Resale Restrictions Coming? Or Just Internet Rumor-Mongering?

[fauna]

Okay, so I'm in the middle of doing a lot of research about buying DVC. (I'm a look before you leap kind of girl). We've pretty much decided on buying resale at BWV, but I'm hearing a lot of rumors that are making me nervous about buying right now. Stuff like....

"New restrictions on resales are coming in 2011. These include no RCI trading, no cruises, no booking with points anywhere but at your home resort and/or booking with points at non-DVC resorts."

"There will be new DVC resorts announced - making Disney anxious to unload their inventory and major incentives/price lowering will happen."

Again, as far as I know, these are only rumors. Does anyone have any insight on their credibility? And their effect on the resale market? I guess I'm worried that we will buy resale DVC points only to see their value drop considerably before we can even close. It would suck to know we could have waited a few months and gotten those points a lot cheaper or even gotten as good of a deal buying direct.

 

[Cubs Brian]

Curious as to where you heard these rumors.DVC released its 2011 points chart a while ago and it still list RCI as its trading partner. And it also lists point charts for cruises and explains both the 11 and 7 month booking windows( for using resorts other than your home resorts).

 

[fauna]

Just google "DVC resale changes". They're on many discussion boards.

From what I've read, the changes would only apply to resales that have closed on or after January 1, 2011. So, if you've already bought your resale, or bought direct these alleged & rumored changes would not apply to you.

I'm just a little concerned - we thought we were all ready to move forward with our DVC resale purchase. Now I'm wondering if we should wait. Or is it stupid to wait because of some rumors? Or would it be stupid not to wait and possibly get a way better deal?

 

[Monty]

I highly doubt DVC could treat members who buy resale differently from members who buy direct. The ownership of points is ownership of points. Distinguishing between how someone got the points would create a two-tier system that would annoy both tiers, the people who bought direct because their ability to sell would be severely impacted and the people who buy resale because their points would be diminished. The back-lash wouldn't be worth it. To say nothing of the poor CMs who would have to try and keep track of which points are direct-buy and which are resale and then what about members who have a mix?

 

[fauna]

I highly doubt DVC could treat members who buy resale differently from members who buy direct.

It's my understanding (and I could be wrong, becuz I'll admit that my source is another discussion forum) that many timeshare companies already have some sort of penalties/exclusions that apply to resales only.

So...so far, I have 2 votes for "only internet rumors".

Does anyone have any great insight to what would happen the resale market (prices stay the same, prices plummet..) if, IF, these changes take place?

 

[Pioneer Hall]

Having recently bought resale I have read into some of these rumors as well. Personally, I don't see changes happening and think that it is just a lot of speculation. Imagine the backlash from those who purchased resale already and would now have a list of exclusions placed on them. I don't think Disney would want to bring in something that would all of a sudden start to exclude a major part of their membership.

However, I have also heard rumors that they could be offering exclusive perks to members who own a large number of points (the 1000 mark floats around a lot). I could see this new VIP level happening because no one is excluded from being included if they really want to be.

 

[slappy magoo]

I highly doubt DVC could treat members who buy resale differently from members who buy direct. The ownership of points is ownership of points. Distinguishing between how someone got the points would create a two-tier system that would annoy both tiers, the people who bought direct because their ability to sell would be severely impacted and the people who buy resale because their points would be diminished. The back-lash wouldn't be worth it. To say nothing of the poor CMs who would have to try and keep track of which points are direct-buy and which are resale and then what about members who have a mix?

I agree it would be a dumb thing to do, but that doesn't meant they wouldn't at least try it. I wouldn't be surprised if the market for buying DVD direct from Disney is slowing in the economy, but there are so many great deals in resale (great, in relation to prices 2 years ago, anyway) that Disney could be deciding how best to handle the competition, and limiting perks could be one of them. But I can't imagine that doing anything but ________ off people who are already DVC members but see the need to sell. In fact, one could argue it would give DVC an unfair advantage in both the sale AND resale of DVC points, since they have the right of first refusal. Limiting perks and advantages of resale points results in members having to offer their resales for less, which makes it cheaper for Disney to pick up those points from RoFR and then resell them themselves, WITH full benefits, because you're buying from Disney.

