The Marriott ROFR Debate: helpful to sellers or not?

I think Marriott's ROFR policy can sometimes be helpful to sellers, even if not all of the time. We have seen a number of posts on this forum that suggest a potential buyer has bid higher in an effort to avoid ROFR. There have also been a number of posts here relating that, after Marriott exercised ROFR, buyers have submitted higher offers on the same timeshares, with Marriott allowing the resubmitted offers. (Marriott apparently stopped allowing second-chance offers in late 2007.) Although such situations might make a purchase more expensive, they get more dollars in the seller’s pocket.


Moderator note to all:

I have received numerous complaints in recent months about threads on this forum being hijacked to argue the merits of ROFR, although the origination of such threads rarely had anything to do with ROFR.

Those who wish to discuss the merits of Marriott's ROFR policy may do so in this thread. Those would like to express opinions about ROFR in other threads may link to this thread. However, I will no longer permit threads on this forum on other topics to be derailed for an ROFR debate. Mentioning the existence ROFR or explanations of how ROFR works will continue to be acceptable.

What About The Hallowed Tradition Of Hijacking Discussion Topics ?

Dave M said:

Those would like to express opinions about ROFR in other threads may link to this thread.

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You mean from now on this is the only OK place to explain why ROFR = ROFL ?

That will be a major serious readjustment, no ?

Alan Cole, McLean (Fairfax County), Virginia, USA.​

I Support Marriott's ROFR

I rarely agree with Dave M when it comes to Marriott (he is usually Pro-Marriott and I’m anti-Marriott). But on this issue I agree with him.

The fact that Marriott buys some of its units using the ROFR adds to the demand for TS units. There are those individuals who want to buy resale (unfortunately there are too few) and added to that interest is Marriott’s desire to purchase units when prices allow it to make a profit. Anyone who wants to buy a Marriott TS, who loses that opportunity to the ROFR, is probably going to submit an offer on another unit. [That’s what I would do if I was looking to buy a unit and lost it to Marriott.]

I remember during Marriott's sales presentation to us last month, that the sales rep at NCV told us that Marriott uses its ROFR to ensure that prices never go down more than a few thousand. That obviously isn't true.

I’ve been watching the listings for the MOC Lahaina Villas units. Not one has sold. So anything that Marriott does to increase possible future demand can’t hurt. If nothing else it gives those of us who would like to sell (I have mine listed, hoping for a miracle) some hope that there is a floor as to how low prices can drop (even if it’s a big drop).

The TS industry would be improved greatly if we could find additional ways to create demand for resale units (maybe we should hire some of those weasels – they could offer dinner certificates to members of the public who are willing to view the resale units and –even though we would discourage it – the weasels could make a few unrealistic promises to close the deal).

An interesting new Thread might discuss how Marriott could improve the resale value of their units. I think Marriott’s customers would have greater respect for Marriott if they saw more affirmative action taken to create a viable resale market.

I’m sure this thread will be 20 pages long soon and we’ll all be begging Dave M to allow us to start a new thread. This debate will probably go on and on for years.

ROFR

At what price point does Marriott excercise its ROFR.

50 to 60% of retail?

Most resales are Redweek.com appear to be at about 50% of retail.

london said:

At what price point does Marriott excercise its ROFR.

50 to 60% of retail?

Most resales are Redweek.com appear to be at about 50% of retail.

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It's anyone's guess. Prime weeks were being nabbed at 40% off, but it "seems" that Marriott is buying back fewer weeks with the downturn in the economy. The ROFR line is forever changing- what passes today may get nabbed tomorrow, and it may get nabbed at a higher price point. There is seemingly no rhyme or reason; depends upon inventory and interest in a particular resort/season/view when the papers happen to cross the desk.

Negotiate the best price you can, regardless of ROFR. Unless it is a fixed week (certain holiday weeks and of course the fixed new Maui weeks), there are literally hundreds of other opportunities for the same purchase up for grabs, so if at first you don't succeed....

