# Why ROFR hurts sellers



## Potential Buyer Scott (Aug 16, 2007)

I see a lot of posts where the person argues that the seller is in fact protected by ROFR and that the seller is not hurt by it.  If you believe that sales rep line, I've got some subprime mortgages I'd like to sell ya.  

Actually there are at least five significant ways that the seller's resale value is hurt.  To illustrate the point, I will use an Ebay example of a Marriott Grande Ocean Platinum Oceanside week.

First way:  Let's say I was interested in aquiring a week, and I know that a good price for this week is about $22,000 - $24,000.  However, if I see a bid on ebay at $10,000 do I bother to bid?  Probably not because I know that the ROFR would be exercised. So until I see the price get to $20,000 it is not worth my time.  A lot of other potential bidders take the same approach and the week sells for $12,000 to some poor fool who is certainly going to be exercised by Marriott.  In addition, the seller is getting a lot less money than he would have otherwise gotten because I might have been willing to pay $20,000 but thought it would get excercised.  

The second way that ROFR hurts value is that it removes the single largest potential bidder (Marriott) from having to bid up the price on a week they want like everyone else does.  They would have to watch websites and bid on units like everyone else for their inventory and that would really support prices. 

The third way is that it reduces the price that Marriott will pay seller's for weeks where you just call and want to sell your high-demand week.  Without ROFR this price would be higher since they need to keep an inventory.

Fourth, it makes the resale process longer which discourages potential buyers and is a hassle for sellers.

Fifth, there is now a charge for anyone who makes it past ROFR.  This is a cost to buyers and reduces potential bids for sellers.


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## taffy19 (Aug 16, 2007)

I agree with you that the ROFR clause is there for the benefit of the Marriott but let's be honest, *TUG buyers* love to bid on the Marriott DSV-I resorts because they can offer lower prices to the seller. They can't do this with MDSV-II because the Marriott will pick them up instead.

Tell me why timeshares, without the ROFR clause, are selling lower than the ones with the clause in the contract? I feel that the seller gets his price either way from the Marriott or from a timeshare buyer. It is you, Mr. Potential Buyer Scott, who doesn't like the ROFR clause in the contract because you can't buy the timeshare for a song and dance from a desperate seller. :annoyed: 

Yes, the process does take longer and Marriott has found another fee that they can charge the new buyer. It is getting very annoying if they keep coming up with other new fees and the Marriott is not the only developer charging us for everything they can think of. They are all pretty good at that lately.


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## Dave M (Aug 16, 2007)

Although there is no question that some of your statements have merit, I can easily argue the opposite positions. Some of my statements overlap, just as some of yours do:

First, it's clear from numerous posts on this forum that some buyers consider offering more for a Marriott timeshare because they know that if they don't offer enough, Marriott will exercise ROFR, thus denying them the chance  - at least temporarily - to become a Marriott owner. Accordingly, prices might well be higher than without ROFR. The frequent question here (at least weekly): "How much do I have to offer to avoid losing to Marriott's ROFR?"

Second, Marriott uses ROFR to create a minimum price-support resale market value for timeshares, far in excess of the resale value of most non-Marriott timeshares and higher than what resale prices would otherwise be.

Third, with the resulting lower market value (see "Second") if ROFR disappeared, Marriott would be able to buy timeshares from sellers at a lower price.

Fourth, since Marriott almost always responds to ROFR requests within about ten days, there is no significant impact on the typical two to three months closing period that might discourage a buyer from making an offer on a Marriot timeshare.

Fifth, a fee of less than $100 to a buyer planning to spend $10,000+ (typically) for a Marriott timeshare isn't likely to merit a nanosecond of concern, particularly considering the savings by buying resale.

Sixth, a potential seller, who might otherwise be discouraged from trying to sell a Marriott timeshare because of generally depressed timeshare prices (note what’s happening on eBay these days, thanks to the postcard companies!), can be reasonably confident of a decent selling price, thanks to ROFR.

Seventh, knowledgeable buyers, such as some here at TUG, are a tiny minority of those who buy Marriott resale timeshares. Most such buyers likely don't have a clue about the ROFR process or how it might impact them. Even the most knowledgeable among us don’t have a clue as to whether ROFR will be exercised on any single transaction.

The bottom line: You can easily find fault with some or all of my statements, just as I can with yours. That’s not the point. There is no clear factual evidence that supports either position as being the correct answer. Without a controlled study, obtaining that evidence would seem to be impossible.


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## Twinkstarr (Aug 16, 2007)

"Seventh, knowledgeable buyers, such as some here at TUG, are a tiny minority of those who buy Marriott resale timeshares. Most such buyers likely don't have a clue about the ROFR process or how it might impact them. Even the most knowledgeable among us don’t have a clue as to whether ROFR will be exercised on any single transaction."


I've been talking to a realtor who deals in Marriott's and she said the best you can do is submit the sale and see what happens. 

I think the best we can do is keep the Marriott ROFR website updated with our experiences good or bad. I know on the DVC MB's that the ROFR threads are a good source of info for resale buyers.


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## Beverley (Aug 16, 2007)

Potential Buyer Scott said:


> I see a lot of posts where the person argues that the seller is in fact protected by ROFR and that the seller is not hurt by it.  If you believe that sales rep line, I've got some subprime mortgages I'd like to sell ya.
> 
> 
> First way:  Let's say I was interested in aquiring a week, and I know that a good price for this week is about $22,000 - $24,000.  However, if I see a bid on ebay at $10,000 do I bother to bid?  Probably not because I know that the ROFR would be exercised. So until I see the price get to $20,000 it is not worth my time.  A lot of other potential bidders take the same approach and the week sells for $12,000 to some poor fool who is certainly going to be exercised by Marriott.  In addition, the seller is getting a lot less money than he would have otherwise gotten because I might have been willing to pay $20,000 but thought it would get excercised.




So why not set the minimum bid for the ROFR price?? problem solved about Marriott picking up a potentially steal of a buy for peanuts.  

Beverley


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## thinze3 (Aug 16, 2007)

*Marriott ROFR*

*If you recently bought or have tried to buy a resale Marriott timeshare and been denied by the ROFR, please go to this website, put together by a fellow Tugger, and enter your information regarding your sale.*

This is a way for all of us "Tuggers" to keep track and be prudent buyers and sellers.


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## CMF (Aug 16, 2007)

*MROFR is Invisible*

I don't care about the ROFR.

Why?  Because I offer what I want to pay regardless of the MROFR.  And, should I decide to sell, my price would certainly be higher than what Marriott would pay for the week.

The only minor nuisance is that whenever I make an offer on a Marriott week the broker/seller immediately tells me about the ROFR to which my response is "yeah, yeah . . . I know all about it."


Charles


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## thinze3 (Aug 16, 2007)

I posted a few days ago about a Waiohai unit that did not sell on eBay because the reserve was not met. (Bid was about $15K)

The seller emailed me asking if I was interested in making an offer before he sold it back to Marriott. After posting the info and reading replies here on Tug, I contacted the seller back. I asked him what was the absolute minimum was he would take. His response was, "Marriott won't approve anything less than $25K." I After I got off the floor from laughing so hard, I replied back to him, "If Marriott has offered you that, you'd better take it NOW! These things have asking prices all over the internet for low $20K's"

My question you all:
What do you guys think Marriott would offer to buy back your unit - say a Waiohai? I imagine that many times, it may be higher that the ROFR price.


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## rickandcindy23 (Aug 16, 2007)

Thinze, was that Waiohai a two-bedroom lockoff?  I would think the ROFR would be over $25K on that one.  The resort is selling those for double that, or more, so why did you laugh?


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## Dave M (Aug 16, 2007)

There is no fixed price point for such offers. Marriott does - sometimes - make such offers, but only when it needs inventory. Thus, just like ROFR prices and actions, buy-back offers can range from $0 to whatever makes Marriott's cash register ring.


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## thinze3 (Aug 16, 2007)

rickandcindy23 said:


> Thinze, was that Waiohai a two-bedroom lockoff?  I would think the ROFR would be over $25K on that one.  The resort is selling those for double that, or more, so why did you laugh?




All Waiohai units are 2BR - no lockoffs! I am talking about island view.

Look here on this website. There are several asking for the low $20's. I believe the sales are a bit lower (about $20K). ROFR has to be lower yet.

Question is, what would Marriott OFFER?


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## thinze3 (Aug 16, 2007)

Dave M said:


> There is no fixed price point for such offers. Marriott does - sometimes - make such offers, but only when it needs inventory. Thus, just like ROFR prices and actions, buy-back offers can range from $0 to whatever makes Marriott's cash register ring.




I can only imagine that Marriott has a written guideline of some sort.


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## Dave M (Aug 16, 2007)

Yes, it all depends on the view. Most asking prices seem to be in the $30K-$35K range for ocean view 2BR weeks. But the island view offerings are definitely in the low $20s (e.g. at My Resort Network as well as at your link).

I don't think you'll get a better answer to your "what would Marriott offer" question than the one I gave you. Any specific $$ offers are anecdotal only.


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## Dave M (Aug 16, 2007)

thinze3 said:


> I can only imagine that Marriott has a written guideline of some sort.


I would imagine so, too. But that guideline (a) is certainly very private and (b) almost certainly has flexibility - just as has been proven for ROFR - such that offers, if made, will vary significantly from time to time, based on Marriott's needs. We have had a number of reports here of Marriott refusing to make any offer for a buy-back. 

