximize profit either through a successful sale, or DVD snatching it up. If Disney starts buying back ABC Villas at $160, a seller would be foolish to list at anything lower than that, and on and on.

 

[Docwheeze]

This is a point that isn't stated often enough. DVD doesn't need to bid on contracts to move prices up. A seller, while having zero guarantee of success, is at least strongly motivated to list at or above the "current" ROFR level. If Disney is ROFR'ing ABC Villas at $150 per point, what seller in their right mind would offer a contract at $120 or $130 PP just to have it ROFR'ed, knowing it had a very good chance of also being taken had they offered at $140 or $145? As a seller, you're going to, at the VERY least, list a contract at or above the current ROFR level to maximize profit either through a successful sale, or DVD snatching it up. If Disney starts buying back ABC Villas at $160, a seller would be foolish to list at anything lower than that, and on and on.

Although no guarantee of the future, ROFR is reassuring that there will likely be a floor to the value of resales. Can't say the same of other traditional timeshares.

 

[Brian Noble]

Many years ago, I did some digging into the scholarship around ROFR. The upshot by those folks seemed to be that, all things considered, ROFR tended to marginally lower the price obtained by sellers, because one of the largest players was not obligated to bid competitively.

If I look at the history of DVC over the past many years, it appears to me that ROFR follows the market rather than sets it. In particular, there have been two periods where prices sank significantly (the Great Recession and the Pandemic Hiccup) during which time Disney stopped ROFR activity almost entirely. If the goal of ROFR was to support resale prices, that was abandoned at least in those two moments.

But my PhD is not in Econ or anything particularly close to it, so this is all armchair quarterbacking.

 

[Sandisw]

You

You are wrong. All the past attempts by DVC to drive people away from the resale market to buy direct have failed since there wasn't much difference between the products but you could save a decent amount of money but you also had a a lot of people buying and driving resale values up. This is why they have now put in the newest restrictions which are pretty severe and now create a huge difference between the products yet still with DVC NOT EXERCISING ROFL RIV contracts the resale prices in my opinion are too high but this is only because regular people are driving the prices up not DVC.

RIV pricing is where it is because buyers like and want the property. So you are right ROFR isn’t playing a roll in that.

But it is causing buyers to pay more for places like SSR. It doesn’t matter what DVDs reason is for for taking contracts,

The point is it plays a role in that both sellers and buyers use it to decide on price.

Obviously if buyers and sellers kept submitting at much lower prices, eventually it would bring prices down because DVD wouldn’t be able to take them all.

But it is just not correct it being in place has no impact.

 

[DVCSunDevil]

Nope. No, I can't prove it and I don't claim to be some big-time insider, but I can tell you that Disney does not care to buy and then flip resale points for a higher price. The exercise ROFR to keep the resale price high, that's pretty much* the only reason. The fact that they can resell those points is a side effect / afterthought.

Think about it like this. Disney buys a 200 point Saratoga contract through ROFR at $140 and then sells it at $190. Seems great, right? $50 margin? Yeah, except they just cannibalized a Riviera contract that they could have sold at a hell of a lot higher margin than $50.

*Setting aside the OKW 2042/2057 situation, because that's a whole 'nother kettle of fish.

Sorry, but we will disagree on this one. Pete was just talking about this the other day on his DVC podcast. Last year, no one could understand why DVC was suddenly ROFR'ing OKW and other resorts. They were all saying, however, that DVC definitely had a plan and reason for doing that. Then..wham...the price increases were announced. It makes perfect sense. They were accumulating points so they could make a higher margin when the direct price went up. I am not saying that is reason for every ROFR transaction, but it explains the OKW ROFR blitz that was going on. And sure, DVC will probably ROFR a really low price/point transaction to possibly keep the resale market high. There are several reasons that go into why DVC will invoke ROFR.