Marriott's ROFR might help a seller every now and then in rare instances, but many more buyers are turned off forever after buying a week and having Marriott steal it from them. If a buyer can no longer raise his price after it is ROFR'd then there is even less chance that it will help a seller because it has been ROFR'd at exactly what it sold for not raising the price one cent for the seller.

There are several Marriott resorts I would like to own. I think Marriott is one of the best resorts there is, period. As I said on another post, I personally would have bid higher than the winning bid on 3 different Marriott sales recently except for ROFR. I would have raised the final bid by at least $500 to $1000 on each of those 3 weeks if there wasn't ROFR. However the prices would have been good enough that I figured I would never have owned them. Marriott would probably have stolen my weeks I bought at my price, so I didn't place any bid. That cost all 3 of those sellers money whether Marriott ROFR'd the weeks or not. If the winning bidder had wanted the week bad enough he could have driven the price even higher than I would pay after I started bidding. Because of ROFR I am not in the resale market for Marriott or any other resort that has ROFR. ROFR actually shrinks the pool of buyers IMO.

The fact that weeks aren't currently selling even when offered for sale for 50% to 60% off of retail prices does not improve because of ROFR. To restrict a market limits the number of potential buyers.If someone finally makes a seller an offer for 50% of the retail price and has the week stolen, he might try to buy another one or he might say heck with it.

Many here believe that people have to have Marriott weeks and will keep offering more until they own one. People have to have food, shelter, and money. Marriott weeks (like any timeshares or vacations) are a luxury item. A lot of us here on TUG are way more involved in timeshares than the average person ever will be. To assume that there is a huge pool of buyers who see a bid for a Marriott week ending on e-bay for $5000 who will go ahead and bid much higher just in case Marriott might ROFR are mistaken. They will say hey I'll pay $5000, they win the bid, and after filling out the paperwork and sending the money in full, they find out weeks later that it isn't their's after all. Most say good, I didn't need that anyway and never bid again. Marriott can be good for buyers saving them from buyer's remorse.

I doubt that there are any buyers who don't post on TUG or a Marriott web site who would ever allow ROFR to enter their purchase equation. Your average buyer simply pays what the winning bid is or negotiates a price with a Red Week seller if they want to buy a week. I can't imagine anyone telling a seller that he wants to pay more than the asking price so it doesn't get ROFR'd. I would love to find a buyer like that myself. Heck even at an asking price of 40% off of retail you are lucky to get an offer. How could ROFR do anything but reduce the number of people wanting to buy a week? A resale buyer for any week at any price is hard to come by with or without ROFR. Unfortunatelly finding a buyer is harder with ROFR because there are a lot of buyers who do not want to play Mariott's ROFR game. I am one of them.

Tombo-
You'd probably be shocked, but over the past 2 years I have seen several posts from people who have done just what you are sure no one would- raised their accepted offer because they wanted the property and didn't want Marriott to nab it. I'd agree that isn't the majority, but it does happen.

I belong in the camp of those who feel ROFR, while certainly good for Marriott, is also good for owners. You are right- it doesn't help sellers, but owners overall benefit from the potential perception of a depressed market because of a few desperate sellers who will let their units go for below market values (and, I know, you will counter-argue that if that's what they went for, that's the market value. However, just like when stores have liquidation sales, the prices they have sold merchandise at doesn't necessarily reflect the true market value).

Marriott and DVC both use ROFR and they are two of the "better" timeshares out there and I own them both. I think Westgate Park City also has ROFR, but I will not vouch for all of Westgate (only Park City).

I only own ROFR timeshares and I personally like them and appreciate the fact that the developers will grab a "too good of a deal for themselves" as this prevents (theoretically) the price bottom dropping out. Thus, I am in favor of ROFR for being a buyer and a seller.

Is it a perfect system....no. But it would kill me to see my DVC drop in value to $1 like many of the "non-ROFR" timeshares out there.