Doesn't it make sense that, if Marriott had a formal program with fixed buy-back price points, this forum would have long ago been all over the program with such info, based on numerous personal experiences from TUGgers? Such reporting is noticeably absent from this forum. That, for me, speaks volumes. 

Just because such a fixed price program makes sense for you doesn't mean that Marriott embraces such an idea.


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## grupp (Aug 16, 2007)

iconnections said:


> I agree with you that the ROFR clause is there for the benefit of the Marriott but let's be honest, *TUG buyers* love to bid on the Marriott DSV-I resorts because they can offer lower prices to the seller. They can't do this with MDSV-II because the Marriott will pick them up instead.[/SIZE][/FONT]
> 
> Tell me why timeshares, without the ROFR clause, are selling lower than the ones with the clause in the contract?




Of course, if you believe that the prices at MDSV-II are higher than MDSV-I and this price difference is soley because of the ROFR. Then  there would never be any sales at MDSV-II until all the units at MDSV-I had been sold. 

Gary


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## dougp26364 (Aug 16, 2007)

Potential Buyer Scott said:


> I see a lot of posts where the person argues that the seller is in fact protected by ROFR and that the seller is not hurt by it.  If you believe that sales rep line, I've got some subprime mortgages I'd like to sell ya.
> 
> Actually there are at least five significant ways that the seller's resale value is hurt.  To illustrate the point, I will use an Ebay example of a Marriott Grande Ocean Platinum Oceanside week.
> 
> ...



But in the end, Marriott resale prices and prices of other resorts exercising ROFR are higher than those resorts the do not exercise ROFR. ROFR is not a perfect world but in the end it is more frustrating to buyers looking for _bargain basement prices _than a problem for sellers trying to get the most out of their timeshares.

Until you can present evidence of prices at ROFR resorts being lower than prices at resort that don't have it or proof that units do not sell when a resort has ROFR then I'm afraid your just whistling in the wind. It's just your opinion without evidence of factual data to back it up.


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## AmyL4408 (Aug 16, 2007)

Potential Buyer Scott said:


> To illustrate the point, I will use an Ebay example of a Marriott Grande Ocean Platinum Oceanside week.
> 
> First way:  Let's say I was interested in aquiring a week, and I know that a good price for this week is about $22,000 - $24,000.  However, if I see a bid on ebay at $10,000 do I bother to bid?  Probably not because I know that the ROFR would be exercised. So until I see the price get to $20,000 it is not worth my time.  A lot of other potential bidders take the same approach and the week sells for $12,000 to some poor fool who is certainly going to be exercised by Marriott.  In addition, the seller is getting a lot less money than he would have otherwise gotten because I might have been willing to pay $20,000 but thought it would get excercised.





I don't see it that way at all.

If you didn't want to sell it for $12,000 than why did you start the bidding that low?   To try and lure people in to a bidding war, so they will pay more than they wanted to?   Or the thought that it will bring in more bids, if people see that alot of bids have been made already?

Its simple actualy,  don't list the week for less than you wanted to sell it for.


And what does it matter if Marriott buys the week for the same price you were willing to sell it to someone else?    I would feel the are just a buyer, like anyone else.       I don't feel they should have to pay you more than you had planned to sell it for, just because of their name or what they might do with it in the future.




But I'm just a housewife, so I'm sure I don't understand the real picture.


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## Beverley (Aug 16, 2007)

AmyL4408 said:


> But I'm just a housewife, so I'm sure I don't understand the real picture.



Now I do not know about that   

Beverley


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## BocaBum99 (Aug 16, 2007)

In general, I agree with the OP that ROFR provides artificial price supports in the timeshare market.  Artificial price supports ALWAYS have some negative consequences which is why I am usually completely against them.  The case that the OP provides is one example of the potential negative impact of such an artificial and partial price support.

However, after being in the timeshare resale market for a couple of years, I'd have to change my view on ROFR for the near term.  The negative impact to the seller has to be weighed against the positive benefit that the artificial price supports provide in creating quasi-market conditions.... not quite a full market, but approximates it.

What I mean by that is this.  A normal market is one where buyers and sellers go to trade their goods and services.  Every buyer and seller has an expectation of what they are willing to sell or buy their products for and from that you can create a supply and demand curve.  In a perfect market, the supply and demand curves meet and the market price is established.  This can only happen when there is a sufficiently large market that is transparent and well known to the potential buyers and sellers.  In timesharing, such a market does not exist.  So, what ROFR does, is forces the smart buyers to forgo the fire sales they would get in an unorganized market and it tells the sellers to wait until a buyer comes along.  As a free marketer, I view this as impeding the market and I don't really like it.  But, in the current state of the market, I can see that the sellers benefit by reducing the impact of the vulture effect of smart buyers preying on unsophisticated sellers.

The downside of ROFR is that it can take a seller a longer time to sell a timeshare.  If the "real" market rate of a timeshare is far below the market's perception of the ROFR rate, then it could take forever for the seller to get a bid for his/her timeshare.  And, such artificial price supports can backfire by taking a bad market and making it worse.  It also provides significant opportunity for a dastardly Resort Developer to maniupulate the market.   

So, I support many of the resort developer's use of ROFR today.  This is true of the high end branded timeshares.


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## thinze3 (Aug 16, 2007)

I too believe that ROFR actually helps prices in most situations. I do believe it offers artificial support.

Notice the relationship of Marriott prices to resale prices. I would say that there is common 60% relationship between the two. Most Marriott resorts, with decent demand, usually sale for about 60% of retail, though good deals are available for less. The market does move from time to time and is probably somewhaat seasonal, but in general it is a good rule of thumb.

You will notice that Marriott raises prices higher and more often at the better sellers. And each time they raise their price, the resale prices seem to move accordingly, usually staying at the 60% level.

If Marriott did not have ROFR you would probably see prices drop dramatically. IMO  


PS - It appears that the timeshare market is softening as I write. This is a perfect time to witness the artificial support.


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## PerryM (Aug 16, 2007)

*Shark bites...*

Let’s face it – timeshare prices are all phony-baloney to begin with.   The ROFR simply continues this illusion.

The developer is typically selling at 4 times the real estate value and the resale market is about 2 times the real estate value (50% discount to developer prices).

If the developer wants to have a ROFR and exercise it to keep prices higher that’s great for all of us, sellers, buyers, and developers.  *That ROFR links the timeshare resale market to the developer’s prices which do follow real estate trends to some extent.*

However, that ROFR is voluntary and don’t think for a second the developer would not sit on their hands if there was ANY sense of a weakening timeshare market.

What to do?   I don’t know anyone that can forecast the future (except global warming?) and you have no choice but to play along with the developer.

Conclusion:
The ROFR is designed for the developer's bottom line and if we can gain any benefit from it – great.  Think of the owners being those little sucker fish that follow sharks around and snatch little bits of food after a kill.


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## BocaBum99 (Aug 16, 2007)

thinze3 said:


> I too believe that ROFR actually helps prices in most situations. I do believe it offers artificial support.
> 
> Notice the relationship of Marriott prices to resale prices. I would say that there is common 60% relationship between the two. Most Marriott resorts, with decent demand, usually sale for about 60% of retail, though good deals are available for less. The market does move from time to time and is probably somewhaat seasonal, but in general it is a good rule of thumb.
> 
> ...



It is exactly when markets soften quickly that price supports provided by ROFR hurt sellers the most.  That's because the market of buyers has been conditioned not to bid below a certain amount, so they don't bid when they normally would.  It takes time for the buying market to conclude that ROFR has decreased.  It that intervening period, if the developer doesn't buy, then the seller takes a lot longer to sell their units.

It would be much more efficient if the developer simply posted on their website the level at which they would exercise ROFR.  But, that would cause them other issues, so they don't.


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## Dave M (Aug 16, 2007)

BocaBum99 said:


> It is exactly when markets soften quickly that price supports provided by ROFR hurt sellers the most.  That's because the market of buyers has been conditioned not to bid below a certain amount, so they don't bid when they normally would.  It takes time for the buying market to conclude that ROFR has decreased.  It that intervening period, if the developer doesn't buy, then the seller takes a lot longer to sell their units.


In an efficient resale market where the majority of buyers have reasonably accurate info about what the lowest level is that would pass ROFR, I would agree. But even here on TUG, there is a wide divergence of opinions - at least for Marriotts - as to what those price points are and as to when Marriott will or won't or might exercise its ROFR option.

Since the timeshare resale market is fragmented and since such a high percentage of buyers aren't savvy about the market, I don't believe your scenario would have much impact in a softening Marriott market, if one exists - and that's a big if! Those who sell Marriott timeshares still get a ton of below market offers, despite the existence of ROFR.


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## PerryM (Aug 16, 2007)

*Danger: poisoned watermelon(s)*

The ROFR reminds me of the farmer who had a problem with thieves stealing his watermelons.  Each day many would be missing until one day the farmer posted a sign saying:

*“Danger: 1 watermelon has been poisoned – do not eat”*

Well that worked like a champ for a few days until he noticed that someone has X’d out the 1 with a *2*.

The ROFR works because it is executed infrequently and perhaps randomly.  They do NOT need to step in and buy every resale – just the hint that they might adds buoyancy to the resale market.

Of course some developers, like WM/FF (Wyndham), never had the brains to add the 1 sentence that provided for ROFR in the sales contract so they can’t lend support to future resale prices.  The owners then become their largest competition.

