Where do you think DVC resale prices are headed?

[EYL]

I think there are 2 issues here, what the fees are and who pays them. My comments were more directed at the calculation of what the fees should be on the resale.

Got it. Thanks. In my case, I offered in December and closed in February (Feb UY). 100% of the previous years MF were paid for by the seller even though the points were banked and I got to use them.

 

[Brianstl]

I’ve begun to rethink how the economy will impact DVC prices, at least in the next 8-12 months.

We’re in the strangest economy, maybe ever?

Tens of millions of people have become unemployed or underemployed, many losing low wage jobs but many not, and these people are in A horrible personal economic situation.

Tens of millions more have huge anxiety about eventually being impacted.

BUT

We have this bizarre and uncharacteristic situation where many people, perhaps the majority of people, are stashing away more money than they’ve been able to for their entire lives. They have reasonably secure job (most people do), they haven’t been spending money on vacations, or fashion, or work clothes, or Fine dining, generally much at all. AND the government sent them a decent check this spring (and might send another?). So they are flush with cash and excited To live large when all this is over.

The first two groups may be selling DVC, but the last group is buying.

I don’t think we will reach tipping point where prices drop until most people start to take the big vacation and dine out and buy new shoes and generally start spending their excess cash again. At that point I do expect we will see supply exceed demand and prices fall. But it will be a while, it seems.

It is definitely a weird economy right now. It will be interesting to see how deep and wide spread the damage to the economy will actually be. My guess is Disney thinks the damage to the economy is deeper, more wide spread and will be more long lasting than most people think. You don’t lay off 20% of the PEP employees if you believe things will be turning around in a meaningful way in six to twelve months.

When it comes to DVC specifically, how should we read the massive job cuts to DVC specifically? I read that as Disney thinks on the direct side that business is going to be slow.

 

[kerrylacherry]

It seems that all that specialize in DVC take this approach though some are more hardline than others. It baffles me somewhat that they do because it's clear that DVC charges dues on a calendar year basis, NOT a UY basis.

Plus it changes based on the time of year. In my experience, at the start of August this year the 2020 MF were nonnegotiable to a lot of resale agents and therefore sellers, then all of a sudden at the end of August the listings changed to say seller pays 2020 MF. As if the agents are well aware the MF are based in calendar year, and they are using the MF to help boost the sale price for the seller and their commission in the first part of the year until it gets too close to closing in Nov/Dec.

 

[CastAStone]

When it comes to DVC specifically, how should we read the massive job cuts to DVC specifically? I read that as Disney thinks on the direct side that business is going to be slow.

That’s how I read it. A lot of sold out resorts and 2nd contracts selling right now. That doesn’t require nearly the same staffing as trying to sell Riviera and *sigh* Aulani.

 

[CastAStone]

That’s how I read it. A lot of sold out resorts and 2nd contracts selling right now. That doesn’t require nearly the same staffing as trying to sell Riviera and *sigh* Aulani.

With a moments more thought it strikes me that automating things, like initiating the add on process online and using transferred points online saves staff too. And based on those two changes rolling out in short order I suspect they’ve doubled down on automation and we’ll see more of it.

 

[Where'sPiglet?]

Also, they haven't been staffing the in-park and resort kiosks, or if they have, it's been far more limited than normal.

They have been staffing several model rooms (one each at several resorts), so I wonder if we see them consolidating some of those. They may have been staffing the model rooms at DVC resorts that were getting guests that had been moved from closed cash resorts, so they may close some of the models.

 

[we"reofftoneverland]

Out of curiosity, are there brokers known for a stance one way or another?

I’m looking at submitting an offer on a Fidelity contract in the next week. My assumption has been that the seller pays (really already has paid) dues on banked 2019 and 2020 points, but I’m trying to grab as much intel as possible!

Fidelity is great. We have made 4 offers with them and on 2 occasions they asked if we wanted to reimburse for member fees and we just said no thank you. No pushback. The other 2 times they didn’t even ask us about it.

Edit: adding another comment/reply. Yes! We have never paid for banked points or member fees already paid. 2020 MF were paid last Jan 15.

