DVC has changed the resell rules

Computer Magic

Well-Known Member
I am sure there are a lot of people on this web site wanting to tell me told you so. I have defend buying DVC over and over and even ask on one time why there are so many people that hate DVC. I am now not real happy with DVC and I think this is not the last change but just a foot in the door. If people do not complain to DVC than they will folllow up with additional changes that may not apply to everyone and not just new resells. I now think every DVC member is going to pay the price in order to increase new sells.

I have not been a fan of DVC, but want to go on record in saying I would never say I told you so. I have never had a problem with the people that bought or buys DVC. I don't like what I see happening to Disney fans and their hard earn money. I hope everything works out.
 

Pioneer Hall

Well-Known Member
I am pretty sure that is incorrect.....If the owners default and the points go back into the DVC bank, then DVC would be responsible for the dues.

I believe this would be correct. Since the total number of points cannot change, if Disney has more points in their inventory then they have to pay more for their share of the dues. The dues have to be spread evenly per point, so extra costs cannot be passed on to the owners.
 

DVCOwner

A Long Time DVC Member
Original Poster
I believe this would be correct. Since the total number of points cannot change, if Disney has more points in their inventory then they have to pay more for their share of the dues. The dues have to be spread evenly per point, so extra costs cannot be passed on to the owners.

I am not talking about the points the DVC has taken back, I am talking about the possilbe large number of points in limbo. These are points that have not been taken back by DVC, but the members are not paying dues. Read the current posting (http://forums.wdwmagic.com/showthread.php?t=689086) about a person trying to buy resell market points that owe over a $1,000 in payments and back dues. I think this is going to become the case in a lot of sales. I do not think DVC will continue to eat this cost.
 

Pioneer Hall

Well-Known Member
I am not talking about the points the DVC has taken back, I am talking about the possilbe large number of points in limbo. These are points that have not been taken back by DVC, but the members are not paying dues. Read the current posting (http://forums.wdwmagic.com/showthread.php?t=689086) about a person trying to buy resell market points that owe over a $1,000 in payments and back dues. I think this is going to become the case in a lot of sales. I do not think DVC will continue to eat this cost.

They still can't pass those dues on to us. If an owner doesn't pay their loan or dues, then DVC will eventually reclaim that property from the owner. Dues costs are per point, if Disney wants to raise the costs on owners then they are going to be raising the costs for themselves as well. There is no way that Disney can raise the burden on owners for these costs without passing it on to their inventory as well.
 

DVCOwner

A Long Time DVC Member
Original Poster
They still can't pass those dues on to us. If an owner doesn't pay their loan or dues, then DVC will eventually reclaim that property from the owner. Dues costs are per point, if Disney wants to raise the costs on owners then they are going to be raising the costs for themselves as well. There is no way that Disney can raise the burden on owners for these costs without passing it on to their inventory as well.

Agree with what you are saying, but if there is a large amount of dues that goes unpaid, than someone will have to pay for the lost income before the points becomes property of DVC. I am sure that DVC would spread the loss out over all points and pay only the increase on there inventory. In this way DVC would only pay a small percentage of the loss based on the amount of inventory and all DVC members will pay the rest of the loss.
 

Pioneer Hall

Well-Known Member
Agree with what you are saying, but if there is a large amount of dues that goes unpaid, than someone will have to pay for the lost income before the points becomes property of DVC. I am sure that DVC would spread the loss out over all points and pay only the increase on there inventory. In this way DVC would only pay a small percentage of the loss based on the amount of inventory and all DVC members will pay the rest of the loss.

I just don't see how that is possible. In simplest math, if it cost 1 million to run the resort (the dues) and there were 1 million points, then the dues would cost 1 dollar per point. If I own 200 points, I would pay 200 dollars. If people are foreclosing on their contracts and Disney has to take over their points there is no way for them to now put the cost of those points on to me. The resort still costs whatever it costs to run and Disney still has to pay their share of the dues on whatever it is they own. If they own 200 points now and foreclosure causes them to have to own 400 they now need to pay 400 for their dues. There doesn't seem to be anyway that the cost of dues can be spread on to one owner (me) and not to another (Disney).
 