So I give credit to all those developers with a ROFR and exercise it enough to lend support to the owners.  It may not be perfect but it does have a benefit to all parties involved.


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## BocaBum99 (Aug 16, 2007)

Dave M said:


> In an efficient resale market where the majority of buyers have reasonably accurate info about what the lowest level is that would pass ROFR, I would agree. But even here on TUG, there is a wide divergence of opinions - at least for Marriotts - as to what those price points are and as to when Marriott will or won't or might exercise its ROFR option.
> 
> Since the timeshare resale market is fragmented and since such a high percentage of buyers aren't savvy about the market, I don't believe your scenario would have much impact in a softening Marriott market, if one exists - and that's a big if! Those who sell Marriott timeshares still get a ton of below market offers, despite the existence of ROFR.



You could be right.  But, I don't believe the disqualifying condition is that the market is not efficient. The market could be inefficient and my hypothesis could be correct.

However, there is also the other side of the trade.  The sellers are also conditioned to believe that the ROFR is at a certain level.   If the market price has indeed dropped due to a singificant reduction in demand due to buyers dropping out AND supply is dramatically increased by effects created from post card company activities, the sellers could have an unreasonably high expectation of what their timeshares will sell for.  That wishful thinking delays sales, too.  And some of the conditioning would be due to expectations set about ROFR by resale brokers and by message boards.

In an efficient market, it is more likely that ROFR will have less effect in a dramatic downturn.  Take Disney as an example.  Owners post on the disboards what they bought for and whether or not Disney exercised ROFR.  Given that information, it would be easy for owners to see a drop off in inventory acquired by Disney.  That is an efficient market and the effects would clearly be reduced since smart buyers would recognize faster the lower ROFR rate.

And, if Disney were to stop buying, then that would further reduce demand and lower prices even more.  

By the way, this is similar to the strategy that George Soros collapsed several Southeast Asian currencies such as the Thai Baht and Malaysian Ringit.  Once the price supports fail and the price supports are removed, then the price point dramatically collapses.


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## thinze3 (Aug 16, 2007)

PerryM said:


> The ROFR reminds me of the farmer who had a problem with thieves stealing his watermelons.  Each day many would be missing until one day the farmer posted a sign saying:
> 
> *“Danger: 1 watermelon has been poisoned – do not eat”*
> 
> ...



Perry, you are never short of words, are you?

I AGREE!

Also,
There is another thread where someone is looking for a Wyndham expert. That's you!


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## grupp (Aug 16, 2007)

PerryM said:


> The ROFR works because it is executed infrequently and perhaps randomly.  They do NOT need to step in and buy every resale – just the hint that they might adds buoyancy to the resale market.




I strongly disagree with the statement. One of the reason ROFR does not impact prices is that it is not applied to every sale. The wise consumer can make multiple offers until one passes the ROFR. Fortunately, while having a purchase taken by ROFR can be frustrating it is not fatal like eating a poisoned watermelon. 

Gary


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## PerryM (Aug 16, 2007)

*ROFR, ROFR - I love it..*

I can remember back in 1999 when we bought our 3 Marriott MountainSides, Marriott exercised their ROFR at 25% of current sales prices instead of the 40% now.  I remember thinking that using Marriott’s track record back then I could flip all 3 MountainSides for a healthy profit in just 3 years.

Well Marriott must have been bugging my home office since they promptly lowered the 25% discount to 40% - we basically made a small profit in those 3 years instead of a large one.

I believe that Marriott, and other developers, look at the ROFR as a cheap source of revenue and that you, the owner, don’t deserve too much of a resale price.  I would not be surprised to see Marriott lower that 40% to 50% at some point.  That 10% will then become Marriott’s property.





grupp said:


> I strongly disagree with the statement. One of the reason ROFR does not impact prices is that it is not applied to every sale. The wise consumer can make multiple offers until one passes the ROFR. Fortunately, while having a purchase taken by ROFR can be frustrating it is not fatal like eating a poisoned watermelon.
> 
> Gary



Well I, of course, see this differently.

I have been the seller of 5 Marriotts, all with a ROFR.  I know that ROFR put more money in my pocket since I brought up the topic of ROFR with my buyers – they had no idea what ROFR was.  I informed them that they will end up getting a 40% discount and be the proud owner of my Marriott.  If they tried to get more of a discount they would screw around for weeks and that I would eventually sell the unit for jus the 40% discount.  That convinced all 5 of them to pay my asking price which was 40% discount in 2 of the Marriotts and just a 20% on 3 of the holiday ski weeks that were very tough to get.

*So thanks Marriott for putting about $20,000+ in my pocket over the typical 50% resale rate.*

As a Marriott buyer I would be shooting for that 40% discount and not let the deal slip away – I will make it up when I sell.


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## Dave M (Aug 16, 2007)

grupp said:


> The wise consumer can make multiple offers until one passes the ROFR.


That's the problem with your position. If every potential purchaser were that wise and if every such purchaser could be sure that eventually Marriott won't exercise ROFR on an offering at the desired price, I might agree. 

Patience is a wonderful virtue, but the posts on this forum make it clear that, at least when it comes to making offers, it's often missing. And no one can be sure what price will be greeted with an ROFR waiver from Marriott. 

Further, there have even been a number of posts here of buyer and seller submitting an offer for ROFR consideration and then having success in getting a waiver _after_(!!!) they increased the price to avoid ROFR!

Thus, the statement that "ROFR does not impact prices" is often proven incorrect on this very forum!


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## grupp (Aug 16, 2007)

PerryM said:


> I can remember back in 1999 when we bought our 3 Marriott MountainSides, Marriott exercised their ROFR at 25% of current sales prices instead of the 40% now.  I remember thinking that using Marriott’s track record back then I could flip all 3 MountainSides for a healthy profit in just 3 years.
> 
> Well Marriott must have been bugging my home office since they promptly lowered the 25% discount to 40% - we basically made a small profit in those 3 years instead of a large one.
> 
> ...



Perry 
I would say the determing factor in you getting your asking price was *your* ability as a saleman rather than the ROFR. 

Gary


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## Bill4728 (Aug 16, 2007)

grupp said:


> Of course, if you believe that the prices at MDSV-II are higher than MDSV-I and this price difference is soley because of the ROFR. Then  there would never be any sales at MDSV-II until all the units at MDSV-I had been sold.
> 
> Gary



Educated buyers know that there is no ROFR for DSV-I but the bidding frenze 
for a bargain on DSV-I bring many (but not all) up to about the same levels that DSV-II sell for.


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## grupp (Aug 16, 2007)

Dave M said:


> That's the problem with your position. If every potential purchaser were that wise and if every such purchaser could be sure that eventually Marriott won't exercise ROFR on an offering at the desired price, I might agree.
> 
> Patience is a wonderful virtue, but the posts on this forum make it clear that, at least when it comes to making offers, it's often missing. And no one can be sure what price will be greeted with an ROFR waiver from Marriott.
> 
> ...



When I say impact price, I was refering to the market as a whole. I would agree that the ROFR may have an impact a particlar sale since the buyer may not want to spend the time to find another unit and offer to pay more. But I do not believe the it has an impact on the market as a whole for a variety of reasons.

Gary


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## cp73 (Aug 16, 2007)

grupp said:


> But I do not believe the it has an impact on the market as a whole for a variety of reasons.
> Gary



I agree with you Gary. The buyer has made his offer, the seller accepted (Market price has been determined), and now Marriott decides to step into the buyers shoes....Nothing has changed with the price. Marriott will step in when they decide they need more inventory or they can make additional profits at a bargain price. Probably more the prior then the later.

I bet in six months we will see a trend of the ROFR prices coming down as we see more defaults on loans.


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## BocaBum99 (Aug 16, 2007)

grupp said:


> When I say impact price, I was refering to the market as a whole. I would agree that the ROFR may have an impact a particlar sale since the buyer may not want to spend the time to find another unit and offer to pay more. But I do not believe the it has an impact on the market as a whole for a variety of reasons.
> 
> Gary




This is flatly untrue.  ROFR distorts the market price for timeshares.  ROFR results in higher resales prices to the buyers than they would have otherwise paid.  If ROFR were made illegal, then the average price to buyers at those resorts that exercise it would decrease dramatically.  The difference between what those buyers would have paid without ROFR and the price actually paid with it goes into Marriott's coffers.


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## PerryM (Aug 16, 2007)

*Garage doors closing on ROFR....*



grupp said:


> Perry
> I would say the determing factor in you getting your asking price was *your* ability as a saleman rather than the ROFR.
> 
> Gary



Well thank you; I gladly take all complements and show them to my son; see...

I just used the ROFR as a sales tool - without it I am sure Marriotts would be at the average 50% discount or worse.

So as a seller ROFR is a wonderful weapon/////tool.

As a buyer I am playing a game of who can run under the closing garage door without getting squashed.  (Ok, I know of the safety beam)

The important thing here as a buyer is to not lose some of your closing fee if the ROFR is exercised.

Instead of being pissed off when the ROFR is exercised the buyer should realize that a rising tide lifts all boats and that same ROFR will be their friend when they sell the unit.


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## e.bram (Aug 16, 2007)

BOCA:
How could you make ROFR illegal. The government cannot(and should not) interfere with contractual(non fraudulent) arrangements made between two or more persons.


