Where do you think DVC resale prices are headed?

[Kickstart]

... If you borrow all next year's points (in normal times), you don't pay $0 MF next year just because you have no points left to use. ..

Exactly, in your example, over the course of two years you've paid a MF on each point used.

The maintenance fee is per point. It doesn't matter that DVC charges you in January. In the end you're paying a MF on each point that you get, and each point has a real value which should not be pro-rated based when they were paid for. They should only be pro-rated based on remaining available "useable" value.

The accurate comparison is to another resale contract that has no remaining current use year points, not to a direct contract the DVC is able to sweeten with free or prorated points. For instance:

August UY $100 pp AKV 100 point contract - 0 2020, 100 2021, 100 2022
vs
August UY $100 pp AKV 100 point contract - 100 2020, 100 2021, 100 2022

Seems to me it makes sense for the buyer to pay MF's on the second contract as it has more value... 100 more points of value compared to the first. In fact, even with paying MF's the second contract is a better deal than the first, as you can easily rent those points for more than you paid in MF's. I just don't see the logic in the argument that it's unreasonable for the buyer to pay MF's in this situation, when it's a better deal than not getting the points in the first place.

EDIT: corrected some typos

 

[Dean]

But you're not buying direct.

I agree that buyer's shouldn't be told they have to pay fees, as everything is negotiable. I just think it makes sense to pay the MF for unused points (assuming it's a useable amount and not close to expiration). Whether those unused points are valuable to the buyer or not, depends on their plans.

I also don't think it makes sense to compare direct to resale, that's not apples to apples. It's not like you'd ask for an additional discount because you didn't get a free ice cream or some other DVC direct swag. The accurate comparison is to a contract with no current year points where you don't pay MF's.

Correct so the question becomes what's a sales incentive vs the technical component of what dues you're paying. So let's say you buy 100 points with an August UY and no points until August 21and close in Dec plus transferred completely in Dec. Dues are then due in Jan and the buyer will be responsible as they now own the contract. The dues you pay in Jan cover 7 months of the 2020 points which you did not get and 5 months of the 2021 points you will receive in August (or could borrow). Were you to buy that same exact contract in the same situation retail you'd pay dues starting in August not as a sales incentive but because that's what dues would be applicable to your points. Thus you overpaid on dues by 7/12 of the amount so you'd deduct that from your "savings" another areas.

As for comparing, of course one has to compare resale vs retail. But that doesn't mean everything will line up in the same manner which is why I said one has to understand the variables then ultimately look at the overall situation.

 

[EM Lawrence]

Exactly, in your example, over the course of two years you've paid a MF on each point used.

The maintenance fee is per point. It doesn't matter that DVC charges you in January. In the end you're paying a MF on each point that you get, and each point has a real value which should not be pro-rated based when they were paid for. They should only be pro-rated based on remaining available "useable" value.

The accurate comparison is to another resale contract that has no remaining current use year points, not to a direct contract the DVC is able to sweeten with free or prorated points. For instance:

August UY $100 pp AKV 100 point contract - 0 2020, 100 2021, 100 2022
vs
August UY $100 pp AKV 100 point contract - 100 2020, 100 2021, 100 2022

Seems to me it makes sense for the buyer to pay MF's on the second contract as it has more value... 100 more points of value compared to the first. In fact, even with paying MF's the second contract is a better deal than the first, as you can easily rent those points for more than you paid in MF's. I just don't see the logic in the argument that it's unreasonable for the buyer to pay MF's in this situation, when it's a better deal than not getting the points in the first place.

EDIT: corrected some typos

Someone earlier in the thread brought up an interesting point. Brokers would typically price that second contract at a higher price pp because it has more points. If the two contracts were priced exactly the same, then yes, I can see how it would be fair to ask for MF fees for 2020. But if the price pp already factors in the extra points on the contract, is asking for MF from the buyer kind of like double dipping?

 

[CarolMN]

Count me with those who say it doesn't matter. (The varying opinions make for an interesting discussion, though). As so many have already posted, for resale, it's all negotiable.

Were I making an offer, I'd just figure the max I am willing to offer including dues and any adjustment (up or down) needed for a loaded or stripped contract. Then I'd divide that amount by the number of points in the contract. I'd assume I was paying dues for the current year points and closing.