Buried20KLeague

Well-Known Member
I just don't see how that is possible. In simplest math, if it cost 1 million to run the resort (the dues) and there were 1 million points, then the dues would cost 1 dollar per point. If I own 200 points, I would pay 200 dollars. If people are foreclosing on their contracts and Disney has to take over their points there is no way for them to now put the cost of those points on to me. The resort still costs whatever it costs to run and Disney still has to pay their share of the dues on whatever it is they own. If they own 200 points now and foreclosure causes them to have to own 400 they now need to pay 400 for their dues. There doesn't seem to be anyway that the cost of dues can be spread on to one owner (me) and not to another (Disney).

I think I understand what DVCOwner is trying to say...

Using your math, the resort costs 1 million to run. Using simple round numbers, let's say that $10,000 worth of that 1 million is not being paid by those members that still have contracts, but are not paying their dues, for whatever reason. So there's a $10k shortfall. And let's say that that 10k shortfall is annual, because each year they have a certain number of people that don't pay their MF's, statistically.

DVD, rather than taking back those contracts and covering that shortfall themselves 100%, raises the MF's to every member (themselves included) to cover that estimated 10K shortfall they have every year, while the non-paying member still physically keeps their contract.

By doing this, sure DVD still pays... But they pay a smaller percentage of that 10K shortfall, rather than 100% of it. The members absorb a percentage of it that before they didn't.

DVD could handle it this way rather than take the points back, knowing that their cost would be lower (because they're not taking the points back and not having to pay 100% of that contracts MF's), and IF they needed to foreclose and take the points back, they'd be there to "officially" take back. Just let the member that's not paying continue to hold the contract, but they're on a "hot list" that DVD could pull back at any time... While the members help cover the shortfall in the meantime.

Maybe that makes it clearer what he's trying to say. I have no idea if he's correct, mind you... I just think I understood his point and was trying to clarify. :wave:

EDIT TO ADD: Apparently he and I were typing at the same time. :)
 

DVCOwner

A Long Time DVC Member
Original Poster
Using you numbers: If there are a million points each paying $1.00 and 100,000 of them are in defalt and not paying there 2011 dues, than the budget is $100,000 short. DVC has not taken over the points yet because it takes sometimes two or more years for a foreclosure. During that time DVC is not going to be paying the dues. If someone other than DVC buys the property than the back dues should be paid by the new owner at closing. I do not think that DVC will be required to pay the back dues on property recieves due to dues not being paid.

All that said, the 2011 budget is missing $100,00 in dues not paid and will have to make that cost up in high dues the next year. That money will be carried forword as a loss and than paid out of an increase in the 2012 dues. If the problem continues the same thing will happen in 2012.

Just because someone is not paying dues, does not mean that DVC owns the property at that time.
 

xdan0920

Think for yourselfer
If this is the only change they make, then I can live with it. However, if this is just the beginning, then this is a major problem. We own 180 points right now, and I was thinking of adding on 50 or so more through resale, this news won't stop me from doing so.


PhoneDave,

You piqued my interest and had me searching the internets for these $1 time shares, I found none. Can you point me in the right direction?
 

Pioneer Hall

Well-Known Member
Using you numbers: If there are a million points each paying $1.00 and 100,000 of them are in defalt and not paying there 2011 dues, than the budget is $100,000 short. DVC has not taken over the points yet because it takes sometimes two or more years for a foreclosure. During that time DVC is not going to be paying the dues. If someone other than DVC buys the property than the back dues should be paid by the new owner at closing. I do not think that DVC will be required to pay the back dues on property recieves due to dues not being paid.

All that said, the 2011 budget is missing $100,00 in dues not paid and will have to make that cost up in high dues the next year. That money will be carried forword as a loss and than paid out of an increase in the 2012 dues. If the problem continues the same thing will happen in 2012.

Just because someone is not paying dues, does not mean that DVC owns the property at that time.

OK...i see what you are saying. I still feel that there are protections against this, but I see where you are coming from.
 

DVCOwner

A Long Time DVC Member
Original Poster
OK...i see what you are saying. I still feel that there are protections against this, but I see where you are coming from.

Why this has not been a problem before is that the resell market has been very good and properties turn over in a short time. The dues a paid in January and the property sells the same year. Very few properties have gone in defalt. If the resell market slows down and the sellers stop paying on the points, this could be a problem. Timeshare resells in most markets have dropped to pennies on the dollar and they still do not sell. I know of one property where 50% of the dues are not being collected at this time and the owners are paying the difference.