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## grupp (Aug 16, 2007)

PerryM said:


> I just used the ROFR as a sales tool - without it I am sure Marriotts would be at the average 50% discount or worse.
> 
> So as a seller ROFR is a wonderful weapon/////tool.



If not for the ROFR I am sure you could have found another tool. Such as, Olympics are coming to town, Park City has moratorium on new construction this close to the slopes, Marriott is not building an more lockouts and the list goes on and on...

Obviously, ROFR is one of those issues where each side has it opinions and we will have to agree to disagree. There are clearly many factors that influence the price of timeshares and just don't believe that ROFR is one of them. But if helps people sleep better thinking that Marriott is looking out for their best interest by exercising their ROFR, that is fine with me. 

Gary


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## PerryM (Aug 16, 2007)

*Bark 2 ROFR's for YES*

I love WM, mainly for the stupidity of the developer, but admire Marriott for their smarts and great resorts.  Neither is perfect.

Marriott has it right – *they act as your real estate broker *when you sell your unit and *act as your rental agent *to rent out your timeshares. 

WM/Wyndham, on the other hand, does neither and that’s why I just got an offer from a major WM reseller for 54¢ a WM credit (fully loaded)  and Wyndham (the current developer) sells the same WM credits (fully loaded) for about $1.89 – *that’s a 71% WM discount versus Marriott’s 40% discount.*

If WM implemented a ROFR that Wyndham could use, the Marriott 40% discount would result in $1.13 resale credits.  I bought ours for an average of 70¢ - I’d be sitting on a *profit of 61% in 4 years*!

Wyndham has an adversarial role with WM owners and Marriott has a symbiotic one.  Neither is perfect but I must admit that the ROFR is a very powerful reason for buying Marriott – even from Marriott.

*Let’s not lightly dismiss the wonderful overall impact of ROFR.*

Count me as a supporter of ROFR.


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## Dave M (Aug 16, 2007)

grupp said:


> But if helps people sleep better thinking that Marriott is looking out for their best interest by exercising their ROFR, that is fine with me.


Where did that come from?!!? The statements in this thread are exactly the opposite! I think we all believe that Marriott is looking out for its own interests by having an ROFR policy. There are specific statements to that effect in this thread and in virtually every thread on this forum that discusses the merits of Marriott's ROFR. 

It just happens that sometimes the existence of that ROFR policy also benefits some people other than Marriott; not always, but sometimes.


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## BocaBum99 (Aug 16, 2007)

e.bram said:


> BOCA:
> How could you make ROFR illegal. The government cannot(and should not) interfere with contractual(non fraudulent) arrangements made between two or more persons.



All the government needs to do is create a statute that outlaws it.  That's how simple it is.  Governments create laws and regulations all the time.

I can make an argument that ROFR represents a kind of restraint of trade.   Developers gaining undue access to markets and cherry picking off good deals from potential buyers, thereby increasing the cost to those buyers.  It only requires a state legislature or Real Estate Commission to create legislation and have it pass.

To argue that a government cannot and should not interfere with a contractual arrangement is flat out nonsense.  Otherwise, they couldn't regulate a contract for selling over the counter drugs between a pharmaceutical company and a pharmacy or any other contract.  They clearly do.


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## BocaBum99 (Aug 16, 2007)

grupp said:


> If not for the ROFR I am sure you could have found another tool. Such as, Olympics are coming to town, Park City has moratorium on new construction this close to the slopes, Marriott is not building an more lockouts and the list goes on and on...
> 
> Obviously, ROFR is one of those issues where each side has it opinions and we will have to agree to disagree. There are clearly many factors that influence the price of timeshares and just don't believe that ROFR is one of them. But if helps people sleep better thinking that Marriott is looking out for their best interest by exercising their ROFR, that is fine with me.
> 
> Gary



Gary,

Why don't you study the resale prices for HGVC points before and after they implemented ROFR.  I think you will be enlightened.

You are entitled to your opinion.  The only difference is that mine is based on fact.


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## PerryM (Aug 16, 2007)

*2 different outcomes....*

Image a horrible accident with many fatalities.  The heirs of 2 families are now saddled with timeshares that they don’t want and must sell – quickly.  Both families are internet savvy and type in “Timeshare owners” in Google and find TUG as #1.

The parents of both families just bought $70,000 of timeshares each:

Family “A” bought 2 Marriotts and family “B” bought 2 FairFields (Wyndham now).


Family “A” sells their 2 inherited Marriotts for $42,000 (40% Marriott discount)
Family “B” sells their 2 inherited FairFields for $10,500 (85% typical FF discount)

All 4 resorts and condos are comparable – same quality.  Part of that huge difference to the heirs is due to Marriott’s ROFR in my opinion.  I must admit I can't prove it.


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## timeos2 (Aug 16, 2007)

BocaBum99 said:


> Gary,
> 
> Why don't you study the resale prices for HGVC points before and after they implemented ROFR.  I think you will be enlightened.
> 
> You are entitled to your opinion.  The only difference is that mine is based on fact.



Check out Wastegate resales before and after they pulled their ROFR card. The value has only continued down - it seems even faster than before ROFR - so ROFR by itself doesn't guarantee anything to anyone except even more hassle for buyers and sellers. A miserable resort management is just as bad with or without ROFR.  ROFR is restraint of trade and should be outlawed.  If a developer wants the chance to buy back property they should have a standing buy back price. THAT would help prop up resale prices as ROFR can never do.  ROFR is another in the developer control tools pure and simple.


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## dougp26364 (Aug 16, 2007)

BocaBum99 said:


> In general, I agree with the OP that ROFR provides artificial price supports in the timeshare market.  Artificial price supports ALWAYS have some negative consequences which is why I am usually completely against them.  The case that the OP provides is one example of the potential negative impact of such an artificial and partial price support.......


How can this be artifical support if there is a buyer willing to pay that price? Just because there is at least ONE prospective buyer willing to pay the highest price to a point (the developer) then it is not an artificial price support. Trust me, the developer isn't going to take a bath just to keep resale prices at a point that is still considerably lower than what they are selling units for. The developer is buying what it feels it can resell at an even higher price that what it is paying for the unit. 

IOW, buy low and sell high. Which is the opposite of what most timeshare buyers (and those on the stock market) tend to do.


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## BocaBum99 (Aug 16, 2007)

timeos2 said:


> Check out Wastegate resales before and after they pulled their ROFR card. The value has only continued down - it seems even faster than before ROFR - so ROFR by itself doesn't guarantee anything to anyone except even more hassle for buyers and sellers. A miserable resort management is just as bad with or without ROFR.  ROFR is restraint of trade and should be outlawed.  If a developer wants the chance to buy back property they should have a standing buy back price. THAT would help prop up resale prices as ROFR can never do.  ROFR is another in the developer control tools pure and simple.



I don't know about Westgate since I've never dealt with them, but I did say earlier in the thread that a scoundrel Resort Developer could use ROFR to manipulate the market to the detriment of owners.  Some simple things a Resort Developer could do include taking 6 months to render an opinion on whether or not they want to exercise ROFR.  That would scare away a lot of buyers.  They could charge an exhorbitant ROFR fee of $1500 to the seller or buyer if they exercise ROFR.  A developer can do a lot of things to kill the resale market.


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## BocaBum99 (Aug 16, 2007)

dougp26364 said:


> How can this be artifical support if there is a buyer willing to pay that price? Just because there is at least ONE prospective buyer willing to pay the highest price to a point (the developer) then it is not an artificial price support. Trust me, the developer isn't going to take a bath just to keep resale prices at a point that is still considerably lower than what they are selling units for. The developer is buying what it feels it can resell at an even higher price that what it is paying for the unit.
> 
> IOW, buy low and sell high. Which is the opposite of what most timeshare buyers (and those on the stock market) tend to do.



It's quite simple.  At any given moment in time, a certain percentage of buyers would have been willing to pay more for a product than they actually paid.  If they pay a higher amount than the free market would normally dictate, then they are paying an unfair surcharge due to the policy and the developer is reaping that surplus.  I don't know of many people who would decline paying a lower price for a given product if given the chance.  That is what a Supply and Demand Curve is all about.  It represents how many people are willing to pay a certain price for a product or service.  Using your logic, I could argue that the market price is ALWAYS higher than the last price sold since there was someone who was willing to pay more than they did, but didn't have to do so.  That would lead to the conclusion that the highest price anyone is willing to pay is the market price.  That is clearly not the case.

The reason why ROFR creates a distortion in the market is because it artificially removes part of the supply / demand curve.  Anyone below a certain point on the curve is effectively removed from the market.  So, the remaining buyers are only the higher ones.  This creates a deficit of buyers and the net result is longer time to sell until a new batch of buyers who are willing to pay the higher price emerges.  

How this manifests itself as a problem is in the time to find a buyer.  If the normal supply / demand curve says that there are for instance 100 buyers and 100 sellers who are willing to pay $10,000 for a given timeshare, that is the point at which the market clears.  In other words, it is price point at which the available demand = the available supply.

If you have a higher price point, you may have 75 buyers who are willing to pay $15000 for the same timeshare.  But, since they could get it for $10000, they take it at the lower price.  Now, at $15000, there could be 200 sellers who are willing to sell at that price.  But, since there are only 75 buyers, those buyers are gone after those 75 get their units.  That leaves 125 sellers less the number exercised by the developer without a buyer.   And, just because the exercise rate is $15000, it doesn't mean that the seller is getting $15000.  It does mean that if a deal sold for $10000 that it was the developer who got it.  