 

[tjkraz]

It's my understanding (and I could be wrong, becuz I'll admit that my source is another discussion forum) that many timeshare companies already have some sort of penalties/exclusions that apply to resales only.

That is correct. Wyndham has a VIP program which combines direct sales benefits with additional perks for high point owners There are 3 different tiers depending upon the number of points owned and only direct purchase points count toward the total.

Their basic VIP level--which is the equivalent of about 300 DVC points--grants some fairly benign perks. Some of the perks for VIP members include early check-in (2pm), unlimited housekeeping credits, VIP check-in desk and a 25% discounts on reservations booked less than 60 days before arrival.

Gold VIP--which is about 500 DVC points--adds things like free daily newspaper, extensions to banking deadlines, the ability to reserve a specific room number, unlimited booking transactions (Wyndham charges if you go over a certain number in a year) and one time per year Gold members can even book a NON-HOME resort at 11 months.

Platinum VIP (about 1000 DVC points) has a 50% discount on >60 days bookings, even more time to bank points and TWO opportunities to book a non-home at 11 months pear year.

Clearly other timeshare systems have much more complicated rules and perk programs, so I don't buy member/agent confusion as a reason why they wouldn't do this. From the agent (Cast Member) perspective, all they need to do is have things laid out properly in the computer system. And DVC is in the midst of substantial system upgrades. Hmmm....

So...so far, I have 2 votes for "only internet rumors".

I firmly believe there is substance to this, HOWEVER DVC hasn't signed-off on it yet. All of the ideas you have seen floated out there are concepts that had to be vetted by Disney legal. Just because they investigated whether it would be legal to limit resale buyers to their Home resort doesn't mean that such a policy will make it into the final rules.

If I were a betting man, I'd say that there is a 90% chance we see some sort of direct purchase benefit program come January 1st. But the exact make-up of it is still a total mystery.

In fact, it wouldn't surprise me if it was a tiered program just like Wyndham's. As another poster mentioned, DVC has floated the idea of additional benefits for high point owners. And that's more than just a rumor--about 9 months ago they sent a survey to high point owners asking for feedback on a list of different perks options. A couple months after that they sent a separate survey to even more members quizzing folks on which perks were the most highly valued.

The Wyndham framework would seem to fit in with all of the proverbial smoke that has been coming out of DVC in the last year--multiple benefit tiers with only direct purchase points counting toward one's total. In retrospect the surveys look like an attempt to gauge which perks are best placed in each level of ownership. For instance, if the Annual Pass discount was rated highest among all perks, DVC may want to throw that into at least their entry level VIP program as a pretty strong incentive to buy 300 points direct rather than giving it away to anyone who buys 100 pts resale.

Does anyone have any great insight to what would happen the resale market (prices stay the same, prices plummet..) if, IF, these changes take place?

Depends upon the exact nature of the changes. If they simply prohibit resale points from being used for RCI/DCL and other exchanges, the results will be MUCH different than if they only allow resale buyers to stay at their Home resort.

I think it's a given that resale prices will decline to some degree. Any perks program will sway SOME buyers, which then has corresponding negative impact on resale. But the devil will be in the details.

Many (most?) members should also benefit from the changes. Think about the proposals that would limit the booking rights of resale buyers. IF that were to actually happen, over time you have a lot fewer members with access to the smaller, more popular destinations. If a resale owners of SSR points can only book BLT 4 months out--or is outright prohibited from booking BLT--then other owners certainly benefit from increased 11/7 month booking success.

Resale prices would undoubtedly suffer but that simply reinforces the idea that DVC points should not be purchased recklessly. Buy what you're going to use and don't look at DVC as some sort of emergency fund that can be liquidated at the first sign of trouble.

If you buy points and hold the contract for 40-50 years, the financial advantages of DVC are still quite clear. And with a VIP program in place, owners may make out even better than before.

(Footnote: Didn't have a better place to say this but personally I believe DVC will grandfather all existing resales when the policy if put into place. If they go with a multi-tiered program like Wyndham, at the very least I could see them placing all resale owners at the first-tier level (VIP), if not outright recognizing all points as direct purchases.)

