# The Marriott ROFR Debate: helpful to sellers or not?



## Dave M (Aug 23, 2008)

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


*Moderator note to all:*

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

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


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## AwayWeGo (Aug 23, 2008)

*What About The Hallowed Tradition Of Hijacking Discussion Topics ?*




Dave M said:


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


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

That will be a major serious readjustment, no ? 

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


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## Lawlar (Aug 23, 2008)

*I Support Marriott's ROFR*

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

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

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

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

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

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

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


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## london (Aug 23, 2008)

*ROFR*

At what price point does Marriott excercise its ROFR.

50 to 60% of retail? 

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


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## m61376 (Aug 23, 2008)

london said:


> At what price point does Marriott excercise its ROFR.
> 
> 50 to 60% of retail?
> 
> Most resales are Redweek.com appear to be at about 50% of retail.



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

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


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## tombo (Aug 23, 2008)

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

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

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

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

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


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## m61376 (Aug 23, 2008)

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

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


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## Steamboat Bill (Aug 23, 2008)

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

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

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


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## timeos2 (Aug 23, 2008)

*The message is simple. No need to debate*

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


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## thinze3 (Aug 23, 2008)

london said:


> At what price point does Marriott excercise its ROFR.
> 
> 50 to 60% of retail?
> 
> Most resales are Redweek.com appear to be at about 50% of retail.



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

Terry


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## RLG (Aug 23, 2008)

Dave M said:


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



Thank you.  Thank you.  Thank you.

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


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## AwayWeGo (Aug 23, 2008)

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




Steamboat Bill said:


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


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

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

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


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## Steamboat Bill (Aug 23, 2008)

AwayWeGo said:


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



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


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## dioxide45 (Aug 23, 2008)

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


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## tombo (Aug 23, 2008)

m61376 said:


> Tombo-
> You'd probably be shocked, but over the past 2 years I have seen several posts from people who have done just what you are sure no one would- raised their accepted offer because they wanted the property and didn't want Marriott to nab it. I'd agree that isn't the majority, but it does happen.
> 
> I belong in the camp of those who feel ROFR, while certainly good for Marriott, is also good for owners. You are right- it doesn't help sellers, but owners overall benefit from the potential perception of a depressed market because of a few desperate sellers who will let their units go for below market values (and, I know, you will counter-argue that if that's what they went for, that's the market value. However, just like when stores have liquidation sales, the prices they have sold merchandise at doesn't necessarily reflect the true market value).



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

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

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

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

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


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## tombo (Aug 23, 2008)

Steamboat Bill said:


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




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

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

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


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## travelplanner70 (Aug 23, 2008)

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

Thanks.


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## tombo (Aug 23, 2008)

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

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


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## Dave M (Aug 23, 2008)

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

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


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## Icarus (Aug 24, 2008)

I can go both ways on the ROFR debate.

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

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

-David


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## chuck1955 (Aug 25, 2008)

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

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

Chuck


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## AwayWeGo (Aug 25, 2008)

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




chuck1955 said:


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


Bargain resale pricing happens anyway, ROFR or no-ROFR _mox nix_. 

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

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

ROFR = ROFL. 

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


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## Steamboat Bill (Aug 25, 2008)

AwayWeGo said:


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



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


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## timeos2 (Aug 25, 2008)

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



Steamboat Bill said:


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



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


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## Stefa (Aug 25, 2008)

Steamboat Bill said:


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



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


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## Icarus (Aug 25, 2008)

chuck1955 said:


> I don't see how it can hurt the seller, who is getting the price regardless, and I don't see how it can do anything but help the owners.  Anytime Marriott applies ROFR than you can assume the seller's price was below market, and they are in turn reselling it at a higher price, raising the price floor.  And Marriott is in the best position to know what the price floor should be.  I think almost all of the negatives about ROFR come from buyers looking for a bargain or steal, and while I don't blame them for complaining, as a owner I certaining don't want to see bargain pricing on my units.  Of course as a buyer I would look at it differently
> 
> I'm not sure what people are looking for Marriott to do.  ROFR is clearly spelled out in the deed.  I don't believe I have ever seen a seller complain about being ROFR'd unless it was a "friendly" transaction, but there are other ways of handling those....
> 
> Chuck



You are assuming things about Marriott's ROFR process that aren't true.