So, in a relatively efficient market, when the ROFR rate is set higher than the market rate, that leads to longer than expected sales cycles and a certain percentage of buyers who pay more than they would have without the ROFR policy.

If the ROFR is set lower than the market rate, then it will have either no effect OR it could have a major impact if the resort developer uses ROFR to stonewall and severely impair the resale market using examples that I described earlier.

If ROFR is set at the market rate, then it could have a slight positive effect since there is increased demand by the developer.

In a relatively efficient market, I would be totally against ROFR like I was when I first started in timesharing.  Now, I've learned that with the dramatic inefficiencies in the market, the longer sales cycles could prevent sellers from selling at a fire sale rate since they can't find and don't know where the market is.  It would give them time to find it.  But, on the other hand, without an organized market, it also forces people to give up completely and do anything to dump the ongoing liabilities of their timeshare assets.  The post card companies living off this market inefficiency.

The root cause of the lack of a robust resale market and need for ROFR is the Resort Developers sales and marketing approach.  Since they have to lure people in with free gifts and close them hard that day, it leads to at least a 2 or 3 tier market with dramatically differing price points and they support the multi-tier of market with product features that don't transfer if you buy a unit from anyone other than themselves.  That scenario is caused by the lack of good information in the market.  Because if there were good information readily available, then the resort developers would never be able to sell for as much as they do.  So, they withhold information from the market and do everything they can to minimize information about the resale market from owners.  I believe this will change over the next 10 years as the diffusion of information gets out into the market and the internet becomes more prevalent to people of all ages.

But, there is no doubt that ROFR has an impact on the resale market.  If it didn't, there wouldn't be a need for it.


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## JimC (Aug 16, 2007)

grupp said:


> When I say impact price, I was refering to the market as a whole. I would agree that the ROFR may have an impact a particlar sale since the buyer may not want to spend the time to find another unit and offer to pay more. But I do not believe the it has an impact on the market as a whole for a variety of reasons.
> 
> Gary



I disagree.  ROFR affects the market price for the resort.  How much depends on how aggressive the developer uses it.  A perfect example of this is DVC (Disney).


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## Bill4728 (Aug 16, 2007)

My suggestion is a little simpler. Change from ROFR  to ROFO (right of first offer).

ROFR would become right of first offer (ROFO) . Before you sell, you must first offer to sell the developer the TS. The developer give you a price and you as the seller can either take it or not. That way the developer has first access to anyone selling and if the seller thinks the offer is fair, the seller doesn't have to go thru the hassel of finding an outside buyer.

What do you think?


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## JimC (Aug 16, 2007)

Bill4728 said:


> My suggestion is a little simpler. make a change to ROFR.
> 
> ROFR would become right of first offer (ROFO) . Before you sell, you must first offer to sell the developer the TS. The developer give you a price and you as the seller can either take it or not. That way the developer has first access to anyone selling and if the seller thinks the offer is fair, the seller doesn't have to go thru the hassel of finding an outside buyer.
> 
> What do you think?



Nice, except timeshare ROFR serves the developer's interests.  I don't see why a developer would insert that language in their agreement


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## BocaBum99 (Aug 16, 2007)

ROFR absolutely impacts the market.   If it didn't, there would be no need for it.

I believe that a resort developer can use ROFR to create a more efficient market for its products if used properly.  It can also use it to destroy the resale market for its product.

Either way, it is clearly a market manipulation vehicle.  The free marketer in me says it should be outlawed.  But, the way that some developers use it, it is actually fairly benign.

At this point, I say keep it until the market matures a bit more and then make it illegal.


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## PerryM (Aug 16, 2007)

*And in this corner......*

The ROFR is the lynchpin of developer involved resales – this has got to be a great idea to everyone involved.

The developer is the one who magically prices a timeshare for prices that cause one to slap yourself upside the head.  Who wouldn’t want this guy on your side?

If you don’t have a ROFR and developer involved resales the opposite happens – the developer goes out of his way to create VIP programs like Wyndham (FF) or WM – anything to make the resale market look bad and thus the resale prices plunge.

You can’t have it both ways – *either the developer is in your corner or in the opponent's corner.*


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## timeos2 (Aug 16, 2007)

PerryM said:


> You can’t have it both ways – *either the developer is in your corner or in the opponent's corner.*



Or it's Wastegate who manages to accomplish everything negative about both sides of the equation and nothing positive for the owner.  That's at least as hard to do as making everything positive would be. Negative values?  Wastegate has got it down to a science.


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## CaliDave (Aug 16, 2007)

I've watched HGVC resales for years. They are pretty easy to compare since they are points based. 
Before they started exercising ROFR, I got 4800 points for $6K.
Shortly after, (18 months) they started aggressively exercising and I sold my 4800 to Hilton for $7500. I didn't even use ROFR, I called and thats what they offered. Recently they have slowed down the ROFR purchases and I think it'll pass well under $7K and it'll probably slowly get back to the $6K mark until they need more inventory.

I haven't kept track much this year.. but these are observations from the last few years.


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## taffy19 (Aug 16, 2007)

BocaBum99 said:


> I don't know about Westgate since I've never dealt with them, but I did say earlier in the thread that a scoundrel Resort Developer could use ROFR to manipulate the market to the detriment of owners. Some simple things a Resort Developer could do include taking 6 months to render an opinion on whether or not they want to exercise ROFR. That would scare away a lot of buyers. They could charge an exhorbitant ROFR fee of $1500 to the seller or buyer if they exercise ROFR. A developer can do a lot of things to kill the resale market.


The Marriott has a certain amount of days to accept or reject the right to purchase the timeshare from the seller and the amount of days is mentioned in the contract. If that amount of days has passed, your sale is automatically valid between the buyer and seller and that has happened a few times too. It is so much better explained here, Boca.

I feel that the Marriott did this so they have more control over re-sale prices and it gives them the opportunity to buy back a timeshare condo that is in prime season in a high demand resort so they can sell it again at a profit.

Up till now, the ROFR clause has been more beneficiary to the sellers of the MDSV-II with the ROFR clause in the contract than to the sellers of MDSV-I without this clause. Some were sold at prices way below of many listings that I was aware of and it has been mentioned here many times to buy at MDSV-I because you can make an offer at lower prices. When we traded in our MDSV-I, we got a much higher offer than the highest listing price on the Internet so we were very happy and we made a profit too. I know we paid too much by buying from the developer again, in your opinion, but it is the week we wanted and the view we like to have but we bought it for *use* and enjoyment.

I also believe that the Marriott didn't want to see happen to the re-sale prices what has happened to the Fairfield resorts or some of the independent resorts too or others too that I am not even familiar with. Personally, I see the re-sale prices going down from here on for all resorts no matter what or where they are because of the economy and Marriott may use the right to purchase a re-sale condo very infrequently unless they have a buyer waiting for it and they can make a quick profit. 

I also have a feeling that developers are not looking for new locations for a while until they have built what they have announced already. I hate to think about all the defaults that will be dumped on the market in the next few years because people bought on credit. You will find bargains galore but I hope that the HOAs will be able to cover the expenses of all the drop-out members.  

If you still want to buy a resort from the developer at pre-construction prices today, ask them to strike out the ROFR clause, if it bothers you so much. If they don't want to do this, walk away from the sale. If too many people do this, Marriott may change their mind about this clause.

Only Disney has a true minimum price in the market place because they guarantee to take it back from you at that price but what happens when you get to the end of the RTU period? How can it be worth anything unless you renew the RTU contract again?

It's interesting to watch the constant changes in this industry but will it get better for the developers or for the timeshare owners? Being a renter sounds awfully safe to me for the next few years unless you make a living at it and know what you are doing or your maintenance fees are all covered with some of your extra time or points.


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## grupp (Aug 16, 2007)

BocaBum99 said:


> Gary,
> 
> Why don't you study the resale prices for HGVC points before and after they implemented ROFR.  I think you will be enlightened.



Boca
I don't really know anything about HGVC points, so can't comment on them. However, intuitively it would seem more likely that a ROFR might impact prices on a points (commodity) system than the weeks system as currently implemented by Marriott. Might be interesting to look at further, when did they implement their ROFR?
Gary


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## grupp (Aug 16, 2007)

Dave M said:


> It just happens that sometimes the existence of that ROFR policy also benefits some people other than Marriott; not always, but sometimes.



Dave 
Actually, this is something we agree on in regard to the ROFR. See my post #23 in this thread. 

Gary 
http://www.tugbbs.com/forums/showthread.php?t=50277


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## potchak (Aug 16, 2007)

thinze3 said:


> Question is, what would Marriott OFFER?



Marriott will not offer anything as long as they have their own units to sell. They will only offer to sell to you when all of their own inventory is sold. Since they are still selling the original developer weeks, they would probably not sell yours for years.


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## timeos2 (Aug 16, 2007)

*DVC offers no gauarantees*



iconnections said:


> Only Disney has a true minimum price in the market place because they guarantee to take it back from you at that price but what happens when you get to the end of the RTU period? How can it be worth anything unless you renew the RTU contract again?




Huh? There is no "guarantee" in the DVC process. In fact, as predicted, the ROFR level is already dropping for the older resorts and most likely will accelerate as the time left dwindles.   Also DVC is almost unique in US timeshares as few others have such an absolute end date and so much control over all aspects of the process.  

