Why Don't Disney Do ROFR Before Resale

[Jkarrows]

That's just it, it's not. They're focus is on selling a current resort and anything off of that is a distraction. I think you're assuming most won't buy the new resort or they'll sell a lot more points if they do so but that's not really the case. They'll make a little here and there they wouldn't have and sell a FEW more points but at considerable aggravation and very little overall profit. The main reason really reason for ROFR is simply to sell retail.

OK, not sure i agree but its only my view so no harm and thanks for the input.

 

[Dean]

OK, not sure i agree but its only my view so no harm and thanks for the input.

Sure, you might want to ask your guide why he feels they don't. Marriott has an exit program, in most cases when they accept the week back, they're paying zero for it.

 

[skippytx]

I looked up BLT. Supposedly it cost in the 140M dollar range to build, and they sold at least 640 Million dollars worth of points at it. Even round up the 140 to 200 Million and they still made a killing.

Disney offering before there was a contract to sell wouldn't make much sense. The ROFR system makes sense the way it is now. 2 people agree on a price, and Disney can either take it at that price or let the contract go.

 

[Dean]

I looked up BLT. Supposedly it cost in the 140M dollar range to build, and they sold at least 640 Million dollars worth of points at it. Even round up the 140 to 200 Million and they still made a killing.

Disney offering before there was a contract to sell wouldn't make much sense. The ROFR system makes sense the way it is now. 2 people agree on a price, and Disney can either take it at that price or let the contract go.

In every situation I've ever seen with timeshares, the offer up front price was quite a bit lower than one could sell for independently. So could DVC do so, sure but expect it to come in around 30-50% of the retail and likely 60-70% of a reasonable ROFR price. The other question is why they don't get into the resale business and take a cut, the answers are essentially the same.

 

[_auroraborealis_]

In every situation I've ever seen with timeshares, the offer up front price was quite a bit lower than one could sell for independently. So could DVC do so, sure but expect it to come in around 30-50% of the retail and likely 60-70% of a reasonable ROFR price. The other question is why they don't get into the resale business and take a cut, the answers are essentially the same.

I have heard of DVC doing so when people try to call and ask to sell it back. Generally, it's about 50% of the fair market value. Disney lowball.

 

[KAT4DISNEY]

Sorry if this has been asked before, i have tried to find a thread on this but had no luck.

Just putting it out there to others but why does Disney not do ROFR before people advertise the points for resale, this would then mean all contracts that are being offered have passed Disney who have said no thank you.

It would then mean all contracts for sale would have passed this stage.

The seller contacts Disney and says for example, i have 100 points at Old Key West with a April use date with this amount of points available on this date and i want 100 Dollars per point.

Disney then look and go yes or no.

The seller then sells for a 100 dollars per point, if they want to reduce the amount they ask for then they would have to go back to Disney and start again but at least whats for sale can be sold rather then having to wait the 30 days for Disney to say no and star the process over again.

I might be missing something here but it would just streamline the process.

ROFR is a concept of allowing a previous owner/developer to keep control of an interest at the negotiated market price. Agreeing to buy at a list price means they are very possibly over paying. The contract might sell to no one at the asking price and wouldn't be representing the market. It wouldn't actually be ROFR then. It would be a buy back program and almost certainly would require pricing below much of the market prices that contracts sell for.

 

[AaronEuth]

Why spend time and effort to process a right of first refusal that may have to be redone?

Right now DVC Resale Market has 551 contracts listed, of those 51 have had their prices reduced in some fashion. All of those would need to be resubmitted for a new ROFR.

Any contract in which the buyer and seller negotiate terms would require a new ROFR.

ROFR basically requires that the final contract terms be set between the seller and prospective buyer, it does not make sense to do it before a seller has been found and the terms of sale agreed to.

 

[Jkarrows]

Why spend time and effort to process a right of first refusal that may have to be redone?

Right now DVC Resale Market has 551 contracts listed, of those 51 have had their prices reduced in some fashion. All of those would need to be resubmitted for a new ROFR.

Any contract in which the buyer and seller negotiate terms would require a new ROFR.

ROFR basically requires that the final contract terms be set between the seller and prospective buyer, it does not make sense to do it before a seller has been found and the terms of sale agreed to.

So less then 10% have been reduced, why?, was they overpriced in the first place?

You say it does not make sense, why not, the price the seller wants is the price they want, if they offer this first to Disney and they say no then they can off it to the resell market at this price, if the seller overprices the points they will not sell and they will have to go through the process with Disney again and pay a fee for doing this.