In the end, all that matters to me is the total amount that actually comes out of my pocket, not the makeup of the offer. YMMV

 

[we"reofftoneverland]

Exactly, in your example, over the course of two years you've paid a MF on each point used.

The maintenance fee is per point. It doesn't matter that DVC charges you in January. In the end you're paying a MF on each point that you get, and each point has a real value which should not be pro-rated based when they were paid for. They should only be pro-rated based on remaining available "useable" value.

The accurate comparison is to another resale contract that has no remaining current use year points, not to a direct contract the DVC is able to sweeten with free or prorated points. For instance:

August UY $100 pp AKV 100 point contract - 0 2020, 100 2021, 100 2022
vs
August UY $100 pp AKV 100 point contract - 100 2020, 100 2021, 100 2022

Seems to me it makes sense for the buyer to pay MF's on the second contract as it has more value... 100 more points of value compared to the first. In fact, even with paying MF's the second contract is a better deal than the first, as you can easily rent those points for more than you paid in MF's. I just don't see the logic in the argument that it's unreasonable for the buyer to pay MF's in this situation, when it's a better deal than not getting the points in the first place.

EDIT: corrected some typos

This is one take on it. But my take is I wouldn’t pay for MFs for which a seller has already paid. And I would not deal with a broker who tried to force me to do so. That is a dishonest broker. It is fine for a broker to encourage me to do so, but for a broker to say buyer pays member fees, end of story? That is a dishonest broker, end of story. Not all points are valuable until you are sure you will be able to use them in a manner that is at your leisure. Here is why “extra” points do not have intrinsic value to me:

1. You have no idea exactly how long it will take to close. In theory, about 60 days. But many things can happen, and I have seen some weird cases where it has taken much, much longer. Right now it seems to be taking 3-4 months. You cannot book anything until points are in your dvc account. Then you have to hope something is left to book. As the process drags on, those points have less to no value. In order for the buyer to even consider reimbursing the seller for already paid MF, the contract would need to discount the points on a future closing performance timetable. When you buy points directly from Disney, you receive your points immediately, not so with resale.

2. I cannot just vacation because I have extra points. My world does not organize itself around dvc points. Dvc points fit into my world. If we have “extra” points from a resale contract that just closed, we may not be able to use them with our vacation schedule. Our vacations are planned for a couple of years out. That is why dvc works for us. Dh has to put in for vacation over a year out, so that everyone at work gets a chance to go on vacation. My schedule is a bit more flexible but still has to be considered. We have different school calendar schedules for different kids to accommodate. We can try to squeeze something short in but there is no guarantee that will happen.

3. We also plan our Disney travel around bi-annual pass purchases. To use those points may make me incur extra costs. It does sound funny, but a good lawyer would write those extra costs incurred into the contract. Points that force me to reorganize my life have much less value to me than points I can use at my leisure.

4. We do not rent points, so points have no rental value for us. There is liability involved, and we try not to take unnecessary legal risks. If a person rents my points and destroys the villa or worse, ultimately I am legally liable. So, no thanks. We think about it this way, if someone approached us and asked would you take on open ended legal liability if I pay you $1000-$5000 (or whatever it is you would make on the rental), we would say absolutely not. If I reimburse the seller for MFs already paid, essentially the seller is getting the rental value of points without the legal liability. In assuming I can make up the MFs by renting, a broker is pushing liability on the buyer and in order to reimburse MF, the contract should account the seller for that potential liability. There is also no guarantee that if a buyer wanted to rent out the extra points that it would be possible. The contract should account for that too.

Obviously this is all personal preference, and if a buyer wants to pay MF, that is a perfectly legitimate position. It is not legitimate, however, for a broker to say MF are non-negotiable across the board. Maybe in the broker’s made up reality, but not in the real world. And a broker who lives in an alternative reality is not a broker I would trust!

 

[Lorana]

I think ultimately it comes down to your preferences and what you’re willing to negotiate on, and the point of these discussions is to help everyone make better informed decisions on the prices they’re willing - and should be willing - to pay.

That all said, I’m going to posit that MFs be looked at differently than some have suggested here. Because MFs actually have nothing to do with how many points you do or do not have available for use.