There is no floor on selling prices with or without ROFR, and Marriott doesn't exercise ROFR to create a floor on prices. They exercise it when they think they can make a profit for themselves by doing so, and if they don't want or need that inventory, they won't exercise. They aren't doing it out of some altruistic reason. They do it simply to make more profits.

The salespeople would have you believe exactly what you said. That ROFR protects owners. It doesn't.

The timeshare business is a heck of a business for a company like Marriott. They make money no matter what an owner does. Want to occupy? They make money. Want to trade for points? They make more money. Want to exchange? They make money. Want to sell? They make more money. Time for a refurbishing of the units? They make more money. Time to increase those maint. fees? They make more money. Want to rent your week through Marriott? They make more money. Want to sell your week through Marriott? They make more money.

What a business.

-David


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## cp73 (Aug 25, 2008)

Icarus said:


> You are assuming things about Marriott's ROFR process that aren't true.
> 
> There is no floor on selling prices with or without ROFR, and Marriott doesn't exercise ROFR to create a floor on prices. They exercise it when they think they can make a profit for themselves by doing so, and if they don't want or need that inventory, they won't exercise. They aren't doing it out of some altruistic reason. They do it simply to make more profits.
> 
> -David



David,

I agree with you on the ROFR. Its just a matter of when Marriott needs inventory and the price is right. It has nothing to do with holding the value for owners. 

Another thing I would point to is DSV I and DSV II. DSV I does not have ROFR and DSV II does have it. Both resales prices are very consistent with one another. The resorts are on the same property and pretty similar. In fact DSV I might even sell for slightly more than DSV II, although probably has nothing to do with ROFR.


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## thinze3 (Aug 25, 2008)

Put yourself into the shoes of a typical timeshare wannabe owner that does NOT spend hours reading and writing about timeshares on the internet. Now, suppose you (the not knowing much about timeshares you) call Stroman Realty, GMAC Realty, Holiday Resales, or even Seth Nock looking to buy a timeshare.  You want to buy Marriott at some resort like NCV, so you ask how much this resort sells for on the resale market.

The agent says, "The developer price is $33K, but I can probably get you into one for about 60% of that if your lucky." You ask, "Why not 50% or even 40%." The agent responds, "Anything less than 60% and Marriott will take the unit away because it has Right Of First Refusl. If you want to own a prime Marriott property like Newport Coast, this is what you will have to pay." You look at your wife for a minute, shrug your shoulders and then say, "How long will it take to write up the offer?" Agent, "I'll have it all written up for you tomorrow sir." You hang up the phone and hug your wife because you are sooo happy.

I can tell you that I have read this exact expression of words before from people like Seth and would have to suspect that experienced timesahare resellers nationwide utter the similar words. Consequently, I personally don't see how ROFR can do anything but help prop up the price of a typical Marriott. Remember we are talking about the typical Joe resale timeshare buyer. *IMO*


Terry 

P.S. - I do agree that it is not the intent of Marriott to prop up your resale price, however.


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## Icarus (Aug 25, 2008)

What the brokers should be saying is that they will write up the offer at any price you want, however, the property has ROFR, and Marriott has a history of exercising at x% of developer pricing on some, but not all sales at this property.

Anything else is not accurate, and they risk losing their brokers license if they do that.

Also, this does nothing for sales that occur outside those brokers.

-David


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## Pit (Aug 25, 2008)

The trouble with ROFR from a seller's point of view, is that it results in fewer buyers in the market, leading to fewer offers and longer times to sell. Many here argue that ROFR causes buyers to increase their offer, citing examples of people who overpaid for fear of ROFR. But, there are many more examples on resale sites of sellers dropping their price well below the supposed ROFR support level or waiting 1-2 years to attract a buyer. Many knowlegdeable, would-be buyers stay out or drop out of the market because of ROFR. Also, the idea that the developer adds to demand by exercising ROFR is incorrect, because the developer is just flipping the units.