This would then set a price that the seller is happy with.

Then the buyer could but straight away knowing hey will get the points at that price, the present process involves making an offer and hoping the offer does not get taken by Disney on ROFR.

The other way you would know they have not taken then points as they are on the re-sell market.]

This is a win win for the seller, Disney and the buyer in the resell market.

 

[KAT4DISNEY]

So less then 10% have been reduced, why?, was they overpriced in the first place?

You say it does not make sense, why not, the price the seller wants is the price they want, if they offer this first to Disney and they say no then they can off it to the resell market at this price, if the seller overprices the points they will not sell and they will have to go through the process with Disney again and pay a fee for doing this.

This would then set a price that the seller is happy with.

Then the buyer could but straight away knowing hey will get the points at that price, the present process involves making an offer and hoping the offer does not get taken by Disney on ROFR.

The other way you would know they have not taken then points as they are on the re-sell market.]

This is a win win for the seller, Disney and the buyer in the resell market.

I think your just defining a different process, not one that necessarily is better. And actually more cumbersome. I’ve maybe once paid the asking price. Your process would have had Disney looking at each contract I bought more than the 1 time they did. I understand wishing for a quicker process if your a buyer but I dont see what you’ve outlined working. It isn’t following market pricing. Or else you think most people pay asking price? I don’t think they do.

 

[Jkarrows]

I think your just defining a different process, not one that necessarily is better. And actually more cumbersome. I’ve maybe once paid the asking price. Your process would have had Disney looking at each contract I bought more than the 1 time they did. I understand wishing for a quicker process if your a buyer but I dont see what you’ve outlined working. It isn’t following market pricing. Or else you think most people pay asking price? I don’t think they do.

That's the point, all the contracts for re-sell would meet market value as Disney would have already said no as they feel the points are at market value.

Just a different point of view.

 

[KAT4DISNEY]

That's the point, all the contracts for re-sell would meet market value as Disney would have already said no as they feel the points are at market value.

Just a different point of view.

That isn’t a definition of market value though. It’s the definition of a single entities valuation but not market.

 

[Dean]

So less then 10% have been reduced, why?, was they overpriced in the first place?

You say it does not make sense, why not, the price the seller wants is the price they want, if they offer this first to Disney and they say no then they can off it to the resell market at this price, if the seller overprices the points they will not sell and they will have to go through the process with Disney again and pay a fee for doing this.

This would then set a price that the seller is happy with.

Then the buyer could but straight away knowing hey will get the points at that price, the present process involves making an offer and hoping the offer does not get taken by Disney on ROFR.

The other way you would know they have not taken then points as they are on the re-sell market.]

This is a win win for the seller, Disney and the buyer in the resell market.

But it's not a win win. One or the other wins, why, because if DVC sets a ROFR price that's close to fair market value, they overpaid. And if they set it a lot below, the seller loses $$$ if they accept the DVD low ball offer. In reality IF they did this, this is how they would approach it. They are NOT going to set it at or right at ROFR price. Remember the MAIN reason for ROFR is to drive people to their main product, the resort in retail sales. One of the main aspects of ROFR is the uncertainty and aggravation of it. Plus it takes them away from their main business which is selling the resort in active sales. I could certainly see them having a resale service for a 40-50% commission or a buy back program for around 30¢ on the dollar and both are likely viable if they get sufficient volume. Remember that any sale of existing resorts will take away a certain amount of retail sales from any active resort which is their main business. And anytime you create variables you create aggravation, risk and drive up costs. For them to make the type of profit they'd want they'd likely need that 30¢ on the dollar to come out. Plus in reality they don't want you to sell. They want you to keep it and the next person to buy retail, that is their perfect world.

 

[Jkarrows]

But it's not a win win. One or the other wins, why, because if DVC sets a ROFR price that's close to fair market value, they overpaid. And if they set it a lot below, the seller loses $$$ if they accept the DVD low ball offer. In reality IF they did this, this is how they would approach it. They are NOT going to set it at or right at ROFR price. Remember the MAIN reason for ROFR is to drive people to their main product, the resort in retail sales. One of the main aspects of ROFR is the uncertainty and aggravation of it. Plus it takes them away from their main business which is selling the resort in active sales. I could certainly see them having a resale service for a 40-50% commission or a buy back program for around 30¢ on the dollar and both are likely viable if they get sufficient volume. Remember that any sale of existing resorts will take away a certain amount of retail sales from any active resort which is their main business. And anytime you create variables you create aggravation, risk and drive up costs. For them to make the type of profit they'd want they'd likely need that 30¢ on the dollar to come out. Plus in reality they don't want you to sell. They want you to keep it and the next person to buy retail, that is their perfect world.

