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Old 09-24-2013, 02:26 PM   #1
dizzyinwdw
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Purchasing stripped contract? Bad idea?

Hi all--

I thought I saw a thread where someone gave an estimate of fair price per point for a stripped contract, but cannot find it. I am eyeing a contract but no points till 2015.. I might just wait for another one since I would love to plan a trip next year LOL.

Thanks!
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Old 09-24-2013, 02:46 PM   #2
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http://www.disboards.com/showthread....ontract&page=2
Maybe this thread?
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Old 09-24-2013, 04:43 PM   #3
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For me I would say 10 -15 $ of per missing 2014 point. Thats the cost of renting the points! But I guess the sellers gets more. I suspect some resellers encourage sellers to strip the contracts to earn more!
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Old 09-24-2013, 07:21 PM   #4
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If you do not have access to the point until 2015 why not wait awhile and see if something better comes along you have time either way! (unless it is a very discounted contract) I would NOT buy a stripped contract personally I would gamble and wait to see what comes along since I cannot use it anyway.
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Old 09-24-2013, 07:43 PM   #5
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Quote:
Originally Posted by Skrutti View Post
For me I would say 10 -15 $ of per missing 2014 point. Thats the cost of renting the points! But I guess the sellers gets more. I suspect some resellers encourage sellers to strip the contracts to earn more!
Nah, that's way too much. A few dollars, maybe. But if it is the contract you want and you want it badly enough, you may have competition and have to pay asking price. But make the owner pay the 2014 dues to you so you won't have to pay them.
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Old 09-25-2013, 03:33 PM   #6
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Quote:
Originally Posted by dizzyinwdw View Post
Hi all--

I thought I saw a thread where someone gave an estimate of fair price per point for a stripped contract, but cannot find it. I am eyeing a contract but no points till 2015.. I might just wait for another one since I would love to plan a trip next year LOL.

Thanks!
Before I start I will say that you will NEVER get a good value buying a stripped deal because the sellers won't agree to the massively lowered value. You should ignore every contract without all 2013, 2014, and 2015 points. You will see why if you walk through the math below:

Quite easy to calculate.

Contract 1 (standard): no 2012 banked, all current year 2013 pts and all pts going forward

Fair value: XX per point (XX is the general average you see listed for sale on the resale sites).

Contract 2 (semi-stripped): no 2013, all 2014, all 2015

Fair value: XX per point - $11 per point for "lost rental revenue".

Explanation:
You could easily turn contract 1 into contract 2 by renting the 2013 points. If you bought contract 1, then immediately rented the 2013 points you would have a contract with no 2013, all 2014, all 2015 pts. Which is exactly what contract 2 is. If you pay $100 per point for contract 1 and then rent all the 2013 pts for $11 per point you would effectively have paid $89 per point for your contract.

Therefore, the fair value of contract 2 (stripped) HAS to be $11 less per point than contract 1. Using the same logic, a contract with banked 2012 points would be equal to XX + 11 points, because you could rent the 2012 points and have the exact same situation as contract 1 (no 2012, all 2013, all 2014, etc).

Example: If I was looking at Boardwalk which had no points until 2015 I would calculate it this way...

$85: Going rate for contracts with all 2013, 2014, 2015 pts.
-11: missing 2013 points
-11: missing 2014 points
$63: fair value for contract with no points until 2015.

Will someone sell you a stripped Boardwalk for $63? No. So don't waste your time with anything that doesn't have all 2013, 2014, and 2015 points. Stripped contracts are a rip-off to the buyer.
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Old 09-25-2013, 04:19 PM   #7
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Quote:
Originally Posted by DVCcurious View Post
Before I start I will say that you will NEVER get a good value buying a stripped deal because the sellers won't agree to the massively lowered value. You should ignore every contract without all 2013, 2014, and 2015 points. You will see why if you walk through the math below: Quite easy to calculate. Contract 1 (standard): no 2012 banked, all current year 2013 pts and all pts going forward Fair value: XX per point (XX is the general average you see listed for sale on the resale sites). Contract 2 (semi-stripped): no 2013, all 2014, all 2015 Fair value: XX per point - $11 per point for "lost rental revenue". Explanation: You could easily turn contract 1 into contract 2 by renting the 2013 points. If you bought contract 1, then immediately rented the 2013 points you would have a contract with no 2013, all 2014, all 2015 pts. Which is exactly what contract 2 is. If you pay $100 per point for contract 1 and then rent all the 2013 pts for $11 per point you would effectively have paid $89 per point for your contract. Therefore, the fair value of contract 2 (stripped) HAS to be $11 less per point than contract 1. Using the same logic, a contract with banked 2012 points would be equal to XX + 11 points, because you could rent the 2012 points and have the exact same situation as contract 1 (no 2012, all 2013, all 2014, etc). Example: If I was looking at Boardwalk which had no points until 2015 I would calculate it this way... $85: Going rate for contracts with all 2013, 2014, 2015 pts. -11: missing 2013 points -11: missing 2014 points $63: fair value for contract with no points until 2015. Will someone sell you a stripped Boardwalk for $63? No. So don't waste your time with anything that doesn't have all 2013, 2014, and 2015 points. Stripped contracts are a rip-off to the buyer.
I agree this is the way I do the math as well!
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Old 09-25-2013, 04:37 PM   #8
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Typically stripped contracts are over valued and loaded contracts are under valued. If you are trying to pay the absolute minimum, buy a loaded contract and rent out the extra points to reduce your costs.