*A quality, well managed resort in a desirable location are the requirements for high resale values, not ROFR. *

- ROFR is not a prerequisite for high resale value. Westin (mandatory) resorts retain high resale values, despite the fact that Westin does not invoke ROFR.
- Resale prices for Red season weeks at MDSV-I (no ROFR) are thousands higher than at MDSV-II (with ROFR). ROFR is not supporting the value of those MDSV-II units.
- Resale prices at MSW have not increased (actually appear to have decreased) since Marriott instituted ROFR at this previously non-ROFR resort. ROFR has done nothing to increase resale values.

Put yourself in the developer's shoes. Why would a developer waive ROFR ?

1. There is insufficient buyer demand to quickly flip the unit.
2. Developer inventory is already at or above the desired level.
3. The unit is overpriced.

As a buyer, you don't want to pass ROFR because of # 3.


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## BocaBum99 (Aug 25, 2008)

thinze3 said:


> Put yourself into the shoes of a typical timeshare wannabe owner that does NOT spend hours reading and writing about timeshares on the internet. Now, suppose you (the not knowing much about timeshares you) call Stroman Realty, GMAC Realty, Holiday Resales, or even Seth Nock looking to buy a timeshare.  You want to buy Marriott at some resort like NCV, so you ask how much this resort sells for on the resale market.
> 
> The agent says, "The developer price is $33K, but I can probably get you into one for about 60% of that if your lucky." You ask, "Why not 50% or even 40%." The agent responds, "Anything less than 60% and Marriott will take the unit away because it has Right Of First Refusl. If you want to own a prime Marriott property like Newport Coast, this is what you will have to pay." You look at your wife for a minute, shrug your shoulders and then say, "How long will it take to write up the offer?" Agent, "I'll have it all written up for you tomorrow sir." You hang up the phone and hug your wife because you are sooo happy.
> 
> ...



If a broker used the words you quoted, they would be misrepresenting the situation and could be fined for misrepresentation.  A good broker will only state facts.  What you are stating is speculation. 

The broker doesn't really care if Marriott exercises ROFR, they get paid either way.


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## hotcoffee (Aug 25, 2008)

I cannot imagine why I am getting myself involved in this ROFR debate. I guess I'm in the mood to inject my 2 cents into the discussion.

I, for one, do that think that the bigwigs at Marriott care beans about me as an individual owner.  They might care about all of their owners collectively, however, because Marriott Corporation is a business that depends upon owners spending money on and/or at Marriott timeshare resorts.  What Marriott does, it does for business reasons.  If things got so bad economically that no one were buying timeshares, I doubt that Marriott would exercise ROFR at all.  After all, why would they want to lose a MF to add another unit to their inventory that they cannot sell?

They certainly ARE NOT trying to prop up prices by exercising ROFR on a given unit.  They certainly ARE trying to exercise a business decision because they decided they can make a nice profit by grabbing the unit and reselling it themselves.  

So, while it is possible that, when timeshares are selling well, ROFR might result in slightly higher resale prices due to real estate companies suggesting pricing above what they think will be the ROFR cutoff, most of the time ROFR will make no difference at all.  The market will determine the resale price because the buyer is going to pay the lowest price he can for the unit he wants, and, of course, the seller is going to ask for the highest price he thinks he can sell his unit for (regardless of who buys it).  In the final analysis, a buyer is not going to offer more than he thinks the unit is worth or what he thinks he can afford.  If he knows about Marriott's ROFR policy and knows ahead of time what the ROFR cutoff is, whether he ups his offer will depend upon whether he thinks the unit is worth the extra money and whether he can afford it.  Otherwise, he will just pass on that particular unit.


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## tombo (Aug 25, 2008)

Steamboat Bill said:


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



I personally was ROFR'd on a 2 bed room 2 bath Westgate Smokey Mountains in Gatlinburg which I purchased for $1 plus closing costs. The owner wanted out so bad that they were going to give it to me for free, but I said that I think you have to actually list a selling price to close, so I said let's do the sale for $1. I was mad at the time when Westgate stold it from me using ROFR, but with all the things I have read about Westgate here since then I have come to feel that it was a blessing in disguise.


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## thinze3 (Aug 25, 2008)

BocaBum99 said:


> If a broker used the *words you quoted*, they would be misrepresenting the situation and could be fined for *misrepresentation*.  A good broker will only state facts.  What you are stating is speculation.
> 
> The broker doesn't really care if Marriott exercises ROFR, they get paid either way.