I think you miss understood my Win Win, for example, Disney sold Saratoga Springs back in the day and made profit on those points it sold, then today they could buy back at 100 dollars and then they are reselling them for 160 dollars, reselling the points they made money on the first time so win one, buy them and then resell them for a profit win two, so win win.

 

[Dean]

I think you miss understood my Win Win, for example, Disney sold Saratoga Springs back in the day and made profit on those points it sold, then today they could buy back at 100 dollars and then they are reselling them for 160 dollars, reselling the points they made money on the first time so win one, buy them and then resell them for a profit win two, so win win.

I understand that perfectly and I think you're off on the thinking there but I do think you missed my point. First, what they made the first round is meaningless, it's water under the bridge. The only issue is this years and the next few years budget and projections. SSR is a good example because few people would buy SSR specifically to own there, they might if the cost were less but MOST of those would buy the new resort if it were all they knew was available. But they don't want to sell for less. Using your numbers they'd likely need to buy back at $50 pp to break even. Their comparison would be the profit, marketing and sales costs on the resort in active sales, let's put that at $100 pp which is likely close to low. So to break even they'd have to make that AND they'd have to hit their sales goals on the other sales going forward. Plus they don't really want you to sell at all so anything that makes it easier is a negative for them. So in order to stomach that negative they'd have to make at least as much or more on the points acquired as you suggest AND it'd have to be points they would not have sold otherwise. I think you're missing the main point of ROFR, to push people to retail sales. Not that their against a windfall but using your numbers it costs them money, it'd not a windfall.

 

[Jkarrows]

I understand that perfectly and I think you're off on the thinking there but I do think you missed my point. First, what they made the first round is meaningless, it's water under the bridge. The only issue is this years and the next few years budget and projections. SSR is a good example because few people would buy SSR specifically to own there, they might if the cost were less but MOST of those would buy the new resort if it were all they knew was available. But they don't want to sell for less. Using your numbers they'd likely need to buy back at $50 pp to break even. Their comparison would be the profit, marketing and sales costs on the resort in active sales, let's put that at $100 pp which is likely close to low. So to break even they'd have to make that AND they'd have to hit their sales goals on the other sales going forward. Plus they don't really want you to sell at all so anything that makes it easier is a negative for them. So in order to stomach that negative they'd have to make at least as much or more on the points acquired as you suggest AND it'd have to be points they would not have sold otherwise. I think you're missing the main point of ROFR, to push people to retail sales. Not that their against a windfall but using your numbers it costs them money, it'd not a windfall.

OK, again ill agree to disagree with your thoughts.

 

[_auroraborealis_]

Disney does not set the market rate, they respond to it.

Sellers do not set the market rate, they respond to it.

Your system has sellers and Disney trying to predict the market, in a cumbersome process, but you claim it's about market rates. But it isn't! You would be giving my freshman econ prof an aneurysm right now (let alone my grad prof).

 

[Dean]

OK, again ill agree to disagree with your thoughts.

If DVC takes it your direction we'll know you're right, otherwise, not so much. Don't you think they've looked at all of these angles forward and backward.

 

[skier_pete]

I think it's very simple - though others have stated it in more complicated ways:

Disney doesn't know what the selling price actually is until an offer has been made.

 

[Dean]

I think it's very simple - though others have stated it in more complicated ways:

Disney doesn't know what the selling price actually is until an offer has been made.

But I'm sure they know what the price is they'd be willing to take it back without fooling with ROFR, much less than ROFR price obviously. And they know what their ROFR criteria are which they've never released. Paying that price up front is leaving money on the table and that difference is really all of the profit they can expect fooling with this comparatively speaking.

 

[dvcsince93]

Funny thing about ROFR, when Disney waives its right, it records a notice with the county-

From 01/01/2017 to 05/01/2017, DVD recorded 2300+ notices-
From 01/01/2018 to 05/01/2018, DVD recorded 3000+ notices-
From 01/01/2019 to 05/01/2019, DVD recorded 32 notices

While they are behind on reviewing the contracts and may be a bit slow on recording, that seems a bit of a drop-off.