 

[Brianstl]

With a moments more thought it strikes me that automating things, like initiating the add on process online and using transferred points online saves staff too. And based on those two changes rolling out in short order I suspect they’ve doubled down on automation and we’ll see more of it.

How many people do you think actually are employed doing that? Before the layoffs DVC employed 225 licensed sales agents/brokers in Florida according Florida’s DPBR. I got to think that is the largest part of the DVC work force as things like reservations, maintenance, customer service and house cleaning are all contracted out to other Disney divisions. Most of those 225 have to be focused on new sales. I don’t know if you can effectively automate the new buying process in any way because a direct DVC purchase is an emotional purchase.

 

[EM Lawrence]

Derek and Marissa from www.dvcresalemarket.com were On the www.welcomehomepodcast.com recently and they discussed the DVC layoffs pretty in-depth. I need to listen again for more specifics, but they did mention that entire divisions were completely laid off, so I assume that it affected more than just the guides.

 

[Dean]

Got it. Thanks. In my case, I offered in December and closed in February (Feb UY). 100% of the previous years MF were paid for by the seller even though the points were banked and I got to use them.

Well not 100% as the fees you paid in January covered 1 month of the 2019 points and 11 months of the 2020 points. Still a fair deal given you got the points early in the UY and were able to use the points. But it allows me to illustrate the very issue I was referring to with dues paid on a calendar year basis. Had the UY been later in the year the affect would have skewed the deal more.

 

[UtahDon]

Honestly surprised there has not been more of a market downturn in general, and that it did not also extend to DVC which is obviously an unnecessary luxury purchase. Very unusual situation where for many COVID has zero effect on income, but for others it is devastating. Shows the resiliency of the market, but makes me wary wondering what is next.

 

[davidl81]

Why do you think this? I'm curious.

Yeah that statement threw me off as well. I can’t see anything shocking anyone on 2021 dues. All owners know they are coming, and maybe some who pay it all upfront move to paying month to month? We can for sure speculate what will happen next year, but it’s all a guess right now. If the economy continues to recover the middle class will likely come away more or less unhurt and DVC prices won’t be effected. We honestly won’t know that till next year. And to many other people’s point, a lot of people are saving a ton of money over this past six months (no vacations, no buying gas for transportation, no day care cost, etc). So if you had maybe 10-15k extra laying around DVC resales May look good right now.

 

[E2ME2]

Yeah that statement threw me off as well. I can’t see anything shocking anyone on 2021 dues. All owners know they are coming, and maybe some who pay it all upfront move to paying month to month? We can for sure speculate what will happen next year, but it’s all a guess right now. If the economy continues to recover the middle class will likely come away more or less unhurt and DVC prices won’t be effected. We honestly won’t know that till next year. And to many other people’s point, a lot of people are saving a ton of money over this past six months (no vacations, no buying gas for transportation, no day care cost, etc). So if you had maybe 10-15k extra laying around DVC resales May look good right now.

STOP! - I already bought an SSR add-on, and I'm in ROFR on a BCV add-on,
and yes - it's because I was fortunate to remain 100% employed throughout COVID, and working remote 100%.
My gasoline bills went to virtually nothing, my car insurance was given a 15% credit through October, then - I turned in my leased vehicle (the lease was just fulfilled),
but did not acquire another vehicle, as we've been getting by with one car, so my car insurance just got cut in half for the next 6 months.
And now I also have way too much time to search for more DVC Resales!
Oddly enough, list prices have seen an uptick, and ROFR has been active lately.....

 

[Kickstart]

Regarding MF...

I recently closed on a Feb use year contract and paid 2020 fees. Seller banking 2020 points was in the contract.

It seems fair to me, I have those points to use or rent in 2021. Even with the extra points on the market I should be able to make a few dollars per point over the fees if I decide to rent. Which, IMO is better than not having those points and saving on the fees.

I can understand the argument that there is less total time to use those points (versus if I closed earlier in the year), but I don't feel that significantly reduces their market value so asking for a significant proration from the buyer doesn't makes sense me.

