I guess based on when the contract was placed into foreclosure could give you some info on points status. Meaning if in 2016 it was posted as being in default, thus the owner could not use the points. Here we are in 2018 so they did not use 2018, but could have possibly used 2017 points. Likely not a fully stripped contract. When you follow the paper trail it is interesting to see how long it takes to go from being listed as a foreclosed property to actually going up for auction.
I have watched them for a bit. You have some flippers who buy foreclosures (you see their name on the OCC both as buyers then sellers of the same contracts), then flip them into the resale market.
So your competition are these flippers and Disney. Disney is often the winner of these contracts so that keeps the price up when you go against them. I still can’t understsnd why they have to bid on their own properties. Maybe someone else has an understanding of that.
If you do your homework researching on the OCC and know exactly what you are bidding on and have the cash to pay in 24 hours of the auction, then this might be a way to buy. The research takes a bit of time which might be a turn off to many.
Disney Corporation isn’t really buying anything, I don’t think. As I understand it, Palm financial is the lending institution that is foreclosing on the property. I believe Disney owns Palm Financial (wholly owned subsidiary).
So, Disney Vacation Developement is bidding on the property so they can retake ownership and resell the contract. Whatever DVD pays for the contract goes to Disney’s bottom line, eventually, through Palm financial. If DVD gets the contract a for a steal and Palm financial winds up in the red on that particular loan. All that means to Disney Corp. is that DVD will have a larger profit margin on those points and that will also, eventually, end up on Disney’s bottom line.
Now, Palm and DVD are separate companies just with the same owner. They cannot communicate to each other about the contract being foreclosed on. I.e. Palm can’t tell DVD that contract #123456789876 is in default and Palm will need $8000 to make this debt even on their balance sheet. Palm, as a subsidiary, has an interest in selling this for the most amount of money possible in order to be as profitable as possible. DVD, as a subsidiary, has an interest in paying as little as possible for the contract so they can turn the greatest profit and make their balance sheet look as good as possible. Parent company Disney will, essentially, wind up with the same amount of profit in the end no matter which source is reporting it.
The only losing scenario for Disney is if DVD doesn’t participate in the foreclosure bid. Let say Palm “needs” $8000 on a contract to just cover their losses on the loan and someone like you or me bids $6000. If DVD does not participate, you or I would win. That $2000 loss will eventually make its way to Disney Corp. balance sheet. Since DVD did not take ownership of those points, there will be no profit on the reselling of them to offset that loss. To prevent that scenario, Disney Corp. has an incentive to order DVD management to buy every foreclosure contract even if that means paying more than the resale market is demanding, effectively pushing you and I out of the bidding.
The best part for Disney is, even if Palm loses money on the loan and DVD does not take the points to resell at a profit, they will still eventually make money because whoever bought the points will be going to WDW and buying admission, food, drink, merchandise and tours! They truly get that money coming and going!