MFs are tied to points only because the number of points you have represents the size of your ownership. And it is the size of your ownership that matters when you pay dues. Those dues are maintenance of the property, pure and simple, which you are responsible for based on the length (how long you’ve owned) and size (% of unit measured in # of points) of your ownership. That is why when you buy direct, you only pay a prorated amount of MFs based on when you bought, not how many points you have available. Because you’ve only owned beginning at the moment you’ve bought. If you bought now, a Dec UY pays the same MFs as any other UY, even though they will have twice the number of points available to them as any other UY.

Because resale is open to negotiation, you can value or not value paying or not paying MFs however you want, and ultimately it comes down to what you and the seller are willing to agree on. But, I do think people generally misunderstand MFs, thinking they are fees for the points, and not fees for the maintenance of the property. Yes, there’s certainly a correlation as points represent your ownership interest and your usage in a given year, but banking, borrowing, or transferring points has no impact on how much you pay in MFs or when they are due. Banking points doesn’t defer MFs to the next year, just as borrowing doesn’t make them due sooner, because MFs are the annual costs for maintenance, taxes, and the like to run and maintain the resort.

Personally, I’ve always tried to either negotiate a prorated amount of dues or I’ve deducted the dues cost from my price per point offer. If the seller counters with a higher amount, then I negotiate them paying dues. Once we hit mid-year I’m more aggressive in not paying dues given that I won’t have access to usage of the resort until points are in my account, and at that point by the time I get my points, the year will almost be over and I’ll have to pay next year’s dues.

 

[zavandor]

I think "who pays the MF" is a false problem.
I do think that a contract with current points is better than a contract without current points.
If two contracts are identical, one is stripped and the other has current year points, then I'd buy the second and I'd be happy to pay, in total, around $8 more for it (if I'm sure I can use the points). However don't let them trick you into paying more than you want.

If you offer for a contract $100pp and that is the maximum you're happy to pay for it, if the broker demands you to pay current year point, then counter offer with $92 and paying MF for 2020. Or if you know the broker requires to pay the current year MF, then offer $92 in the first place.
I guess requesting to pay the MF is just a way to increase the total money paid by the buyer (does the broker get paid a % of total price?). Just figure out how much you want to pay in total and stick to it.


Regarding 2021 MF, I have no idea what's going to happem.
In a resort like SSR, given that it has been closed for many weeks, I would expect the MF to go down considerably. However there are increased claning procedures, sanification gel to buy, PPE for the CM... who knows the impact for those.
For resorts that share infrastructure with a cash resort, anything can happen. At BWV, for example, the pools are shared amenities, will the DVC part continue to pay the same amount or the full costs of staffing and upkeep?

 

[The Jackal]

They don't intentionally stop it with people on board.

On the Epcot line when a ECV or wheelchair is getting on or off at RIV they have to stop the line, due to the design of the station. The other stations have a separate loading line.

 

[Cabius]

I think "who pays the MF" is a false problem.
I do think that a contract with current points is better than a contract without current points.
If two contracts are identical, one is stripped and the other has current year points, then I'd buy the second and I'd be happy to pay, in total, around $8 more for it (if I'm sure I can use the points). However don't let them trick you into paying more than you want.

This seems exactly right to me. And it's mostly a semantic debate at some point. But as a buyer, I'm not actually "paying MFs" - the seller already paid them! I'm perhaps "reimbursing seller for MFs" but really what I'm doing is paying a higher price for a more valuable product.

And that's totally fine and reasonable! A loaded contract is worth more than a stripped one. But I would want to negotiate transparently on those terms, not as a surprise tack-on at the end after we've agreed on price. Especially since loaded contracts are already priced higher per point to reflect that value!

ETA: I think the key here is transparency and being up-front in negotiations so you get a total price that is agreeable to all parties. I certainly appreciate the strong opinions on the subject!

 

[Grumpy by Birth]

To add to the subject of transparency... at least some of the broker sites include terms such as "buyer pays closing costs and 2020 MFs" in the listing.

So, I think that kind of transparency is there for the most part. Maybe not all brokers, though. They shouldn't be adding that on after the price has been agreed to. It should be disclosed up front and taken into account in calculating your offer.