If that absolute minimum price isn't the most important thing to you but instead things like how quick you can get a contract, the resort, the UY, etc then maybe a stripped contract will work for you. Just shop around and see what is available and how they compare to each and figure out what they are worth to you.

And fair has nothing to do with the price of a contract. No seller is going to reduce their price by $10+ because their contract is stripped. The only thing that matter is what price both the seller and buyer agree on, but that doesn't imply that is fair price.

Good luck with your purchase.

PS. I would never buy a stripped contract because I want to pay the absolute minimum, but as a seller I would always strip the contract first before selling cause I want to get the most for the contract.
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Old 09-25-2013, 07:55 PM   #9
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Quote:
Originally Posted by DVCcurious View Post
Before I start I will say that you will NEVER get a good value buying a stripped deal because the sellers won't agree to the massively lowered value. You should ignore every contract without all 2013, 2014, and 2015 points. You will see why if you walk through the math below:

Quite easy to calculate.

Contract 1 (standard): no 2012 banked, all current year 2013 pts and all pts going forward

Fair value: XX per point (XX is the general average you see listed for sale on the resale sites).

Contract 2 (semi-stripped): no 2013, all 2014, all 2015

Fair value: XX per point - $11 per point for "lost rental revenue".

Explanation:
You could easily turn contract 1 into contract 2 by renting the 2013 points. If you bought contract 1, then immediately rented the 2013 points you would have a contract with no 2013, all 2014, all 2015 pts. Which is exactly what contract 2 is. If you pay $100 per point for contract 1 and then rent all the 2013 pts for $11 per point you would effectively have paid $89 per point for your contract.

Therefore, the fair value of contract 2 (stripped) HAS to be $11 less per point than contract 1. Using the same logic, a contract with banked 2012 points would be equal to XX + 11 points, because you could rent the 2012 points and have the exact same situation as contract 1 (no 2012, all 2013, all 2014, etc).

Example: If I was looking at Boardwalk which had no points until 2015 I would calculate it this way...

$85: Going rate for contracts with all 2013, 2014, 2015 pts.
-11: missing 2013 points
-11: missing 2014 points
$63: fair value for contract with no points until 2015.

Will someone sell you a stripped Boardwalk for $63? No. So don't waste your time with anything that doesn't have all 2013, 2014, and 2015 points. Stripped contracts are a rip-off to the buyer.
So do you pay an owner $11 a point over asking price for any banked points from the previous UY for gained revenue?
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Old 09-25-2013, 09:07 PM   #10
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Thanks everyone! I decided to pass on the stripped contract and will keep looking
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Old 09-26-2013, 06:47 AM   #11
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Quote:
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So do you pay an owner $11 a point over asking price for any banked points from the previous UY for gained revenue?
You should be willing to pay $11 over "fair market value" of a standard contract (no banked, all current and future points).

And maybe $11 isn't really accurate because there is cost associated with time and effort renting the points. So maybe a stripped should only deduct $9 per point and a loaded should only add $9 per point.

But those details don't matter. What matters is that a contract with no 2013 points, all 2014, all 2015 will be offered at the same price per point as a contract with all 2013, all 2014 and all 2015 points.

So if you pay the same amount per point, wouldn't you always choose the contract that includes more points up front?

I am well aware of "real world pricing" so I would never consider a contract that didn't have all current and future points. A contract with banked points, all current year points, all future points is the only "deal" to be had. Especially considering the $15-$25 point increases we've seen since last fall.
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Old 09-26-2013, 06:56 AM   #12
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Quote:
Originally Posted by DVCcurious View Post
Before I start I will say that you will NEVER get a good value buying a stripped deal because the sellers won't agree to the massively lowered value. You should ignore every contract without all 2013, 2014, and 2015 points. You will see why if you walk through the math below:

Quite easy to calculate.