Do I think that this is going to happen with just this one rule change -- No!, but if DVC continues to make second class owners out of "members" that buy on the resell market - it could happen.
 

Phonedave

Well-Known Member
If this is the only change they make, then I can live with it. However, if this is just the beginning, then this is a major problem. We own 180 points right now, and I was thinking of adding on 50 or so more through resale, this news won't stop me from doing so.


PhoneDave,

You piqued my interest and had me searching the internets for these $1 time shares, I found none. Can you point me in the right direction?

I have stayed at this one in the Grand Caymans. (I have a friend who owns 2 weeks). For sale - $1 bid + $299 admin fees. They are even paying current years maintenance and the resort transfer fees.

Dues are about $770 a year (until the next hurricane special assement comes along)

They also charge you for your elecrticity usage during the week you stay.

http://cgi.ebay.com/MORRITTS-TORTUG...70695480845?pt=Timeshares&hash=item3f06b53e0d


Meanwhile you can buy them through the company (Morritt's)


http://www.morritts.com/Page20_Contact_Info.htm


doing so makes you a member of "The Golden Turtle Club"

Vacation ownership is a great investment that guarantees a steady stream of unique experiences and family memories to last a lifetime. It’s also the start of a money-saving family tradition as you lock in savings at today’s prices. Generations to come can enjoy the vacation tradition you’re embarking on right now. And yet, with all the basic benefits of timesharing, the value of a Morritt’s timeshare is truly extraordinary. Owners who purchase through Morritt’s at Morritt’s Tortuga Club and Morritt’s Grand Resort are rewarded with membership in the Golden Turtle Club, which provides all of these exclusive privileges and benefits:

• Bonus Week. Available each year with as little as 30 days notice. You pay whatever your annual maintenance fee is for the bonus week. (Bonus weeks do not roll over into following years.)

• Wholesale Week. Another week available to you each year through our Internal Exchange Program. Stay at your choice of resorts all over the world. Pay the going rate at the resort you are requesting plus a $125.00 service fee.

• 10% discount on meals at the Resort.

• 10% discount at our Tortuga Spa.

• 20% discount on daily rentals.

• 20% discount on water sports.

• Exchange privileges with Global Resort Management. No annual fee. US trade: $125. International trade: $150.

• Preferred reservation service.



-dave
 

tjkraz

Active Member
Using you numbers: If there are a million points each paying $1.00 and 100,000 of them are in defalt and not paying there 2011 dues, than the budget is $100,000 short. DVC has not taken over the points yet because it takes sometimes two or more years for a foreclosure.

It would not take nearly that long. In fact, DVC passed a resolution at the 2010 condo meeting which gives them the right to foreclose simply for non-payment of dues. And unless the owner chooses to fight the proceedings (why would they if they cannot even pay the dues?), the foreclosure can be complete in a couple of months' time.

Additionally, someone who is behind on their dues cannot use the points. Vacant rooms generated by unused points would ultimately be turned over to CRO for rental to cash guests. Income from those rooms is credited back to members as Breakage Income.

During that time DVC is not going to be paying the dues.

Yes they are. Read the section of the operating budget entitled Developer Guarantee.

If someone other than DVC buys the property than the back dues should be paid by the new owner at closing. I do not think that DVC will be required to pay the back dues on property recieves due to dues not being paid.

Right on the first part. Wrong on the second part.

Additionally, bear in mind that these points are a drop in the bucket. You cited about 11,000 points for sale at TTS for Saratoga Springs. If my math is correct, that's less than 1/10 of one percent of the 11,000,000+ points at SSR. And of those resale listings, there is no reason to believe that a significant number are behind on their dues.

The post you linked referencing a resale purchase gone bad is the exception, not the rule. Changes of ownership cannot occur unless all of the mortgage and dues payments are up to date, and FAR more resale contracts go through without incident than those who encounter the issues described.

Do I think that this is going to happen with just this one rule change -- No!, but if DVC continues to make second class owners out of "members" that buy on the resell market - it could happen.