As for the end of the RTU here is exactly what will happen. The buyers (really renters) will owe the full amount of annual fees - some of the highest in the industry already and almost sure to be far higher by the end - and then within twelve months will own rights to nothing.  Long before then the resale value will be near zero as any ROFR will have been stopped years before and the high annual fees make even a give away price not much of a value.  

That is the biggest downside to the DVC product as the other problems - small units, high fees, total developer control - can be overlooked if you want to be 110% Disney. But that loss of capital and zero resale value not that far off will sour most on the DVC product over the long run. One of the myths is that DVC is among an extremely small group of timeshares that hold their value. It is only true in the extremely short term.  That myth will be exposed before much longer for the owners of early termination RTU contracts.


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## PerryM (Aug 16, 2007)

*Houston; hold the countdown....*



timeos2 said:


> Huh? There is no "guarantee" in the DVC process. In fact, as predicted, the ROFR level is already dropping for the older resorts and most likely will accelerate as the time left dwindles.   Also DVC is almost unique in US timeshares as few others have such an absolute end date and so much control over all aspects of the process.
> 
> As for the end of the RTU here is exactly what will happen. The buyers (really renters) will owe the full amount of annual fees - some of the highest in the industry already and almost sure to be far higher by the end - and then within twelve months will own rights to nothing.  Long before then the resale value will be near zero as any ROFR will have been stopped years before and the high annual fees make even a give away price not much of a value.
> 
> That is the biggest downside to the DVC product as the other problems - small units, high fees, total developer control - can be overlooked if you want to be 110% Disney. But that loss of capital and zero resale value not that far off will sour most on the DVC product over the long run. One of the myths is that DVC is among an extremely small group of timeshares that hold their value. It is only true in the extremely short term.  That myth will be exposed before much longer for the owners of early termination RTU contracts.




This will truly be something to watch - as the clock ticks down to zero (end of RTU).

My guess, and that's all it is, is that 10 years before the RTU expires Disney will offer to extend the RTU by 20+ years.  They will make a special offer which the proceeds will be used to fatten Mickey's pockets and to refurbish the resorts.

Then look for another 20+ year extension and so on and so on.

I'm sure this is a hot topic somewhere with Disney owners - I'd like to hear what others think.


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## JimC (Aug 17, 2007)

PerryM said:


> This will truly be something to watch - as the clock ticks down to zero (end of RTU).
> 
> My guess, and that's all it is, is that 10 years before the RTU expires Disney will offer to extend the RTU by 20+ years.  They will make a special offer which the proceeds will be used to fatten Mickey's pockets and to refurbish the resorts.
> 
> ...



It is rumored that an announcement on this is coming later this year with OKW being the first to get an extension program.  DVC has already begun staggering their contracts by having the last two resorts each sell for a full 50 year period.


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## JimC (Aug 17, 2007)

timeos2 said:


> Huh? There is no "guarantee" in the DVC process. In fact, as predicted, the ROFR level is already dropping for the older resorts and most likely will accelerate as the time left dwindles.   Also DVC is almost unique in US timeshares as few others have such an absolute end date and so much control over all aspects of the process. .



I believe the other poster was referring to DVC's limited buyback program.  It is not a guarantee because it is only for certain high demand resorts.  And the price is quite low, much less than you would get selling through a broker, even after commission.



timeos2 said:


> As for the end of the RTU here is exactly what will happen. The buyers (really renters) will owe the full amount of annual fees - some of the highest in the industry already and almost sure to be far higher by the end - and then within twelve months will own rights to nothing.  Long before then the resale value will be near zero as any ROFR will have been stopped years before and the high annual fees make even a give away price not much of a value.



Resale value will continue although it will decrease as the contract termination approaches and as you state the likely decline in ROFR being exercised by DVC (not unexpected given that it is a prepaid vacation program).  With any vacation program (timeshare or otherwise), the value depends on how you use it and how you like to vacation.




timeos2 said:


> That is the biggest downside to the DVC product as the other problems - small units, high fees, total developer control - can be overlooked if you want to be 110% Disney. But that loss of capital and zero resale value not that far off will sour most on the DVC product over the long run. One of the myths is that DVC is among an extremely small group of timeshares that hold their value. It is only true in the extremely short term.  That myth will be exposed before much longer for the owners of early termination RTU contracts.



There is no myth.  Your are stating a fact of the life cycle of these contracts and the power of the Disney brand.  I could sell all my DVC points right now and net more than I paid for them.  If I did that, then my vacations cost me the annual fees -- quite a bargain.  If I was an early purchaser the return could come close to free lodgings if I sold now.  If I hold until termination, I will have vacationed at Disney in one bedroom villas for the price of a moderate hotel room, even considering the opportunity cost of the upfront purchase -- still a good value in my opinion.


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## thinze3 (Aug 17, 2007)

potchak said:


> Marriott will not offer anything as long as they have their own units to sell. They will only offer to sell to you when all of their own inventory is sold. Since they are still selling the original developer weeks, they would probably not sell yours for years.



It is the guy on eBay I am referring to. See the earlier posts on this thread.

So you think Marriott would not make him an offer if he called and asked for an offer. I believe if this is the case, then it is possible to get very low numbers past their ROFR. Their price points of buybacks and ROFR have to be similar, with buybacks being a bit lower.

I know that Waioahi is about 70-75% sold. The prices are raised just about every quarter as a result of demand. Some resorts have little to no increase in price. The projection is to be sold out of Waioahi at the end of 2008 or early '09.

Everything is based on demand. If the demand is there, and prices are steadily increasing at good rate, it only makes since that Marriott would offer to buy back your unit. Reason, because it is a good investment! Regardless of being sold out or not, buying something at 50% of what you can sell it for now, and having that product increase greatly in value while "sitting on the shelf" is too good to pass on. It is *not *good business to "run out" of inventory before replenishing the stock.

I will bet a dollar to a doughnut that Marriott would be very happy to buy back your Waiohai unit today!


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## CMF (Aug 17, 2007)

*This is not always the case.*



potchak said:


> Marriott will not offer anything as long as they have their own units to sell. They will only offer to sell to you when all of their own inventory is sold. Since they are still selling the original developer weeks, they would probably not sell yours for years.




I believe that Marriott is not sold out at Grande Vista and they offered to purchase my week.

Charles


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## PerryM (Aug 17, 2007)

*Lets use the ostrich model...*



JimC said:


> It is rumored that an announcement on this is coming later this year with OKW being the first to get an extension program.  DVC has already begun staggering their contracts by having the last two resorts each sell for a full 50 year period.



I personally like the concept of a RTU - with the last owners actually owning whole ownership condos which are sold at an auction - the owners split the proceeds.  (This is not Disney)

That simple concept would be revolutionary and timeshares would probably increase in value each year to follow real estate trends.

I have no idea why we have the current mess - what the heck do you do with a 50+ year old timeshare that is run down and still uses VHS tapes and tube TVs, and has that 1960's look to it?  What do we do with this mess?

Talk about an entire industry sticking its head in the sand.

A RTU puts the pressure on all parties concerned to constantly think about the fate of the resort - even from day 1.


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## PerryM (Aug 17, 2007)

*2 for specials....*



CMF said:


> I believe that Marriott is not sold out at Grande Vista and they offered to purchase my week.
> 
> Charles



There are 2 different groups of Marriott folks at work here:

1) When a Marriott is sold out (or has just dregs left) Marriott will act as your real estate broker and the entire resort is up for resale.

2) Hot holiday weeks, in high demand, that might be temporarily in short supply (a new building is scheduled to sell down the road perhaps ) Marriott seems to be willing to buy/sell these in a low key way.

But I am not a Marriott expert, so I could be wrong here.


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## CMF (Aug 17, 2007)

*None of the above.*



PerryM said:


> There are 2 different groups of Marriott folks at work here:
> 
> 1) When a Marriott is sold out (or has just dregs left) Marriott will act as your real estate broker and the entire resort is up for resale.
> 
> ...



Perry, I'm talking about Grande Vista here.  I don't think that the scenarios you describe apply.  Grande Vista is still in the active sales phase; the new building are not sold out.  And, I own a floating Gold week in, of course, Orlando; so much for hot high demand weeks.


Charles


Charles


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## PerryM (Aug 17, 2007)

*Gold into Platinum?*



CMF said:


> Perry, I'm talking about Grande Vista here.  I don't think that the scenarios you describe apply.  Grande Vista is still in the active sales phase; the new building are not sold out.  And, I own a floating Gold week in, of course, Orlando; so much for hot high demand weeks.
> 
> 
> Charles
> ...



Maybe Marriott has a new policy - I don't know.

If Marriott finds that it can flip the same unit over and over again why not get in that business?

But, I'm just guessing here.

Another WAG here - Marriott is buying back Gold weeks to change the calendar and replace a Gold week with a Platinum week - then they could indeed turn Gold into Platinum.  I'd do that if I were them.


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## CMF (Aug 17, 2007)

*And how would this work?*



PerryM said:


> Another WAG here - Marriott is buying back Gold weeks to change the calendar and replace a Gold week with a Platinum week - then they could indeed turn Gold into Platinum.  I'd do that if I were them.



Perry, nothing is impossible, but this is infinitesimally remote.  Has this ever happened? And how would this work when they are buying floating weeks? How many weeks would they have to buy to change the season?  Wouldn't some Gold week owners suddenly find themselves owners of Platinum weeks?  How will this sit with the preexisting Platinum week owners who paid a premium?  Won't Platinum weeks loose their value? I'm sure there are a ton of other reason why this is idea is unworkable.