Contract 1 (standard): no 2012 banked, all current year 2013 pts and all pts going forward

Fair value: XX per point (XX is the general average you see listed for sale on the resale sites).

Contract 2 (semi-stripped): no 2013, all 2014, all 2015

Fair value: XX per point - $11 per point for "lost rental revenue".

Explanation:
You could easily turn contract 1 into contract 2 by renting the 2013 points. If you bought contract 1, then immediately rented the 2013 points you would have a contract with no 2013, all 2014, all 2015 pts. Which is exactly what contract 2 is. If you pay $100 per point for contract 1 and then rent all the 2013 pts for $11 per point you would effectively have paid $89 per point for your contract.

Therefore, the fair value of contract 2 (stripped) HAS to be $11 less per point than contract 1. Using the same logic, a contract with banked 2012 points would be equal to XX + 11 points, because you could rent the 2012 points and have the exact same situation as contract 1 (no 2012, all 2013, all 2014, etc).

Example: If I was looking at Boardwalk which had no points until 2015 I would calculate it this way...

$85: Going rate for contracts with all 2013, 2014, 2015 pts.
-11: missing 2013 points
-11: missing 2014 points
$63: fair value for contract with no points until 2015.

Will someone sell you a stripped Boardwalk for $63? No. So don't waste your time with anything that doesn't have all 2013, 2014, and 2015 points. Stripped contracts are a rip-off to the buyer.
I would reduce the amount you're deducting by the cost of the maintenance the buying has already paid or agrees to pay. When you rent out your points you have already paid maintenance. So, the total deduction would be about $11 and not $22.
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Old 09-26-2013, 07:17 AM   #13
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As with anything, patience in buying is needed to find that good deal. A motivated DVC seller is not using their points so these are more likely to be loaded.

I agree totally with the math presented here and it is the only way to compare contracts evenly. Apples = apples

Good luck and patience in your search for the right contract.
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Old 09-26-2013, 07:54 AM   #14
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Quote:
Originally Posted by DVCcurious View Post
Before I start I will say that you will NEVER get a good value buying a stripped deal because the sellers won't agree to the massively lowered value. You should ignore every contract without all 2013, 2014, and 2015 points. You will see why if you walk through the math below:

Quite easy to calculate.

Contract 1 (standard): no 2012 banked, all current year 2013 pts and all pts going forward

Fair value: XX per point (XX is the general average you see listed for sale on the resale sites).

Contract 2 (semi-stripped): no 2013, all 2014, all 2015

Fair value: XX per point - $11 per point for "lost rental revenue".

Explanation:
You could easily turn contract 1 into contract 2 by renting the 2013 points. If you bought contract 1, then immediately rented the 2013 points you would have a contract with no 2013, all 2014, all 2015 pts. Which is exactly what contract 2 is. If you pay $100 per point for contract 1 and then rent all the 2013 pts for $11 per point you would effectively have paid $89 per point for your contract.

Therefore, the fair value of contract 2 (stripped) HAS to be $11 less per point than contract 1. Using the same logic, a contract with banked 2012 points would be equal to XX + 11 points, because you could rent the 2012 points and have the exact same situation as contract 1 (no 2012, all 2013, all 2014, etc).

Example: If I was looking at Boardwalk which had no points until 2015 I would calculate it this way...

$85: Going rate for contracts with all 2013, 2014, 2015 pts.
-11: missing 2013 points
-11: missing 2014 points
$63: fair value for contract with no points until 2015.

Will someone sell you a stripped Boardwalk for $63? No. So don't waste your time with anything that doesn't have all 2013, 2014, and 2015 points. Stripped contracts are a rip-off to the buyer.
Your analysis makes perfect sense.....if there were two contracts for sale, identical in every way, except for one being stripped and one not! That doesn't happen in the resale market very often. I just bought a stripped contact. Would I have preferred a loaded one? Absolutely. Would a loaded contract have cost much more, probably not. But there was no loaded contract available...I went with the contract that was a pretty good price and a point amount and use year that worked for me.

Last edited by lawboy2001; 09-26-2013 at 07:58 AM. Reason: adding stuff
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Old 09-26-2013, 09:37 AM   #15
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I would reduce the amount you're deducting by the cost of the maintenance the buying has already paid or agrees to pay. When you rent out your points you have already paid maintenance. So, the total deduction would be about $11 and not $22.
I was thinking the same thing- It's like punishing the seller twice if you deduct $22/ point! He is taking less per point and he is paying all the maint fees! If the points had been there most likely the buyer would have paid more per point and all maint. fees! The maint fees covered until 2015 might be a good deal for some who do not plan to make a reservation until next year!
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