 

[DVCSunDevil]

That theory doesn’t work for AKV, it was $186 direct price from 2019 and ROFR forced it up to over $130 by August last year from $105, only this month has direct gone up

That's not the only reason why DVC would use ROFR. I said in another comment that there are multiple reasons why the would do that. In the case of OKW, those prices settling down now that the price increase happened would not shock me.

 

[Ruttangel]

That's not the only reason why DVC would use ROFR. I said in another comment that there are multiple reasons why the would do that. In the case of OKW, those prices settling down now that the price increase happened would not shock me.

I wouldn’t think that would happen to OKW as they need to get as many 2042 contracts as possible it’s an easy flip to a 2057 and get extra 15 years dues

 

[tjkraz]

Given the amount of attention paid to resale transfer prices and "what it takes to pass ROFR", I think it's clear that DVC's actions have SOME affect on prices. Exactly how much is certainly debatable.

I say this as someone who once sold VGC points for a price that was very generous at the time, only to see asking prices rise substantially a couple months later when DVC jacked-up their own rates for the "sold out" resort by nearly 30%.

 

[Ashlotte]

If DVC were to allow resale owners to "upgrade" their points to be unrestricted for use for RIV and other future resorts (or for RIV resale owners to use literally anywhere else besides RIV) for the life of your contract, would you pay for it? If so, how much would you realistically be willing to pay--10pp? 20pp? 30pp? Bonus question: Would you pay even more to get resale points to count towards blue card status? If so, how much?

Feel like this could be a win-win situation for DVC and resale owners. Easy money for DVC and allows resale owners the opportunity to book other places like RIV and upcoming resorts. Think DVC would ever go for something like this? Is this even a good idea?

I don't care about Riviera, Moonlight Magic, or AP, because I don't think I will go to WDW enough to make use of those. Since those are the primary direct perks, they aren't enough to sway me. What I would like is the food and shopping discounts.

I heard that DVC owners get free popcorn refills at Aulani. I am assuming that as a resale owner, even as an owner AT Aulani, I won't get free refills. They are only $1 (I think), which makes it feel extra petty. I feel like resale members should get discounts at their actual resorts. Do we know with 100% certainty that those discounts aren't absorbed by maintenance fees? Isn't that why resale can still use the TOWL?

Rather than paying to upgrade my points, I'd happily buy a smaller account direct to have benefits. 150 is too much. I would do 50 without a second thought.

 

[RoseGold]

I cannot see disney ever allowiing something like this, but what i can see is maybe, disney allowing a trade in fee, where members pay a fee to be allowed to trade into the other resorts.

I never really considered this, but it makes sense, especially with those unfavorable 2042 charts. Maybe it makes sense for DVC to give you a discount to trade in your BW for RIV3 in 2030.

I can also picture DVC doing this for the questionable OKW contracts. I think that will be a a very interesting discussion.

 

[DonMacGregor]

Many years ago, I did some digging into the scholarship around ROFR. The upshot by those folks seemed to be that, all things considered, ROFR tended to marginally lower the price obtained by sellers, because one of the largest players was not obligated to bid competitively.

But wouldn't that model only hold true, if, in fact, Disney WAS participating as a bidder, rather than enjoying the benefit of ROFR? I don't think Disney actively utilizes ROFR as a means to maintain resale values, but that the indirect result of ROFR is the psychological effect it has on the price a seller sets for their contract.

Certainly, the pandemic moratorium on ROFR raises questions, but in that case there are probably multiple forces at play. DVC traditionally holds good value, and a pandemic has an endpoint (which most initially felt would be on the order of several months), so there was no real impetus for a fire sale on the part of sellers, for example. If memory serves me, there wasn't a huge glut of contracts all of a sudden up for sale, or the corresponding wailing and gnashing of teeth by the hoards of sellers who "lost" money on their sales that would correspond with a glut of supply over demand.

 

[Brian Noble]

Given the amount of attention paid to resale transfer prices and "what it takes to pass ROFR",

It might be worth remembering that these conversations mostly happen in a place like DISboards or DVC news, neither of which is likely to be representative of the DVC market at large. Ask around the hot tub some day to get an (admittedly anecdotal) sense for “typical” understanding.