Charles


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## PerryM (Aug 17, 2007)

*I'll look into my crystal ball....*



CMF said:


> Perry, nothing is impossible, but this is infinitesimally remote.  Has this ever happened? And how would this work when they are buying floating weeks? How many weeks would they have to buy to change the season?  Wouldn't some Gold week owners suddenly find themselves owners of Platinum weeks?  How will this sit with the preexisting Platinum week owners who paid a premium?  Won't Platinum weeks loose their value? I'm sure there are a ton of other reason why this is idea is unworkable.
> 
> 
> Charles



I'm just trying to find some logic behind a seemingly illogical behavior.

I have no idea what would be required to change the season calendar - it happened at MountainSide when we owned there.

Week 7 is a very hot ski week at a ski resort.  When we bought in 1999 week 7 was just a plain old Platinum week.  Marriott changed the calendar making it a Platinum Plus Holiday week while sales were going on.

So there is precedence for Marriott changing the calendar.  I don't know who controls the HOA but I suspect Marriott does - they could easily do this if they want.

They would try to buy all the Gold weeks they can get their paws on and say that these units are now Platinum - just that simple I think.


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## thinze3 (Aug 17, 2007)

> ..... Reason, because it is a good investment! Regardless of being sold out or not, buying something at 50% of what you can sell it for now, and having that product increase greatly in value while "sitting on the shelf" is too good to pass on. It is *not *good business to "run out" of inventory before replenishing the stock....



Example:
Marriott sales 2BR units today for $40,000. That property increases 10% a year for two years. New price is $48,400 in two years.

Marriott buys your unit back from you at $20,000 today. Two years later, Marriott is out of their own onventory and sells the unit they bought from you for $48,400.

They make a profit of $28,400 or 142%. That's a 55.5% annual return on there investment. :whoopie:
Of course MF, sales commsisions, etc... (maybe even interest) must be deducted.
Anyhow, it is more than enough reason for Marriott to buy back a Waiohai (or any quality unit) now, even though they are not yet sold out.


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## CMF (Aug 17, 2007)

*It's madness I tell ya.*



PerryM said:


> They would try to buy all the Gold weeks they can get their paws on and say that these units are now Platinum - just that simple I think.




So, under this scenario, Marriott would buy my week 45, and:

Platinum season that now ends at week 34 will extend to week 45?

Marriott buys a ton of additional week 45s and then Platinum skips from week 34 to week 45?


Charles


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## Dave M (Aug 17, 2007)

No. I think Perry is suggesting a scenario where Marriott would extend the Platinum season by a single week, thus, for example, converting week #35 from Gold to Platinum. As you indirectly point out, that's possbile only by converting those weeks that are deeded as week #35 to Platinum. Since Marriott couldn't possibly buy any more than a small fraction of those deeded #35 weeks, Perry's "WAG" idea isn't practical.


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## JimC (Aug 17, 2007)

PerryM said:


> I...I have no idea why we have the current mess - what the heck do you do with a 50+ year old timeshare that is run down and still uses VHS tapes and tube TVs, and has that 1960's look to it?  What do we do with this mess?...



We are fortunate the both Marriott and Disney reinvest in their resorts.  It means higher fees and reserves, but the resorts age more gracefully and the amenities are kept current.


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## timeos2 (Aug 17, 2007)

*All resorts should be updated but not all are*



JimC said:


> We are fortunate the both Marriott and Disney reinvest in their resorts.  It means higher fees and reserves, but the resorts age more gracefully and the amenities are kept current.



Every resort that is properly operated should have the same plan. Maintain, reinvest, update. If they don't it's because the owners refuse to raise fees (a shortsighted "savings") or the Board/Management isn't doing their job correctly. 

Unlike DVC the Marriott or other deeded t/s owner's money goes to improve their resort while DVC reaps the ultimate benefit of the money poured into their resorts as they, not the long term renters, actually never give up ownership or control. No wonder their fees are among the highest while the resorts tend to have smaller than average unit sizes.  Di$ney knows how to make money and DVC t/s is just another money spigot for them.  And they keep it flowing.


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## PerryM (Aug 17, 2007)

CMF said:


> So, under this scenario, Marriott would buy my week 45, and:
> 
> Platinum season that now ends at week 34 will extend to week 45?
> 
> ...



Here's what I'm getting at:

Right now Week 35 at Grande Vista is Gold, Marriott want's that week to be Platinum like week 34.

If there are 300 villas in the sales "pot" now then 300 Gold weeks will have to be converted to Platinum.  They could just take 300 Gold weeks for sale now and move them from the Gold pot of weeks to the Platinum pot of weeks.

Or, they could buy buy a Gold week from an existing owner and drop it into the Platinum pot.  This might make sense to them with new buildings coming on line - I don't know.

The week number on your deed means nothing - your deed has "Gold season" on it but it is floating and is looked up in a table to find out what season it belongs to.

Frankly none of this makes sense to me but I can't think of any other reason why Marriott would want to buy your Gold week.

I'll keep thinking...


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## PerryM (Aug 17, 2007)

*Putting a timeshare out of it's misery...*



JimC said:


> We are fortunate the both Marriott and Disney reinvest in their resorts.  It means higher fees and reserves, but the resorts age more gracefully and the amenities are kept current.




At some point no amount of replacing the old rugs with new rugs drives folks wild to want to exchange into the resort - resale prices plunge with no end in sight.

I guess a resort could decide to have a major face lifting and sock the owners with eye-watering special assessments but why?   What if the neighbourhood goes to hell?

That's the dilemma I see for older timeshares - just when do you put them out of their misery?  And then what?


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## timeos2 (Aug 17, 2007)

*There is a time when things have to be decided*



PerryM said:


> At some point no amount of replacing the old rugs with new rugs drives folks wild to want to exchange into the resort - resale prices plunge with no end in sight.
> 
> I guess a resort could decide to have a major face lifting and sock the owners with eye-watering special assessments but why?   What if the neighbourhood goes to hell?
> 
> That's the dilemma I see for older timeshares - just when do you put them out of their misery?  And then what?



Properly maintained and reasonably constructed resorts should have a life of 75+ years.  That doesn't mean that the neighborhood wouldn't become undesirable or the owners simply tire of the operation but physical end of life can be a century or more away.  

I agree that attempting to reach an end of life decision isn't going to be easy at most timeshare resorts.  Most require a super majority vote - (at least 50% of 66% of all owners voting for the move) to make any type of document alteration or disbanding of the project.  Even now, when sales are relatively recent and people care about the resort, it is nearly impossible to get 66% of all owners to reply to anything - in 50 years the chance will be almost zero as ownership passes to heirs, deeds are forgotten, people move, etc.  

And if such a vote isn't successful? The project lives on.  At that point most likely to follow the path of the infamous DelRay Beach resort that simply fell into disrepair and finally there were enough foreclosed and deed back weeks to simply put it out of it's misery.  No one got anything out of it except the developer who got to rebuild something new on the land.  Hopefully resorts will keep ownership lists current and when the time comes they will be ready to get a valid vote to disband or continue. I'll bet some will but many more will end up like that Delray Beach resort did.  It will be an issue in the future for many resorts.


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## CMF (Aug 17, 2007)

*My theory.*



PerryM said:


> Frankly none of this makes sense to me but I can't think of any other reason why Marriott would want to buy your Gold week.
> 
> I'll keep thinking...



Possible reason one:  Marriott loves me and wants me to be happy.

Possible reason two:  They can sell my week for about three times of what they offered me; AND, my unit is a three bedroom lockout - the three bedrooms in the new buildings are not lockouts.


Charles


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## PerryM (Aug 17, 2007)

timeos2 said:


> Properly maintained and reasonably constructed resorts should have a *life of 75+ years*.  That doesn't mean that the neighborhood wouldn't become undesirable or the owners simply tire of the operation but physical end of life can be a century or more away.
> 
> I agree that attempting to reach an end of life decision isn't going to be easy at most timeshare resorts.  Most require a super majority vote - (at least 50% of 66% of all owners voting for the move) to make any type of document alteration or disbanding of the project.  Even now, when sales are relatively recent and people care about the resort, it is nearly impossible to get 66% of all owners to reply to anything - in 50 years the chance will be almost zero as ownership passes to heirs, deeds are forgotten, people move, etc.
> 
> And if such a vote isn't successful? The project lives on.  At that point most likely to follow the path of the infamous DelRay Beach resort that simply fell into disrepair and finally there were enough foreclosed and deed back weeks to simply put it out of it's misery.  No one got anything out of it except the developer who got to rebuild something new on the land.  Hopefully resorts will keep ownership lists current and when the time comes they will be ready to get a valid vote to disband or continue. I'll bet some will but many more will end up like that Delray Beach resort did.  It will be an issue in the future for many resorts.



75 years is the definition of an antique - who want's to vacation there?

Folks seem to want the flashiest and newest place to vacation - imagine a tube type of radio/TV in the room - no remote.  OMG American's would be humiliated.

I am no expert at age of hotels/motels but they seem to need major upgrades every 25 or so years to be competitive.  Timeshares still compete with other timeshares.  Over just a 40 year life span most original owners have sold their units or their heirs want to sell - who will buy?