 

[Kickstart]

This is one take on it. But my take is I wouldn’t pay for MFs for which a seller has already paid. And I would not deal with a broker who tried to force me to do so. That is a dishonest broker. It is fine for a broker to encourage me to do so, but for a broker to say buyer pays member fees, end of story? That is a dishonest broker, end of story. Not all points are valuable until you are sure you will be able to use them in a manner that is at your leisure. Here is why “extra” points do not have intrinsic value to me:

1. You have no idea exactly how long it will take to close. In theory, about 60 days. But many things can happen, and I have seen some weird cases where it has taken much, much longer. Right now it seems to be taking 3-4 months. You cannot book anything until points are in your dvc account. Then you have to hope something is left to book. As the process drags on, those points have less to no value. In order for the buyer to even consider reimbursing the seller for already paid MF, the contract would need to discount the points on a future closing performance timetable. When you buy points directly from Disney, you receive your points immediately, not so with resale.

2. I cannot just vacation because I have extra points. My world does not organize itself around dvc points. Dvc points fit into my world. If we have “extra” points from a resale contract that just closed, we may not be able to use them with our vacation schedule. Our vacations are planned for a couple of years out. That is why dvc works for us. Dh has to put in for vacation over a year out, so that everyone at work gets a chance to go on vacation. My schedule is a bit more flexible but still has to be considered. We have different school calendar schedules for different kids to accommodate. We can try to squeeze something short in but there is no guarantee that will happen.

3. We also plan our Disney travel around bi-annual pass purchases. To use those points may make me incur extra costs. It does sound funny, but a good lawyer would write those extra costs incurred into the contract. Points that force me to reorganize my life have much less value to me than points I can use at my leisure.

4. We do not rent points, so points have no rental value for us. There is liability involved, and we try not to take unnecessary legal risks. If a person rents my points and destroys the villa or worse, ultimately I am legally liable. So, no thanks. We think about it this way, if someone approached us and asked would you take on open ended legal liability if I pay you $1000-$5000 (or whatever it is you would make on the rental), we would say absolutely not. If I reimburse the seller for MFs already paid, essentially the seller is getting the rental value of points without the legal liability. In assuming I can make up the MFs by renting, a broker is pushing liability on the buyer and in order to reimburse MF, the contract should account the seller for that potential liability. There is also no guarantee that if a buyer wanted to rent out the extra points that it would be possible. The contract should account for that too.

Obviously this is all personal preference, and if a buyer wants to pay MF, that is a perfectly legitimate position. It is not legitimate, however, for a broker to say MF are non-negotiable across the board. Maybe in the broker’s made up reality, but not in the real world. And a broker who lives in an alternative reality is not a broker I would trust!

100% Agree with every point you made. I would say these all fall into the "... pro-rated based on remaining available "useable" value" category - to a given buyer . Very logical negotiating points.

And agreed, it's unacceptable for a broker to insists MF are non-negotiable across the board - that's an unprofessional intimidation/pressure technique, IMO.

Conversely, I think it's a convoluted negotiating point to say the seller should pay some, or all, of MF's just based on how far through the calendar year we are, because the fees are technically spent in the given calendar year. I mean, that just seems down right silly for a Dec UY contract. So, if I was a seller I would not find the "MF's are for the calendar year" a convincing negotiating argument... whereas your statements above would be much more likely to influence me. I suspect I'm not alone on this.

I think we're all in agreement that in the end it comes down to the total price you're willing to pay and how much you value any current use year points (or banked points into the next year) . You have to do the math for your own needs and risk tolerance.

 

[CastAStone]

Someone earlier in the thread brought up an interesting point. Brokers would typically price that second contract at a higher price pp because it has more points. If the two contracts were priced exactly the same, then yes, I can see how it would be fair to ask for MF fees for 2020. But if the price pp already factors in the extra points on the contract, is asking for MF from the buyer kind of like double dipping?

Yes.

But the current value of CY points (and in particular of banked points!) is much higher than the value of your 2030 points or your 2050 points, so it’s usually still a better deal to buy a loaded contract and pay the ~$6 up charge per year AND pay the MFs than it is to buy a stripped contract to avoid paying MFs.

This is particularly acute on a 2042 resort where a loaded contract could still have 23 years left while a stripped one could have as few as 20.