 

[DVCOwner]

DVC is a time share and the State of Florida watches what all time shares do in the state. I for one would protest to the State of Florida that changes such as these would violet my deed and would devalue my property ownership. I think the State of Florida would be on my side. Disney can only make changes that a allowed in the deed.

 

[tjkraz]

DVC is a time share and the State of Florida watches what all time shares do in the state. I for one would protest to the State of Florida that changes such as these would violet my deed and would devalue my property ownership. I think the State of Florida would be on my side. Disney can only make changes that a allowed in the deed.

In what specific ways would any of these proposals violate the Public Offering Statement?

 

[DVCOwner]

I will have to pull my dead, but I remember that the deed allows for resale of the deed with DVC getting first right to buy it back. I would believe that any changes to the rules that would decrease the price that I could resell the property for could be looked at as voilating my right to resell. Just as the amount of points is fixed, I believe that in Fl, any restrictions on resale of property must be part of the deed. Because of some of the problems FL had during the early years of time shares, they have some of the truffest laws and oversight. I think DVC could change the rules on resale of property, but it could only do so on the ones that they have not sold and would have to reflex those rules in the deed.

They one they could change is use outside DVC. Like trading for other time shares or DCL. But this is a big selling point that they use during the first time sales.

I will try to do some additional reseach tonight.

 

[fauna]

Again, I would just like to re-iterate - everything I've heard would indicate that IF these changes/restrictions happen it would only affect RE-SALES THAT CLOSE ON OR AFTER JANUARY 1, 2011.

I don't think anyone is suggesting that if you've already bought and closed on a re-sale that DVC would suddenly spring these restrictions on you.

Thanks tjkraz for the info and insight. I guess the smart thing to do would be to wait it out another 6 weeks or so and see how everything shakes out.

 

[puntagordabob]

I have only bought from Disney directly thus far...however this change you have been discussing would Peeve me off because it would likely drop the ability for any of us to sell our DVC at a reasonable price if that day would ever come (God willing, never)... Disney would in a sense be in a Buyer's market since most people in the market for DVC would not like the whole "only book at your resort" thing.

Also, when we bought into DVC, we were under the illusion (false it appears very soon) that we were all one equal happy family.... Rockerfellers could vacation alongside the normal Joe as equals.... this rumor now makes it more like Power & Greed are entering the playing field right out in your face.

Little changes like this could start turning some of us Disney Diehards off IMHO.

 

[tjkraz]

I will have to pull my dead, but I remember that the deed allows for resale of the deed with DVC getting first right to buy it back. I would believe that any changes to the rules that would decrease the price that I could resell the property for could be looked at as voilating my right to resell. Just as the amount of points is fixed, I believe that in Fl, any restrictions on resale of property must be part of the deed.

The Public Offering Statement grants owners the right to re-sell their deed, but it expressly states that Disney does not make any guarantees regarding future value. As long as the terms of the POS continue to apply, Disney is upholding its part of the agreement.

All perks programs and bookings outside of DVC itself are listed as "subject to change" in the POS. I don't see any legal reason why DVC couldn't restructure such that the Annual Pass discount and DCL cruise bookings are available only to direct buyers.

Booking outside of one's Home resort is not guaranteed, and in terms of the booking window only a 1 month advantage is provided for in the POS.

Because of some of the problems FL had during the early years of time shares, they have some of the truffest laws and oversight.

I agree. And Disney legal is well aware of this. In fact, I would be surprised if they did not review any proposed changes with the Florida Timeshare Bureau well in advance.

 

[tjkraz]

I have only bought from Disney directly thus far...however this change you have been discussing would Peeve me off because it would likely drop the ability for any of us to sell our DVC at a reasonable price if that day would ever come (God willing, never)... Disney would in a sense be in a Buyer's market since most people in the market for DVC would not like the whole "only book at your resort" thing.

Personally I don't think the "only book at your Home resort" part of this rumor has any chance of being implemented. If anything they may alter the booking windows for resale buyers. But as it has been presented, that particular clause seems more than a bit extreme.