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## Dave M (Aug 17, 2007)

PerryM said:


> Here's what I'm getting at:
> 
> Right now Week 35 at Grande Vista is Gold, Marriott want's that week to be Platinum like week 34.
> 
> If there are 300 villas in the sales "pot" now then 300 Gold weeks will have to be converted to Platinum.  They could just take 300 Gold weeks for sale now and move them from the Gold pot of weeks to the Platinum pot of weeks.


That would work only if Marriott had control of all weeks that are currently designated for week 35. Marriott can't issue deeds for unit and week #s that they have already sold. In most - if not all - states, that would violate the law. Further, if Marriott has already sold some timeshares that list week #35 on the deed, those would become Platinum weeks under your plan - with no additional revenue to Marriott.





> The week number on your deed means nothing - your deed has "Gold season" on it but it is floating and is looked up in a table to find out what season it belongs to.


Those designations of unit # and week # in a deed don't have any significance for reservation priority purposes, but they are very important for ownership purposes. 

None of my Marriott deeds - three different resorts - specify what season I own in, contrary to your statement. That's probably because the seasons are part of the resort's "Program", which Marriott can change at its option. If the season showed on my deed, Marriott couldn't make that change unilaterally for week #35, unless it owned every deeded week #35 timeshare.

As I suggested earlier, your proposal doesn't seem at all practical.


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## CMF (Aug 17, 2007)

*I would if they were built right.*



PerryM said:


> 75 years is the definition of an antique - who want's to vacation there?



I agree - mostly.  The timeshares I've seen will not stand-up to the test of fashion and time.  But that does not have to be the case.  I think there are many that would love to stay in a old building that was done right, e.g., a nicely restored art deco condo in Miami, an Irish castle, or Italian palazzo.  


Charles


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## thinze3 (Aug 17, 2007)

Dave M said:


> ....None of my Marriott deeds - three different resorts - specify what season I own in, contrary to your statement. That's probably because the seasons are part of the resort's "Program", which Marriott can change at its option...




I believe that if Marriott increases the length of a "platinum season, thereby shortening the length of a gold season, there would be more than a handfull of mad gold owners who bought "knowing" what their season was. The new platinum week would most certainly be the most premium gold week to boot. More the reason for gold owners to be mad.

I personally think Marriott might have a leagl liability on their hands, regardless of what ownership documents say. Consequently, I don't believe Marriott would try  to pull such a stunt.

Now, as resorts mature and new buildings are added, seasons in those new buildings very well may change. As a matter of fact, it's not all that uncommon. That's a whole different ball game. IMO


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## PerryM (Aug 17, 2007)

Dave M said:


> That would work only if Marriott had control of all weeks that are currently designated for week 35. Marriott can't issue deeds for unit and week #s that they have already sold. In most - if not all - states, that would violate the law. Further, if Marriott has already sold some timeshares that list week #35 on the deed, those would become Platinum weeks under your plan - with no additional revenue to Marriott.Those designations of unit # and week # in a deed don't have any significance for reservation priority purposes, but they are very important for ownership purposes.
> 
> None of my Marriott deeds - three different resorts - specify what season I own in, contrary to your statement. That's probably because the seasons are part of the resort's "Program", which Marriott can change at its option. If the season showed on my deed, Marriott couldn't make that change unilaterally for week #35, unless it owned every deeded week #35 timeshare.
> 
> As I suggested earlier, your proposal doesn't seem at all practical.



I just looked at our Summit Watch deed - it does not mention season; so the state doesn't care about season in the description of the unit and the season could change - I guess.  Our Park Plaza units do mention "Prime Ski Season" it's a Utah property too.

So what would prevent Marriott from just picking 300 (300 villas) Gold weeks which have or have not been sold and change them to Platinum?  I don't know, but am guessing, that the HOA has to get involved here - and if run by Marriott they would authorize it.

Somehow this happened at MountainSide while sales were going on.


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## JimC (Aug 17, 2007)

PerryM said:


> At some point no amount of replacing the old rugs with new rugs drives folks wild to want to exchange into the resort - resale prices plunge with no end in sight.
> 
> I guess a resort could decide to have a major face lifting and sock the owners with eye-watering special assessments but why?   What if the neighbourhood goes to hell?
> 
> That's the dilemma I see for older timeshares - just when do you put them out of their misery?  And then what?



Valid points.  Yet there are some very old resorts around the world that people think very highly of.

My point was that DVC and Marriott have kept their resorts in good order and the fees reflect that reinvestment.  I'll expire long before they get old and decrepit.  And I suspect that I will liquidate my portfolio before the tipping point (where refurbishment investment and maintenance overshadow use and resale value).


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## taffy19 (Aug 17, 2007)

timeos2 said:


> Huh? There is no "guarantee" in the DVC process. In fact, as predicted, the ROFR level is already dropping for the older resorts and most likely will accelerate as the time left dwindles. Also DVC is almost unique in US timeshares as few others have such an absolute end date and so much control over all aspects of the process.


 I thought that I had read that several times but I see now that it is only at certain high-end resorts. Where can I *read more* about Disneyland resorts? I don't see a heading.


timeos2 said:


> As for the end of the RTU here is exactly what will happen. The buyers (really renters) will owe the full amount of annual fees - some of the highest in the industry already and almost sure to be far higher by the end - and then within twelve months will own rights to nothing. Long before then the resale value will be near zero as any ROFR will have been stopped years before and the high annual fees make even a give away price not much of a value.


I was under the impression too that when an RTU contract runs out, you are relieved from paying maintenance fees if you do not want to renew? Is that not true?


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## taffy19 (Aug 17, 2007)

*Gold into Platinum?*



PerryM said:


> Maybe Marriott has a new policy - I don't know.
> 
> If Marriott finds that it can flip the same unit over and over again why not get in that business?
> 
> ...


Perry, older resorts do not use the term "Platinum" but they use "Gold". Is a gold season not the same as a platinum season today or is that a step higher yet?

Does that mean that older resorts like the DSV cannot compete with resorts that have a platinum season today? Are there resorts that have platinum and gold both? Where do I find this information?


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## JimC (Aug 17, 2007)

iconnections said:


> I thought that I had read that several times but I see now that it is only at certain high-end resorts. Where can I *read more* about Disneyland resorts? I don't see a heading.



For DVC resorts go to the DIS



iconnections said:


> I was under the impression too that when an RTU contract runs out, you are relieved from paying maintenance fees if you do not want to renew? Is that not true?



You are correct maintenance fees are due only up to the termination date of the contract.


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## Dave M (Aug 17, 2007)

iconnections said:


> Perry, older resorts do not use the term "Platinum" but they use "Gold". Is a gold season not the same as a platinum season today or is that a step higher yet? ... Are there resorts that have platinum and gold both? Where do I find this information?


The different Marriott seasons are explained in this "Seasons" link from the FAQs for this Marriott forum. I don't believe there are any Marriott resorts where Gold is the highest season. However, most resorts that have a Platinum season as one of several seasons during the year have Gold as the next highest season after Platinum. The FAQ describes how to find the seasons for any single Marriott resort.



> Does that mean that older resorts like the DSV cannot compete with resorts that have a platinum season today? ?


Fortunately for exchangers, the Marriott systems of Platinum, Gold, Special, Summer, Sport, etc. have nothing to do with II's exchange system. Marriott developed those season designations for two purposes: (1) determining different sales prices and (2) determining the portion of a year for which an owner of a specific season can make a reservation. II doesn’t care what Marriott calls its seasons or what period of a year each season covers.

II uses its own criteria for determining trading power based on II's experience for relative demand versus supply in its system for specific weeks of the year (along with its other criteria for resort quality, how far in advance the week was deposited, etc.). That's why, for example, a strong DSV "White" season week (in Marriott's system) such as Thanksgiving week might well trade better than a not so great DSV "Red” Season week (in Marriott's system) such as an early May week.

Thus, whether Marriott calls the prime season at a particular resort by the name Platinum Plus or Platinum or Special or Red should have no impact on how well that week trades with II.


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## timeos2 (Aug 18, 2007)

*RTU fees and total developer control are a potentially bad mix*



JimC said:


> You are correct maintenance fees are due only up to the termination date of the contract.



But up to that last year the fees can and will be whatever DVC wants them to be. If they want to fund a total refurb during the last 5 years before the RTU ends they could. And the way annual fees are rising it may be possible for them to do so.  

Even more interesting is the idea that they will offer "renewal" RTU's at re-purchase prices. Sort of blows a hole in the idea of a "prepaid" vacation and all those carefully crafted break-even plans so many DVC buyers talk about.  

Lets be honest. DVC is a high priced, niche product that can be great for those who would want to spend far over average prices simply to stay on Di$ney property. The temporary bubble of price stability and, in a few cases, actually making money flipping DVC RTU contracts was a fluke that they let slip by - never a planned result.  The ROFR is, like it is for every developer, a way for them to make more money and not a buyer protection. For anyone who doesn't need the Mickey Eared flowers and Goofy napkins to feel they have experienced DVC is not a good deal.  Be sure thats what your family really wants before you lay out big dollars for the "full Di$ney monty".  And don't think that DVC or any other timeshare is anything more than a preplanned vacation - it is never an investment.  If there were as many Di$ney rooms as there are Wastegates the value would be circling the same toilet for both names.  DVC has at least been smart enough to maintain enough exclusivity, and the absolute control of the limited RTU, to not suffer the overbuilt fate of the Orlando mega-resorts. But that is wise business for them not any guarantee of money back or value to any DVC owner.  They are nothing if not smart business people.


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