 

[Heather07438]

I think we're all in agreement that in the end it comes down to the total price you're willing to pay and how much you value any current use year points

I agree It mostly will depend on the total cost, and I'm going to determine the value of any points with prepaid MFs by considering their potential risk or inflexibility.

 

[Sandisw]

Someone earlier in the thread brought up an interesting point. Brokers would typically price that second contract at a higher price pp because it has more points. If the two contracts were priced exactly the same, then yes, I can see how it would be fair to ask for MF fees for 2020. But if the price pp already factors in the extra points on the contract, is asking for MF from the buyer kind of like double dipping?

MFs are to cover operation of the resort, While they are calculated based on how many points you own, it is not an extra fee on the points, but rather to cover expenses, including taxes, on the building,Merck.

So, if someone owns the contract for 6 months of the year, they are paying for the costs associated with running the resorts, regardless of whether they use it.

It is why Disney can’t legally charge buyers fees prior to signing a contract to own.

I do agree that contracts fully loaded build in the price for it So sellers should also expect reimbursement are certainly getting more than others would,

But, as mentioned, it’s all the way people want to look at it and be happy with the final outcome,

 

[Brian Noble]

But on the flip side, all those people who are not eating out or buying shoes or buying new clothes are impacting the bottom line of a company somewhere that normally would have made that sale. And there will eventually be ripple effects from all of that lack of spending.

Yep. About a year ago I had a conversation with a mentor who said something that stuck with me. We were talking about the relationships between technology, productivity, and cost, when he said: "Every time you reduce costs anywhere, you are ultimately taking that out of someone's paycheck."* It took me a while to wrap my head around that, but once I did, a lot of things clicked for me.

Not spending is the same as reducing costs. It is coming out of someone's paycheck somewhere, they in turn will spend less, and so on. It's the multiplier effect in reverse. It will take time, but it seems sure to happen---the "low wage" economy is not separate from the "middle class" economy. It's all one thing, and it's all connected.

*: You often don't think of entrepreneurs worrying about things like this. I've found that the ones I admire almost always do---and I usually don't learn of their opinions on such matters until long after I've formed an opinion of them. As another mentor puts it: "One thing I've learned in these later years of my career is that building a business is much more about the people you meet, the lasting friendships you make. That revenues and profits follow is a pleasant byproduct but it's not the reason to work as hard as we do."

https://twitter.com/menloprez

 

[Memorymakerfor4]

I wonder if GC will take a temporary dip on the resale market, considering today's announcement. There's a real possibility DL won't open until 2021. Yes you can stay at the other resorts, but it would be a tough pill to swallow to pay MFs for a place you couldn't stay at for the next several months.

 

[Lorana]

I wonder if GC will take a temporary dip on the resale market, considering today's announcement.

What announcement?

[EDITED TO ADD] Oh, do you mean the reopening guidelines?
https://www.latimes.com/business/st...land-california-theme-parks-reopen-guidelines
Hmmm, I have a VGC contract in ROFR right now, but I wasn't planning on visiting until likely 2022 at the earliest, but even so, I do wonder what this means in terms of dues for next year and whether they plan to keep the resort shut until the park is opened.

Given how MY luck works, though, if I pass ROFR, then you can pretty much guarantee the resale prices for VGC will tank. ;-)

 

[davidl81]

What announcement?

[EDITED TO ADD] Oh, do you mean the reopening guidelines?
https://www.latimes.com/business/st...land-california-theme-parks-reopen-guidelines
Hmmm, I have a VGC contract in ROFR right now, but I wasn't planning on visiting until likely 2022 at the earliest, but even so, I do wonder what this means in terms of dues for next year and whether they plan to keep the resort shut until the park is opened.

Given how MY luck works, though, if I pass ROFR, then you can pretty much guarantee the resale prices for VGC will tank. ;-)

VGC won’t “tank”. It’s such a small overall amount of points and such a high demand that it will never tank short of DL being closed forever. Could it drop $10 or so, maybe, but it won’t tank in value.

 

[DisneyOutsider]

Hopefully DL will be fine long term, but it definitely won't be the same there for a long time once it's finally able to open. So sad

 

[DarthMBD]

Does anyone think Animal Kingdom resale prices will drop any time soon?