The message is simple. No need to debate

As long as owners (it's really too hard to say we could possibly reach the mass of un/under-informed buyers) realize that ROFR is not, and never was, intended to support prices but to act as a process to insure that Marriott (or DVC, or even Wastegate) can snatch back time at deep discount RATHER than guaranteeing a floor value at which anyone can sell (THAT is truly price protection and would apply to all types of weeks/resorts not just those they deem worthy) then the job is done. If owners choose to somehow believe that by simply asking XX% they will automatically (and within a reasonable time period) get that or better in part or solely due to ROFR then they are welcome to that delusion to make them feel better. They will unfortunately find themselves (most likely) accepting a lowball offer when they actually do have to/want to sell but then it's too late. In the meantime they felt good and that's worth something. Reality sucks. Asking more for a week that isn't selling doesn't make offers appear. Cutting price does and thats what they will find at some point with a very few (but always vocal) exceptions that manage to find a buyer even less savvy than most. Heck, that's what retail timeshare sales live off of but resale buyers tend to be at least one step more knowledgeable. There's always one or two that can be found that will act irrationally as touted examples but that's not the norm and when they try to sell they'll find out the hard way too.

london said:

At what price point does Marriott excercise its ROFR.

50 to 60% of retail?

Most resales are Redweek.com appear to be at about 50% of retail.

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Typically, yes for the "average" resort. But lately, the word is that Marriott is taking back very few timeshares through ROFR.

Terry

Dave M said:

Those who wish to discuss the merits of Marriott's ROFR policy may do so in this thread. Those would like to express opinions about ROFR in other threads may link to this thread. However, I will no longer permit threads on this forum on other topics to be derailed for an ROFR debate.

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Thank you. Thank you. Thank you.

This is a great idea which I wish would be applied to several other highly contentious topics (e.g. PCC's, walking away from a timeshare, renting exchanges, financial viability of destination clubs, etc). Not only would it prevent threads from being hijacked, it would also allow people who actually want to participate in (or even search for ) a discussion of the topic to find all the viewpoints in one place.

R. O. F. R. = R. O. F. L.

Steamboat Bill said:

I only own ROFR timeshares and I personally like them and appreciate the fact that the developers will grab a "too good of a deal for themselves" as this prevents (theoretically) the price bottom dropping out. Thus, I am in favor of ROFR for being a buyer and a seller.

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I'm too dull to understand how it prevents the bottom from dropping out of the price when a timeshare company buys a timeshare whose price has bottomed out.

By me, low price = low price any way you shake it.

-- Alan Cole, McLean (Fairfax County), Virginia, USA.​

AwayWeGo said:

By me, low price = low price any way you shake it.

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Shux, DVC never has been priced low except in 1991 when it was started and they use ROFR and probably have the highest resale values of any timeshare.

I think it all depends on if the developer is actively excercising ROFR. If they are it can drive prices up just like DVC. DVC is pretty consistent when it comes to ROFR. If the developer every stops excercising ROFR, then you will see resale prices plumet with it, even DVC.

m61376 said:

Tombo-
You'd probably be shocked, but over the past 2 years I have seen several posts from people who have done just what you are sure no one would- raised their accepted offer because they wanted the property and didn't want Marriott to nab it. I'd agree that isn't the majority, but it does happen.

I belong in the camp of those who feel ROFR, while certainly good for Marriott, is also good for owners. You are right- it doesn't help sellers, but owners overall benefit from the potential perception of a depressed market because of a few desperate sellers who will let their units go for below market values (and, I know, you will counter-argue that if that's what they went for, that's the market value. However, just like when stores have liquidation sales, the prices they have sold merchandise at doesn't necessarily reflect the true market value).

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If you ever have to sell your week for health or financial reasons you will see why owners are listing their weeks for sale for "below market value". Some Marriott owners feel like their weeks are worth a lot more than they actually are worth, and they get upset when someone lists their week for sale for a price that might actually sell. Stores don't liquidate merchandise that is selling well at retail prices, stores liquidate inventory that isn't selling and is costing them money to keep in inventory. Timeshare sellers are the same, prices aren't lowered unless an owner can't be found at current prices.

