Does Disney treat those who buy resale differently?

[JimMIA]

Originally Posted by ELMC

It would have to be pretty valuable though...

Actually...to work it wouldn't have to BE valuable. It would just have to appear valuable.

Limiting resale buyers to home resort would be counter-productive.

Think about it for a second -- if DVC prohibits resale buyers from booking non-home resorts (which is of questionable legality anyway), they would book their home resorts. More bookings at home resorts = less availability for non-home owners...all of whom would be direct buyers.

Who have you hurt there? Both groups, not just resale buyers. It would mean that direct buyers at GF, for example, could NEVER book at the smaller resorts like VWL, BCV, or VGC.

But there's a LOT of stuff they could do with booking windows that would make much better sense than limiting which resorts members could book.

If you gave direct buyers of say, 500 points or more, a one-month booking advantage for both home and non-home...

[Dean]

Originally Posted by JimMIA

If you gave direct buyers of say, 500 points or more, a one-month booking advantage for both home and non-home...

I don't think they could legally limit to home resort for current resorts and system or give any group a direct booking advantage. What they could potentially do would be to give a priority wait list that opened say a month before the 11 month booking window. Others have done this exact approach though I'm not sure if the legalities are different. It is my opinion that there is a point where every single owner or potential owner who still values DVC would buy retail if they could afford it. I doubt they'll do enough to get those in the know to bite but it's possible.

[Vinnya1726]

This is an interesting discussion...I just placed a bid to purchase my first resale and would never be able to do it direct from Disney. When I think about it, Disney has already made money once on these points, when the initially sold them, so that sales person has already made out on it. If I buy a car from the dealership and turn around and sell it to someone else, I as the seller have already given the dealer his money and that salesperson has already made out on it. I think it is the same thing with the resale, someone in DVD has already made their sales commission on this contract and now that owner wants to sell it to someone else...the original owner is not trying to make some money of their original purchase. That may not seem fair to those who buy direct from Disney, but not everyone can afford 150 dollars a point for a minimum of 160 points. Maybe if you could buy 100 points to start with from Disney, more would buy direct and not go to resale. Some families may only want to start with 100 points, and 100 points can get you 5 nights if you use them wisely. Great discussion.

[Dean]

Originally Posted by Vinnya1726

This is an interesting discussion...I just placed a bid to purchase my first resale and would never be able to do it direct from Disney. When I think about it, Disney has already made money once on these points, when the initially sold them, so that sales person has already made out on it. If I buy a car from the dealership and turn around and sell it to someone else, I as the seller have already given the dealer his money and that salesperson has already made out on it. I think it is the same thing with the resale, someone in DVD has already made their sales commission on this contract and now that owner wants to sell it to someone else...the original owner is not trying to make some money of their original purchase. That may not seem fair to those who buy direct from Disney, but not everyone can afford 150 dollars a point for a minimum of 160 points. Maybe if you could buy 100 points to start with from Disney, more would buy direct and not go to resale. Some families may only want to start with 100 points, and 100 points can get you 5 nights if you use them wisely. Great discussion.

A better analogy would be that you looked for a new car at dealership A, bought at dealership B and then take the car to dealership A for service with the further caveat that they don't make money on service. But even with the used car example, they'd still rather the resale buyer buy new from them, they just don't have any way to enforce it, timeshares do.

Like car dealerships, they could also allow trade ins.

[bighoo93]

Originally Posted by Dean

A better analogy would be that you looked for a new car at dealership A, bought at dealership B and then take the car to dealership A for service with the further caveat that they don't make money on service. But even with the used car example, they'd still rather the resale buyer buy new from them, they just don't have any way to enforce it, timeshares do.

The previous analogy seems a lot better to me. The person who purchased a depreciating asset is trying to sell it to someone else, and this purchase has nothing to do with the original manufacturer (or dealership) who made money on the first sale but no longer owns the asset. I don't understand what you mean by comparing taking it into service with the caveat that they don't make any money on it. What is that supposed to represent? A person who bought something from a manufacturer and then sells it to someone else later is what is happening with DVC resale, just like selling a house or car or another asset.