Also, when we bought into DVC, we were under the illusion (false it appears very soon) that we were all one equal happy family.... Rockerfellers could vacation alongside the normal Joe as equals.... this rumor now makes it more like Power & Greed are entering the playing field right out in your face.

That's a little extreme, IMO. You are certainly aware that Disney goes to great lengths to sell products directly rather than allowing buyers to go elsewhere. They offer DME for free so that guests are pretty much forced to pay $4 for a 2-litre soda in a resort gift shop. They have Extra Magic Hours exclusively for guests willing to pay more for Disney resort hotels. A host of different groups are entitled to different perks and benefits packages: hotel guests and AP holders get free parking, FL residents get cheap annual pass alternatives, DVC and APs get dining and shopping discounts. The list is endless.

This isn't about Rockafellers vs. average joes....it's Disney wanting buyers to purchase directly from them rather than going to eBay or other secondary markets. It's no different than offering DME, EMH and park transportation to entice guests to stay on-site rather than paying less to another vendor to stay 5 minutes off property.

Ultimately it is likely to have both good and bad aspects, IMO. The bad is obviously some decline in resale values. The degree of which remains to be seen. But this should also help direct sales which benefits all members in the long run. Good sales means more resort destinations for members. Growth in the overall number of DVC members gives them greater bargaining power with the Disney Parks for discounts and other incentives.

 

[puntagordabob]

My 2nd part was directed at the part where people with more points would have priority over someone who had less...

 

[Phonedave]

This is the first I have heard of this, but not that I have, it does not surprise me.

Many other timeshares out there have the same sort of program.

Right now, what is the incentive to buy a contract through Disney? You can pretty much find whatever you want on the resale market. Just wait, some timeshares have contract transfer fees. If you sell your contract, you have to pay to transfer the title.

-dave

 

[George]

Interesting. I'm in the midst of buying some points re-sale right now and the odds are that I will be closing after 1/1. I'm buying at Beach Club and if any of the more extreme things are implemented (i.e. only being able to use at my home resort and/or only being able to book 7 months out), I'll just back out. I mean they could create system where I couldn't use my points at all! :lol:

That being said, I find these rumors unlikely. I'm also an owner (at WL) and they would be doing something that would annoy me as an owner and a re-sale points buyer. Actually, annoy is not a strong enough word. It would really pi$$ me off. I'd think they'd have to be aware of this.

 

[Pioneer Hall]

On a DVC related message board that I lurk on, it was reported that these changes will not be implemented in the near future. Certain aspects were very close to execution, but these ideas have been shelved for now. This doesn't mean that changes may not be on the horizon sometime later on down the road. With that in mind, I feel that if all the extremes of this situation did take place (only being able to go to home resort, very small booking window, etc) then Disney will probably offer resale owners the chance to purchase these benefits. If you are willing to give them another 1000 dollars or so, they might not restrict you. Time will tell of course if anything happens in the future at all, and how it might change. Again though, as of now, no changes are expected in the very near future.

 

[toolsnspools]

The conversation got me thinking so I pulled out my contract to take a look. The original contract sold by DVC is deeded and cannot be changed. It can be re-sold, and they (DVC) do have ROFR. Here's a summary of what's guaranteed in my contract at BLT. These rights would go with the contract if it were sold, and cannot be modified until 2060:

- The ability to book at BLT at 11 mo. (or at other DVC resorts at 7 mo.)
- Ability to transfer or will the deed
- Total points on the chart for each resort can't change
- Current ability to trade through RCI, World Passport Collection, etc.
- written intent to maintain these agreements. This statement would prevent them from dis-allowing those benefits to resale contracts unless they dropped them from all contracts.

and then there's this clause...

- Special discounts may be offered, but those offeres may be supplemented, discontinued or modified at any time. Here's where they may have some leeway on re-sale contracts. Special offers would include things like discounts on APs and the DDP.

There is also a lot of wording specific to BLT so contracts for BWV may be different, but I would expect them to be very similar. Since you're considering buying resale, once you have one picked out, have them fax a copy of the contract to you before closing on the deal. One thing the Florida Timeshare Bureau has done is make the contracts easier to read for those of us who aren't lawyers. If you still have questions, take the contract to a personal lawyer before signing.