If I was selling, unless it was too late to bank, I would expect the buyer to pay fees on unused points.

 

[Sandisw]

Regarding MF...

I recently closed on a Feb use year contract and paid 2020 fees. Seller banking 2020 points was in the contract.

It seems fair to me, I have those points to use or rent in 2021. Even with the extra points on the market I should be able to make a few dollars per point over the fees if I decide to rent. Which, IMO is better than not having those points and saving on the fees.

I can understand the argument that there is less total time to use those points (versus if I closed earlier in the year), but I don't feel that significantly reduces their market value so asking for a significant proration from the buyer doesn't makes sense me.

If I was selling, unless it was too late to bank, I would expect the buyer to pay fees on unused points.

If you were fine with covering the fees, that is all that matters,

But, telling buyers that if they get the points they should pay the fees isn’t really accurate because dues are paid per calendar year,

As mentioned, when you buy with Disney direct, you get the points and do not pay the fees, except based on how many days are left in the year,

If I bought RIV today with my Dec UY, I’d get 2019 UY points and 2020 UY points and my MFs would only be only 2 1/2 months worth for 2020.

Again, everything resale is negotiable and it’s up to the buyer to decide what makes the deal a good one for them.

 

[Cabius]

Again, everything resale is negotiable and it’s up to the buyer to decide what makes the deal a good one for them.

My thinking here is mostly that loaded contracts should already command a price premium. The seller has already paid the fees for 2020, so it’s not really “buyer pays fees“, but rather how much more you pay for a product that includes current-year points.

 

[Sandisw]

My thinking here is mostly that loaded contracts should already command a price premium. The seller has already paid the fees for 2020, so it’s not really “buyer pays fees“, but rather how much more you pay for a product that includes current-year points.

Most brokers though take that line and imply to buyers that MFs are due if you are getting points, regardless if the contract is loaded.

When I was selling last year, my contract was a Dec UY and did not have all of its 2019 points and I had borrowed from 2020. The brokers said that I would br expected to reimburse for the missing 2020 points Since buyer wasn’t getting the full set.

I politely informed them that since .I was selling in the fall I would not be paying any 2020 since the contract will be owned by someone else by then.

Of course, it sold within 2 weeks with the terms I stated,

The point I was trying to make was simply that buyers need to understand how it works as I have seen posts where people who paid the dues on later in the year UYs came here shocked they got a bill in January as they thought when they paid the current year at closing, it covered them until the next UY started.

 

[Kickstart]

If you were fine with covering the fees, that is all that matters,

But, telling buyers that if they get the points they should pay the fees isn’t really accurate because dues are paid per calendar year,

As mentioned, when you buy with Disney direct, you get the points and do not pay the fees, except based on how many days are left in the year,

If I bought RIV today with my Dec UY, I’d get 2019 UY points and 2020 UY points and my MFs would only be only 2 1/2 months worth for 2020.

Again, everything resale is negotiable and it’s up to the buyer to decide what makes the deal a good one for them.

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.

 

[Sandisw]

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.

Like I said, when you buy direct, you get a contract with all current UY points and beyond and don’t pay a full years of dues on them, unless you are buying in January. So, not sure why resale contracts that come with the same number of points should be a reason to reimburse sellers MFs if bought later in the year,

Any buyer who wants to reimburse a seller for fees, that is great. MFs though are based on ownership at the resort. That is why we all pay in January, regardless of UY.

Again, resale allows one to negotiate. I just bought a contract in June with 2018, 2019 and all 2020 points in it. Normally, I’d have offered to split 2020 MFs since my ownership would be 6 months...I chose to reimburse all since it wasn’t worth losing the contract for $325.

But, it was the first contract I ever bought that I paid MFs that way, All the rest have always been based on calendar year.

 

[kerrylacherry]

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.

I disagree, however you got the points you're paying the same MFs, resale or direct. 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. The MF are not based on points after the $pp calculation, Sandi's example of a direct sale just emphasizes that they are based on the calendar rather than when the points are used. In resale or direct, a buyer pays for the points, and the MF are a separate consideration.