[ELMC]

I think we're looking at this backwards. A lot of the comments on this thread talk about DVD's position regarding a particular contract and that once the contract is sold, they have made their money on it and should not care whether it gets sold through resale or not, because they're out of the picture. While that statement makes sense and seems to be true, I don't think it accurately reflects DVD's position.

Another way of looking at this situation is that DVD does not care at all about inventory, or particular contracts. Their main concern is buyers. Specifically, they want every single potential timeshare buyer in the greater Orlando area (and beyond) to buy from them. So when someone buys resale, they're not upset because they didn't get to sell another unit, they are upset because that was an active buyer who spent their money elsewhere. It's like going fishing and wanting to catch every fish in the lake. It doesn't matter if you have caught 20 fish, if one gets off the hook, you're at least a little upset about that one.

I think the car analogy holds true, but in a different way. Compare DVD to Ford Motor Company. Ford wants 100% of car buyers to buy a Ford vehicle. Every time a buyer buys resale (Chevrolet) Ford essentially "loses" a sale. Inventory is not an issue at all, as they can always build more cars (or more DVC resorts). DVC salespeople want every single person who is interested in a timeshare to buy a DVC timeshare direct from them. That's not evil or malicious, it's simply business. They can do whatever they see fit to try to make that happen (incentives/restrictions) but they also need to understand that it's not a reality.

[Dean]

Originally Posted by bighoo93

The previous analogy seems a lot better to me. The person who purchased a depreciating asset is trying to sell it to someone else, and this purchase has nothing to do with the original manufacturer (or dealership) who made money on the first sale but no longer owns the asset. I don't understand what you mean by comparing taking it into service with the caveat that they don't make any money on it. What is that supposed to represent? A person who bought something from a manufacturer and then sells it to someone else later is what is happening with DVC resale, just like selling a house or car or another asset.

There are at least 2 problems with that line of thinking. The car dealership has little or no control, if they did, they'd use it. The other is that this is not completely separate from the developer, esp not in DVC's case where they retain control. If the resorts were sold out and not in active sales, I'd agree, but that's simply not the case. Every resale that's sold is a potential retail sale that doesn't happen and thus lost money. That some would not buy if it weren't for resale has nothing to do with this fact from DVD's standpoint. I suspect the difference is you're looking at this from what you think SHOULD be the case and I'm looking at the realities of the timeshare business. I'd say for anyone that this is important to, simply alter the contract on the initial retail purchase. Of course DVD would deny the sale but then you'd have the opportunity to prove how much of an issue it is for you and vote with your feet or proceed with the current risks being discussed. It has to go back to the retail purchase because everyone that buys resale assumes the risks initially in place at the time of the retail purchase.

I've sold several DVC contracts over the years downsizing. DVD exercised ROFR on one but tried to alter the terms of the purchase by instituting a clause that said that one couldn't talk about the terms. I refused to sign the paperwork both on principle and for the simple fact I'd already somewhat discussed the terms publicly. I was prepared to lose the sale over the issue and told them so, they backed off and proceeded with the purchase.

[MichiganDVC]

I tried to read through all the posts, but I may have missed this. Resale buyers do NOT get the generous financing that Disney direct buyers do. We are required to have $10,000-$20,000 in cash all at once. (Yes, some may choose to get their own loan, but at a higher interest rate than Disney offers.)

Point is, how many people can really buy, with cash in hand, a 160 point resale contract at AKV? That's $13,000 roughly. OR...they can finance $22,000 for those same points for up to 10 years. So, unless you have $13,000 in cash, your best bet is to finance with Disney for 10 years. Much more affordable. So, let's not pretend that buying resale is this golden piece of cake. You have to have tens of thousands of dollars available, right now.

