Opinions on Buying Stripped Contracts

[fmer55]

Originally Posted by tomandrobin

I would buy a stripped contract only is it came with a stripped price!

For example, if it was SSR, I would not pay more then $30.

In fact, a good rule of thumb is to subtract (min) $20 off the low selling price.

[Brian Noble]

In general, the market seems to over-value stripped contracts, and under-value loaded ones, relative to the "street price" of a point.

[arthur06]

I just saw a contract on one of the resale sites today... it was:

BW125-12-0823 Boardwalk Villas-$60/pt. December 125 $7,500.00
Notes: 125 points coming on 12/1/14 and 125 points coming on 12/1/15. Can close 5/6/13. Priced at $60 per point.

So, I look at this that it has no points until 12/2014 and you can't close until 5/6/2013. And they still want $60 per point.

Why would they even list it now. Wait until March or so, then it doesn't look so bad. I wouldn't mind owning a similar contract, but there are just too many negatives with this one.

[AllieV]

I would consider a stripped contract if it was for a high-demand location and the price was good. For example, $50-55 a point for Beach Club or Boardwalk. Sure, a few people have gotten them for that price loaded, but it quite rare.

If you're not going to use the points, then you'd have to buy into the disboards' "rent/trade" section in order to advertise. Not sure what that cost is. Then you have to consider the cost of the dues, which is in some way figured into the entire sale price. If you are have not rented before, you'll have to offer a lower rate. Add all that up and maybe you're getting back $4 per point by renting. You could go through David's to rent, which would yield $9 a point but subtract dues and you're back to $4 or less.

So if you can get the price per point lowered by $5-6 over a loaded one, you are breaking even in my calculations. If you can get it $10 less, great, especially if you have to pay 2013 dues and don't get points till 2014.

[jennybdis]

Originally Posted by arthur06

I just saw a contract on one of the resale sites today... it was:

BW125-12-0823 Boardwalk Villas-$60/pt. December 125 $7,500.00
Notes: 125 points coming on 12/1/14 and 125 points coming on 12/1/15. Can close 5/6/13. Priced at $60 per point.

So, I look at this that it has no points until 12/2014 and you can't close until 5/6/2013. And they still want $60 per point.

Why would they even list it now. Wait until March or so, then it doesn't look so bad. I wouldn't mind owning a similar contract, but there are just too many negatives with this one.

I put an offer in on that one. A very reasonable offer, but they're only considering list price. Ah well.

[arthur06]

Originally Posted by jennybdis

I put an offer in on that one. A very reasonable offer, but they're only considering list price. Ah well.

Too bad. I would think that it would sit around for a while, but it only takes one person to offer list price.

No points for over 2 years (if you don't borrow) and can't close or close to 9 months, doesn't scream full price offer.

I see that there was a 25 point BWV contract that sold (or at least listed) at $64 per point. No points for 2012, but all after that.

I think that there price is considerably high for what they are selling.

[Dean]

Originally Posted by Marionnette

Just looking for opinions on purchasing stripped contracts. At what price would you consider them a good deal and what price would make you pass over one at any particular resort? What other factors would you take into consideration? Or are they generally considered to be a bad purchase?

Is Disney less likely to exercise ROFR on them? Does the lack of available points make it less desirable to Disney since they cannot resell it immediately?

I noticed a few contracts like that over the past few months and they still seem to sell. I'm just wondering if the lower $/pt. cost is worth waiting for months after making settlement before even being able to use your points.

Generally stripped contracts are not discounted enough to justify them but it's all in the numbers. It's fairly easy to compare contracts. Lets take the simple situation of the same UY and home resort. Then you're just assigning a value to every missing point. I'd generally subtract $10 for each point that's missing from the stripped contract. That calculation also assumes you're not paying for additional maint fees on the non stripped contract and if so, you'd add that back in to the $$$ difference between the 2. Remember that DVC charges maint fees based on a calendar year not a UY. If the UY are different, you'd simply adjust up or down by 1/12 of the points in a given year times the $10. For different home resorts you simply have to make an assumption of the difference if value on a purchase price between the 2. Here is a simple example and this assumes that the closing costs ($500) and total points are all the same and 100 pt contract and $5 a point fees for simplicity and closing 1 Sept. Generally you don't add much of any value for banked points but would subtract for borrowed points.

SSR completely stripped (no 12 or 13 points) vs non stripped Feb UY but no additional banked points. assume $60 a point for simplicity for the non stripped. Cost for non stripped SHOULD be $6600 with fees due in Jan for the new year. The stripped should be $4500 (or $4600) with fees still due in Jan adding in another $500. Of course many resale companies would want the initial price to be an additional $200 for the non stripped contract wanting you to pay all fees for the calendar year and since you're giving full value to the points gone, that isn't unreasonable.