Go to redweek and pick 2 or 3 different Marriott resorts to watch. Print off the prices of all of those units for sale and see how many sell in 6 months. See how many owners lower their prices after receiving no offers. See how many weeks still don't sell after lowering their prices. It will enlighten you to how hard it is to sell weeks resale for any price, and how long it might take to sell your week if you ever need to.

The simple fact is that if you have a silver ocean view week for sale for $6000 and someone else has the same type week for sale for $5500, no buyer will ever buy yours until that week is gone. Of course many Marriott owners think the problem is the guy selling for $5500. Nope, the problem is that the week for sale for $5500 isn't selling meaning that he hasn't lowered his price enough yet. The other 15 owners with identical weeks realize that no one will buy at $5500, so some lower to $5000. If months later no one has bought it goes to $4500. When sellers find a price that will sell the market value has been reached and a sale actually occurs. Until then the ads are never going to produce a buyer. Many owners drop their prices numerous times hoping to find a buyer. Of course ROFR is getting them a good price (sure it is) so they really don't have to drop their price. They could hold out for the great ROFR price, but they instead choose to drop their prices because as we all know the goal of all sellers is to sell their week for as low of a price as they can get. These bad owners always remember to buy high and sell low.

If Marriott wants to really prop up prices they should buy all the weeks for sale at $6000 or less and then none will sell for less than $6000. Until Marriott starts to actually buy back weeks (which they will never do) then weeks will sell for whatever the market will bear. ROFR hasn't helped a thing.

Many owners here refuse to sell their weeks for those "below market" prices, so they list them for sale for a high price secure in the knowledge that thanks to ROFR a magical buyer will appear. This magical, ROFR educated buyer will simply call them and offer to pay them more than he could buy 15 identical weeks from other sellers for. The owners who refuse to sell their weeks for "below market prices" in reality simply refuse to sell their weeks. They will own them as long as they keep telling themselves that ROFR will get them a buyer at a higher price than a real buyer will pay.

Steamboat Bill said:

Shux, DVC never has been priced low except in 1991 when it was started and they use ROFR and probably have the highest resale values of any timeshare.

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As DVC contacts mature and have less and less years left on them, the resale prices will fall RORF or no ROFR. People will not pay as much for a contract with 5 or even 10 years left on it as they will pay for a contract with decades of use remaining. Would anyone here pay the same with 5 years left? Disney won't pay as much either because in 5 years they will get it for free, or get to charge the current renter a bundle to keep renting.

Marriott and DVC have high resale prices because of the quality of the resorts pure and simple. The fact that they have high resale prices is why there is ROFR because the resorts want to be able to obtain inventory to sell as cheaply as possible. Of course the resorts don't make ROFR mandantory so they don't have to take back weeks when the values drop (like right now). The prices are falling and Marriott is ROFR'ing less. Wouldn't that be the time they should increase their ROFR activity to help stabilize prices if that is what it was designed to do? They aren't ROFR'ing now because it isn't good for Marriott and they don't care a bit what happens to the owners resale prices. In fact the cheaper the resale prices, the cheaper Marriott gets new inventory, so cheap is good for Marriott. ROFR is only good for the developer.

Mercedes vehicles have higher resale prices than Fords, and this seems to happen even though Mercedes doesn't have ROFR. If Mercedes did have ROFR, I am sure that many Mercedes owners would give ROFR the credit against all reason.

There was something that Dave M said,that is confusing to me.
If Marriott is exercising ROFR on an unit I want to sell, and I refuse to sell to them, can I go back to the original bidder and ask them to up their price?

Thanks.