 

[Ashlotte]

Almost nobody who buys a timeshare considers how much they can resell it for, if most people did then timeshares wouldn't exist since most are only worth pennies on the dollar in the resale market and that would be a stupid purchase. DVC is an outlier in that not only do their contracts hold their value they go up in value even as the years left on them decrease. What DVC is doing is making buying resale unattractive and this will in turn lower the value of resale. People will buy direct because of their FOMO and DVC will be able to exercise their ROFR to buy back resale contracts cheaper to resell as direct.

An exit strategy is definitely something our family thought about before buying DVC, as with our other timeshare, which is the reason we buy resale. If we buy resale and resell it down the road for what we bought it for, we have just vacationed for the cost of our maintenance fees. If it goes up (as DVC historically has) and we make money when we sell, then we are vacationing for free. I know that we aren't the norm because someone has to buy the contract from the developer initially. We can't all be exclusively resale buyers.

The restrictions on Riviera (and other new resorts, potentially) don't sway me into buying direct to use Riviera. If anything, it does the opposite for me. I know that if I buy Riviera and need to sell (as most eventually do), that resale Riviera account will go for less than a resale of the original 14, since the use is restricted. Knowing this, it pushes me into buying something else initially and steering clear of Riviera. I also don't feel pushed into buying a different resort direct just to use Riviera because there are lots of options at WDW and missing out on one resort is no big whoop for me personally. I think they are trying to use the psychological trick of wanting what we can't have, but it doesn't work on everyone.

I don't think Disney actually wants resale to go down. If they didn't they wouldn't be using ROFR at such high rates and prices. They need resale to remain high to push people into direct. If resale prices are a lot lower, resale is the obvious choice. If they are higher, it makes you think a little harder on if it is worth it to just pay the extra to buy direct. The key is to have the spread between resale and direct be small enough that people question whether or not there is a point to buying resale over direct. It's hard to find that sweet spot.

 

[Ashlotte]

Although no guarantee of the future, ROFR is reassuring that there will likely be a floor to the value of resales. Can't say the same of other traditional timeshares.

Which feels like an insurance policy that you can't lose too much, even though the buy-in (including resale) is astronomically high.

 

[DVCSunDevil]

It might be worth remembering that these conversations mostly happen in a place like DISboards or DVC news, neither of which is likely to be representative of the DVC market at large. Ask around the hot tub some day to get an (admittedly anecdotal) sense for “typical” understanding.

One. Hundred. Percent!! We were at a travel lacrosse tournament last summer and were talking to some other parents about vacations. We mentioned we had an upcoming WDW trip and that perked their interest and they told us they were getting ready to purchase DVC. We told them we were members and asked if they were buying direct or resale. You should have seen the look on their face...they had zero clue what resale was. Once we explained it, they were incredulous.

Another story...the grandparents of my teenage daughter's friend have been DVC owners since the early 2000s. We met them for the first time over Christmas and were talking DVC. They barely understand banking/borrowing/UY rules and they didn't even know there was a resale market out there, or that they could rent their points! They are getting too old to go as much as they used to and they were wondering what to do with their points rather than letting them expire like they have for the last two years. We told them they could either sell their contract or better yet rent the points they don't use and, like the other people I mentioned, they were shocked.

I think the number of actual people who understand and/or care about this stuff is lower than those on here think.

 

[DVCSunDevil]

I don't care about Riviera, Moonlight Magic, or AP, because I don't think I will go to WDW enough to make use of those. Since those are the primary direct perks, they aren't enough to sway me.

That is exactly how we feel. We live in upstate NY and "only" visit WDW once per year. Because of that, AP discounts and MM didn't matter to us. Once you take those out of the equation, the break even on the difference between direct and resale becomes impossible to attain.