[taaren]

The main reason I would probably buy a stripped contract is if you are looking for a rare resort and/or a rare use year to match what you already have. Ours had only half the points for 2011, we bought in late 2010, but there weren't that many VGC contracts on the market, and particularly not in the size we wanted. Plus we didn't really "need" the points we just wanted to know we had them going forward. In retrospect they are a bargain at $82 per point, but really for us stripped or not didn't matter we just wanted the right size at the right resort. I imagine the same holds for people who want to match a rarer use year or other of the smaller resorts where there simply isn't as much activity on the resale market, and it may be just a matter of finding what you want at a price that's cheaper than direct.

[zavandor]

As taaren said, I would consider a stripped contract if the size (under 50, even better 25) and UY (december) comes out on the resale market.
I've seen on Fidelity a 25 points stripped contract for SSR priced not too much high ($60 pp), but it was for a wrong UY, so I didn't make an offer (I would have had offered $50). However, two days later it was sold.

[fmer55]

Originally Posted by AllieV

I would consider a stripped contract if it was for a high-demand location and the price was good. For example, $50-55 a point for Beach Club or Boardwalk. Sure, a few people have gotten them for that price loaded, but it quite rare.

If you're not going to use the points, then you'd have to buy into the disboards' "rent/trade" section in order to advertise. Not sure what that cost is. Then you have to consider the cost of the dues, which is in some way figured into the entire sale price. If you are have not rented before, you'll have to offer a lower rate. Add all that up and maybe you're getting back $4 per point by renting. You could go through David's to rent, which would yield $9 a point but subtract dues and you're back to $4 or less.

So if you can get the price per point lowered by $5-6 over a loaded one, you are breaking even in my calculations. If you can get it $10 less, great, especially if you have to pay 2013 dues and don't get points till 2014.

That is a lot of assumptions even for you Allie

My most recent 90pt contract was a Jun UY with 180 pts currently available. Only paid 156 towards MF, obviously less than a buck a point and you DEFINATELY do not need to pay a fee to anyone to rent your points, just saying

Even at $9 -1MF=8x2yrs pts. Looks like 16 bucks a point to me

[fmer55]

Originally Posted by arthur06

I just saw a contract on one of the resale sites today... it was:

BW125-12-0823 Boardwalk Villas-$60/pt. December 125 $7,500.00
Notes: 125 points coming on 12/1/14 and 125 points coming on 12/1/15. Can close 5/6/13. Priced at $60 per point.

So, I look at this that it has no points until 12/2014 and you can't close until 5/6/2013. And they still want $60 per point.

Why would they even list it now. Wait until March or so, then it doesn't look so bad. I wouldn't mind owning a similar contract, but there are just too many negatives with this one.

If they get asking soon they should be locked up for robbery

[Kidanifan08]

Originally Posted by arthur06

I just saw a contract on one of the resale sites today... it was:

BW125-12-0823 Boardwalk Villas-$60/pt. December 125 $7,500.00
Notes: 125 points coming on 12/1/14 and 125 points coming on 12/1/15. Can close 5/6/13. Priced at $60 per point.

So, I look at this that it has no points until 12/2014 and you can't close until 5/6/2013. And they still want $60 per point.

Why would they even list it now. Wait until March or so, then it doesn't look so bad. I wouldn't mind owning a similar contract, but there are just too many negatives with this one.

Originally Posted by jennybdis

I put an offer in on that one. A very reasonable offer, but they're only considering list price. Ah well.

Originally Posted by fmer55

If they get asking soon they should be locked up for robbery

And it's sold! I would have to believe that it went for asking price this close to the listing date. I really thought this one would sit for awhile. I guess BWV is a highly desirable location and a small point contract is worth waiting for . . . even if it's two more years until points are available.

[cz4ever]

Originally Posted by Kidanifan08

And it's sold! I would have to believe that it went for asking price this close to the listing date. I really thought this one would sit for awhile. I guess BWV is a highly desirable location and a small point contract is worth waiting for . . . even if it's two more years until points are available.

Amazing. Seems like sellers are not the only ones who do not value points in nearly the same way as I do --- loaded contracts in the 50s or stripped contracts in the 60s (especially stripped that hard) make me wonder.

[Dean]

Originally Posted by Kidanifan08

And it's sold! I would have to believe that it went for asking price this close to the listing date. I really thought this one would sit for awhile. I guess BWV is a highly desirable location and a small point contract is worth waiting for . . . even if it's two more years until points are available.

There's something to be said for finding the right contract, one must weight that and the efforts and time involved (both personal and lost usage) in waiting for something else.

[Kidanifan08]

Originally Posted by Dean

There's something to be said for finding the right contract, one must weight that and the efforts and time involved (both personal and lost usage) in waiting for something else.

I agree. For a contract like this, you would think $50/pt would be a winner for the seller. But, a $1000 difference is probably not worth quibbling about if you just need 125 BWV points to go to F&W every year or EOW; starting in 2014 or 2015, of course.