[ELMC]

Originally Posted by MichiganDVC

I tried to read through all the posts, but I may have missed this. Resale buyers do NOT get the generous financing that Disney direct buyers do. We are required to have $10,000-$20,000 in cash all at once. (Yes, some may choose to get their own loan, but at a higher interest rate than Disney offers.)

Point is, how many people can really buy, with cash in hand, a 160 point resale contract at AKV? That's $13,000 roughly. OR...they can finance $22,000 for those same points for up to 10 years. So, unless you have $13,000 in cash, your best bet is to finance with Disney for 10 years. Much more affordable. So, let's not pretend that buying resale is this golden piece of cake. You have to have tens of thousands of dollars available, right now.

I totally see your point about the unspoken requirement for purchasing resale. However, I will disagree with your numbers a little. I think it is very likely that you can get a 160 point AKV contract for $60 pp for a total of about $10,000. There are also many 100 point contracts available that can be had for around $6,500. So while your point is valid, I think you may have exaggerated a bit. Plus, you are glancing over a very important fact...namely that you are paying $22,000 for almost the exact same thing that can be bought elsewhere for less than half the price. I don't know of anything in this world that I would want to have so badly that I would pay twice as much for just so I could finance it. Think about it, if you test drove a car and the dealer said "Cash price $25,000 or if you want a car loan it is $50,000 plus interest" would you buy that car? I wouldn't, I'd be looking for an alternate for of transportation at that point.

And this isn't even the best comparison because a car is a necessity and a timeshare certainly isn't. A lot of intelligent and experienced posters on here would suggest that a timeshare is a luxury purchase and therefore should not be financed. I agree with this to a point. There are a lot of things that I would love to have...a boat, a ski house in Vermont, a wicked sports car, etc. etc. But they are all "wants" and not "needs". So unless I feel like paying cash for them, I'm not going to have them.

But there are others who disagree, and I see their point of view as well. DVC is a wonderful way to travel to the World and some people feel excluded because they don't have the lump sum to pay for it. These people typically finance knowing that it is going to cost them more, but happy for the experiences that DVC allows them to have. Although I have a problem with the numbers aspect to that approach, there's also a very proven theory that you can't take your money with you when you die, so why not enjoy it? Two very different perspectives.

Back to your point, I do disagree with your characterization that Disney's financing is "generous". Given today's interest environment, the rates are actually outrageous. Banks are offering less than 1% interest on savings account. DVD is charging up to 13.99% on financing for DVC purchases. That's too big of a gap in my opinion.

Aside from that, there are many ways to secure a personal loan for rates that are much less. If you own your home (or at least a portion of it) then home equity lines can be had for as low as 3%. Another option would be to secure timeshare financing for a resale purchase. This combines the best of both worlds...low resale prices and the ability to finance. The Timeshare Store works with a lender that charges 12.9%. Yes, it's high, but it's lower than Disney financing and you are financing a lower amount.

But going back to your original point, I do agree that the majority of the voices in this conversation are those with the money sitting around to buy resale contracts for cash. But I also think that we are respectful and open to people who are not in the same position. I hope we are anyway.

[delmar411]

Originally Posted by MichiganDVC

I tried to read through all the posts, but I may have missed this. Resale buyers do NOT get the generous financing that Disney direct buyers do. We are required to have $10,000-$20,000 in cash all at once. (Yes, some may choose to get their own loan, but at a higher interest rate than Disney offers.)

Point is, how many people can really buy, with cash in hand, a 160 point resale contract at AKV? That's $13,000 roughly. OR...they can finance $22,000 for those same points for up to 10 years. So, unless you have $13,000 in cash, your best bet is to finance with Disney for 10 years. Much more affordable. So, let's not pretend that buying resale is this golden piece of cake. You have to have tens of thousands of dollars available, right now.

Or you can just buy 25-50pt contracts as you find them and pay only a couple thousand for them. Build your points up as you get the cash.

There are no point minimums with resale.