The restrictions on Riviera (and other new resorts, potentially) don't sway me into buying direct to use Riviera. If anything, it does the opposite for me. I know that if I buy Riviera and need to sell (as most eventually do), that resale Riviera account will go for less than a resale of the original 14, since the use is restricted. Knowing this, it pushes me into buying something else initially and steering clear of Riviera. I also don't feel pushed into buying a different resort direct just to use Riviera because there are lots of options at WDW and missing out on one resort is no big whoop for me personally. I think they are trying to use the psychological trick of wanting what we can't have, but it doesn't work on everyone.

I totally agree. Riviera didn't really appeal to us, anyway. I mean, it's ok and I would maybe stay there one day if I wasn't restricted. But it wasn't nice enough to sway us into spending another $20k to be able to stay there. We have access to 14 resorts and that is great for what my family wants to do. And with the length of the Riviera contract, there was a good chance that down the road we would need to sell it due to age. Those restrictions could really have a negative impact on that.

 

[BeachClub2014]

DVD doesn't need to bid on contracts to move prices up. A seller, while having zero guarantee of success, is at least strongly motivated to list at or above the "current" ROFR level.

Although no guarantee of the future, ROFR is reassuring that there will likely be a floor to the value of resales. Can't say the same of other traditional timeshares.

If I look at the history of DVC over the past many years, it appears to me that ROFR follows the market rather than sets it.

The point is it plays a role in that both sellers and buyers use it to decide on price.

Obviously if buyers and sellers kept submitting at much lower prices, eventually it would bring prices down because DVD wouldn’t be able to take them all.

Last year, no one could understand why DVC was suddenly ROFR'ing OKW and other resorts. They were all saying, however, that DVC definitely had a plan and reason for doing that. Then..wham...the price increases were announced.

I don't think Disney actively utilizes ROFR as a means to maintain resale values, but that the indirect result of ROFR is the psychological effect it has on the price a seller sets for their contract.

I think that you all could be correct, to a degree. It sure "feels" like DVC and the resale universe seek a state of stasis in the relationship between direct pricing and resale pricing. Surely normal market drivers such as supply and demand play a large role in determining the asking and selling prices for resale contracts. Of course, ROFR has an influence on pricing and DVC surely uses it to tactically and strategically meet their needs. Otherwise, there would be no need for or purpose behind the ROFR process.

The real mystery to me is what is the formula they use to determine ROFR. I need to crack that code because nearly every contract I have sent that way has been taken

 

[tjkraz]

One. Hundred. Percent!! We were at a travel lacrosse tournament last summer and were talking to some other parents about vacations. We mentioned we had an upcoming WDW trip and that perked their interest and they told us they were getting ready to purchase DVC. We told them we were members and asked if they were buying direct or resale. You should have seen the look on their face...they had zero clue what resale was. Once we explained it, they were incredulous.

Well, sure. There‘s no doubt many people are completely ignorant of the resale process.

My comments addressed the topic of whether DVC‘s actions have an influence on resale pricing. There we’re specifically talking about an audience who is fully aware of resale.

A small number of these transfers may be private transactions with buyers or sellers who aren’t exactly aware of max value. Some sellers may be desperate enough to bite on the first lowball offer. But most will utilize a broker who is more than willing to offer guidance on pricing trends.

If you’re buying a contract resale or selling a contract resale, you’re aware of the resale marketplace. And there’s a lot of information available to determine recent selling prices, recent ROFR rates, either with the broker’s assistance or via independent research.

 

[DougEMG]

I would not pay anything to upgrade my points. RIV doesn't really interested me, I'd rather stay at BWV, it has a better location and a way better point chart.

 

[Bjaiken77]

It all depends on the difference in price between resale and direct and how many points I was buying. I think RIV right now is around $155 resale, however, it exists in a world where upgrading is not an option. At $207 direct, I’d probably pay $10-15 per point. That still leaves me pretty considerable saving over direct and I could use the points anywhere. I’m also assuming I could pass on that “unrestrictedness” to a buyer, so it’d increase resale value if I ever needed to sell.