Not as I understand it. You send Marriott the sale price that is agreed upon, and based on that agreement between you and your buyer they get to steal it or not steal it (depending on whether Marriott wants the week and whether Marriott thinks the price is low enough for them to buy). Before 2007 the buyer after getting his week stolen by ROFR, could (sometimes) increase his purchase price and Marriott could ROFR at the new price or let the buyer have it at the increased price. Marriott realized that occasionally allowing the bidder to increase his bid would actually increase the sale price for owners, raise some resale prices, and it would cost Marriott more to steal the week benefitting everyone but Marriott, so Marriott discontinued this practice.

ROFR was implemented by developers, for developers, and it is only good for the developers.

It doesn't work that way. Once you make a deal with a potential buyer, you (or your closing agent) give Marriott the details of the proposed transaction. If Marriott exercises its right, Marriott takes the place of the proposed buyer and buys it from you. Under the terms of the ROFR wording in your documents, you don't have the right at that point to "refuse to sell to them". The documents provide that Marriott has the option to buy at the terms you presented to them.

And to respond specifically to your question, Marriott apparently no longer allows the potential buyer/bidder to submit a higher offer (as of late last year).

I can go both ways on the ROFR debate.

In a way, it does help informed sellers, because they can use current developer selling prices as a basis for their asking price. On the other hand, there are lots of uninformed sellers, and ROFR is more for Marriott's benefit than it is for current owners. ROFR does not create a floor for asking/selling prices, so in that sense, it does nothing for sellers.

If I had to choose one answer I would have to say that it doesn't help sellers. It certainly does not offer them any price protection. Any positive benefit of ROFR is an indirect benefit, and that indirect benefit can go away any time Marriott decides it owns enough inventory.

-David

I don't see how it can hurt the seller, who is getting the price regardless, and I don't see how it can do anything but help the owners. Anytime Marriott applies ROFR than you can assume the seller's price was below market, and they are in turn reselling it at a higher price, raising the price floor. And Marriott is in the best position to know what the price floor should be. I think almost all of the negatives about ROFR come from buyers looking for a bargain or steal, and while I don't blame them for complaining, as a owner I certaining don't want to see bargain pricing on my units. Of course as a buyer I would look at it differently

I'm not sure what people are looking for Marriott to do. ROFR is clearly spelled out in the deed. I don't believe I have ever seen a seller complain about being ROFR'd unless it was a "friendly" transaction, but there are other ways of handling those....

Chuck

R. O. F. R. Doesn't Halt Bargain Resales.

chuck1955 said:

I certaining don't want to see bargain pricing on my units. Of course as a buyer I would look at it differently

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Bargain resale pricing happens anyway, ROFR or no-ROFR mox nix.

With ROFR, however, all that happens is that nobody but the timeshare company gets to buy the bargain resales -- so the company can turn round & resell the resales all over again for big bux.

Stacking the deck via ROFR doesn't protect owners from lowball resale prices.

ROFR = ROFL.

-- Alan Cole, McLean (Fairfax County), Virginia, USA.​

AwayWeGo said:

Stacking the deck via ROFR doesn't protect owners from lowball resale prices.

ROFR = ROFL

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Shux...show me one ROFR timeshare that sells for $1 on eBay like many of the non-ROFR timeshares sell for (and some do not even reach the $1 reserve) everyday.

ROFR does nothing for price - resort quality and reputation is the key

Steamboat Bill said:

Shux...show me one ROFR timeshare that sells for $1 on eBay like many of the non-ROFR timeshares sell for (and some do not even reach the $1 reserve) everyday.

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Wastegate Lakes, Villas, Palace, etc. Nearly everyday. (And some poor sucker almost bought it! They don't know that, in this case, ROFR saved them a lifetime of unhappiness) Applies only to the weeks that actually HAVE ROFR of course (not as many as CFI wants people to think)

Steamboat Bill said:

Shux...show me one ROFR timeshare that sells for $1 on eBay like many of the non-ROFR timeshares sell for (and some do not even reach the $1 reserve) everyday.

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In the case of Marriott, I'd say this is because of the quality of the product and the benefits of owning a Marriott. Even Marriott's w/o ROFR sell for more than $1.