[JimMIA]

Originally Posted by MichiganDVC

Point is, how many people can really buy, with cash in hand, a 160 point resale contract at AKV? That's $13,000 roughly. OR...they can finance $22,000 for those same points for up to 10 years.

Your direct prices are pretty accurate, but you are way off on your resale pricing.

According to the ROFR thread, the most recent AKV report passed ROFR for 160 points @ $64 (and that was a LOADED contract). That's not $13K, it's $10,400 -- less than half the price of buying direct.

So essentially, your strategy is to purchase at more than double the price, and then finance at a higher interest rate than is available elsewhere -- possibly 10% higher?

Why? Because you want it?

I don't pretend to be smart enough to tell anyone whether they should or should not finance a DVC purchase. I do know that, for MY family, I would never even consider it. But I don't know anyone else's situation well enough to comment.

However -- paying DOUBLE, and then compounding the felony by financing at a very high interest rate because you don't have the cash strikes me as impossible to objectively, logically justify.

I can twist and turn, and contort and distort, numbers with the best of them -- but I can't make that math work.

[JimMIA]

I would add that the resale listings are full of contracts purchased with exactly that risky strategy. Those are the ones to avoid -- because the seller is WAY upside down on their loan and will not have the cash to pay in to close out a disasterous losing Disney adventure.

Can you imagine buying direct at $22,000 when the resale value is $10,240, and then being forced to sell a year later? You owe $20,000-22,000, you have to pay a 10% commission...and your best offer is $10,000?

You're upside down $10,000 - $12,000...and you're the person who didn't have the $10,000 cash to buy in!

Good luck!

[Dean]

Originally Posted by MichiganDVC

I tried to read through all the posts, but I may have missed this. Resale buyers do NOT get the generous financing that Disney direct buyers do. We are required to have $10,000-$20,000 in cash all at once. (Yes, some may choose to get their own loan, but at a higher interest rate than Disney offers.)

Point is, how many people can really buy, with cash in hand, a 160 point resale contract at AKV? That's $13,000 roughly. OR...they can finance $22,000 for those same points for up to 10 years. So, unless you have $13,000 in cash, your best bet is to finance with Disney for 10 years. Much more affordable. So, let's not pretend that buying resale is this golden piece of cake. You have to have tens of thousands of dollars available, right now.

I'm not sure generous would be the word I'd chose, unless you're a stockholder maybe. IMO if you can't pay cash you shouldn't play and likely shouldn't go on vacation to a place as expensive as Disney anyway.

[k3chantal]

Originally Posted by MichiganDVC

I tried to read through all the posts, but I may have missed this. Resale buyers do NOT get the generous financing that Disney direct buyers do. We are required to have $10,000-$20,000 in cash all at once. (Yes, some may choose to get their own loan, but at a higher interest rate than Disney offers.)

Point is, how many people can really buy, with cash in hand, a 160 point resale contract at AKV? That's $13,000 roughly. OR...they can finance $22,000 for those same points for up to 10 years. So, unless you have $13,000 in cash, your best bet is to finance with Disney for 10 years. Much more affordable. So, let's not pretend that buying resale is this golden piece of cake. You have to have tens of thousands of dollars available, right now.

Only people who truly have the amount 'in hand' should buy a direct or indirect contract. It is not a 'best bet' to finance with Disney for ten years. If you don't have the money, you shouldn't buy it. As much as I love my DVC, it is not a necessity the way a house or a car is. A major vacation like Disney World while staying at an onsite resort is not a right. It is a gift that you earn and give to yourself and your family after years of hard work.

Quite frankly, there would not be so many resale contracts available if people were more careful with their finances when buying direct. If anything, Disney financing should have more stringent rules about loaning money. In the end, they are the ones that are creating an interesting issue and a two tiered system: direct points and indirect points and what you can rent with those points.

[Illini Al]

Financing vacation lodging? I can't think of a worse financial move (one that's legal, anyway).