Doubt it. The bigger problem with other timeshares is that demand for a mud week in Branson, Missouri is infinitely smaller than the number of units built by developers.

As long as Walt Disney World and Disneyland stand as viable vacation destinations, there will be demand for DVC contracts. But many market forces will contribute to setting prices.

In fact, I have my doubts as to whether prices will immediately drop as a result of this change. It's a given that resale brokers will get an inordinately high number of offers over the next 2 months from buyers looking to beat the March 20 deadline. That's going to clear out a lot of inventory. In this case, the laws of supply and demand tell us that lower supply will be good for resale prices.

Then it becomes a question of whether the owners of unsold contracts will accept that their contract has a lower value. To illustrate, assume that most of the SSR contracts priced around $62-64 per point are purchased in the next 2 months. Come April, most remaining contracts are priced at $65+. The only way prices will drop is if the owner asking $65 per point today agrees that his contract is worth less and accepts an offer of, say, $59 per point.

There's enough reason to question whether that will happen.

Over time contract prices certainly will decline, but it will be due more to factors like approaching contract end dates and over-saturation of the market (the supply of DVC ownership candidates is not infinite) -- challenges DVC faces, policy changes or not.
 

wdwfan100

Active Member
So lets look past the deadline. If resales points are now "sub-prime". Do they stay that way? In other words, if Disney exercises its ROFR. Do they now hold an inventory of "sub-prime" points? Are they also restricted by these new rules. If not, doesn't this give them a tool to drive resale prices down so they can buy the points back inexpensively?
 

Pioneer Hall

Well-Known Member
So lets look past the deadline. If resales points are now "sub-prime". Do they stay that way? In other words, if Disney exercises its ROFR. Do they now hold an inventory of "sub-prime" points? Are they also restricted by these new rules. If not, doesn't this give them a tool to drive resale prices down so they can buy the points back inexpensively?

Of course not, Disney can do whatever they would like with their points. That is why the only thing they changed is a benefit that is never guaranteed. They could drive prices down, but they won't do it unless they can guarantee to sell the points. Disney would rather let the points go cheaper to someone else than hold on to points that they can't sell. For every point that Disney owns, it costs them more money in dues. This is why BCV is the only resort that is actively getting ROFR'd lately, Disney knows that there is demand for this resort at their prices so they are swooping the points back up.
 

Phonedave

Well-Known Member
Of course not, Disney can do whatever they would like with their points. That is why the only thing they changed is a benefit that is never guaranteed. They could drive prices down, but they won't do it unless they can guarantee to sell the points. Disney would rather let the points go cheaper to someone else than hold on to points that they can't sell. For every point that Disney owns, it costs them more money in dues. This is why BCV is the only resort that is actively getting ROFR'd lately, Disney knows that there is demand for this resort at their prices so they are swooping the points back up.


Exactly.

DVC has a wait list of people who want to buy at certain resorts. They have a good handle on the demand.

IF they have people lined up to buy at $110 a point, they know what their associated costs are with buying a point, holding it, and selling it. Lets say that costs them $4 a point.

If they have buyer lined up at $110 a point, they are going to ROFR - from the bottom up, anything that comes in below $106.

-dave
 

DVCOwner

A Long Time DVC Member
Original Poster
Someone post on another site what might be a hidden problem for DVC. They are changing the rules so they can sell more directly from DVC. If this is the case the market that they are trying to win over is those that are looking at DVC vs. resell. So if the new rules drive the price down even a few dollars a point and the buyer does not plan to use points outside the DVC resorts; it might drive more sells to the resell market.

Just one more angle in this to consider.
 

Pioneer Hall

Well-Known Member
Someone post on another site what might be a hidden problem for DVC. They are changing the rules so they can sell more directly from DVC. If this is the case the market that they are trying to win over is those that are looking at DVC vs. resell. So if the new rules drive the price down even a few dollars a point and the buyer does not plan to use points outside the DVC resorts; it might drive more sells to the resell market.

Just one more angle in this to consider.

I have heard this as well, and definitely see it as a possibility. But I am sure Disney thought of this as well and decided in the long run they can really spin this their way. I still wouldn't hesitate to buy resale with this as a restriction. However, I also don't plan on purchasing more points for a very long time so I will see what the environment is like in 10 years or so when that time comes.
 

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