Misrepresenation or experience??

I am not stating that these words were quoted in a misrepresentative way, but that salespeople in the know, express, and have expressed, their knowlegde of the ROFR situation buy telling you up front what will and what won't pass ROFR based on his/her recent history.

The last conversation similar to this I had was about a year ago when I called an experienced salesperson about KoOlina. The salesperson told me that Marriott was buying back anything under $22K for mountainview and a few thousand more for OV. Obviously there was nothing wrong with that conversation. Just an experienced salesperson trying to help me get into a KoOlina unit.

It was also a case where Marriott's ROFR was unintentionaly helping to prop up resale prices.

Terry


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## AwayWeGo (Aug 25, 2008)

*WestGate Nuisance Fees Tacked On ?*




tombo said:


> I personally was ROFR'd on a 2 bed room 2 bath Westgate Smokey Mountains in Gatlinburg which I purchased for $1 plus closing costs. The owner wanted out so bad that they were going to give it to me for free, but I said that I think you have to actually list a selling price to close, so I said let's do the sale for $1. I was mad at the time when Westgate stold it from me using ROFR, but with all the things I have read about Westgate here since then I have come to feel that it was a blessing in disguise.


Did WestGate charge the seller their customary sales commission ? 

Or a ROFR-administration fee ? 

Or both ? 

From what I read here at TUG-BBS, those WestGate timeshare folks can get you both coming & going. 

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


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## tombo (Aug 25, 2008)

AwayWeGo said:


> Did WestGate charge the seller their customary sales commission ?
> 
> Or a ROFR-administration fee ?
> 
> ...



I am not sure whether Westgate got them coming and going or not. I met them on an exchange to Gatlinburg and they had nothing but bad things to say about Westgate. They said they were so disgusted with not being able to reserve the weeks they were promised they could reserve when they bought that they put it up for sale. They had it for sale for over a year starting at $12,000, dropping to $9000, and finally at $3000 with no offers. They said they would rather give it away than pay one more year's MF's. I got their phone numbers, e-mails address, etc and said I will buy it for $1. When the closing company contacted Westgate they said they were going to ROFR the week. The owners were madder than me when they found out that westgate was getting the week because they had offered to give it back to Westgate for $1000 and Westgate said they didn't buy weeks back from owners. That was the last I heard from them so I don't know if Westgate cherged them to sell or not.

The good part of that story is that a woman who worked for me had made a bad mistake and bought a week at the same resort. Her and her elderly mother went in half and still owed about $9000 on their week. They couldn't find a buyer to get them out and were hurting financially making payments. I told them how they could could make ROFR work for them. They said if they could get a couple of thousand for the week  they could come up with enough cash to pay it off. They submitted an imaginary $3000 offer from a friend to Westgate and it was ROFR'd getting them out of a week they couldn't find a buyer for. They wish they had gone higher than $3000 in hindsight on the fake offer, but $3000 was a price they had advertised their week for for months with no offers. They did have to pay some fees, but they were so glad to be done with Westgate that I never found out how much they had to pay.

 If you can't sell your Marriott do the same thing and you will actually make ROFR work for you.


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## cp73 (Aug 25, 2008)

*Brokers and ROFR*



Icarus said:


> What the brokers should be saying is that they will write up the offer at any price you want, however, the property has ROFR, and Marriott has a history of exercising at x% of developer pricing on some, but not all sales at this property.
> Anything else is not accurate, and they risk losing their brokers license if they do that.
> Also, this does nothing for sales that occur outside those brokers.
> -David




I assume the broker gets his commission as long as the sale goes through? Therefore they should be indifferent, if not happier, when Marriott exercises their ROFR. If they do exercise it they can then direct the would be purchaser to another unit and make another sale...Is this correct?


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## tombo (Aug 25, 2008)

Timeshare brokers are timeshare salesman. They will say things true or not to try and get the highest price they can to make more commission. However I don't think that most people don't believe the sales lines and I doubt that most people will  raise their offer to what the salesman suggests might pass ROFR. I wish I could be the salesman selling a timeshare, house, car, or any other high ticket item to a customer who would raise their offer on my suggestion. All I would have to say is that the current ROFR is $2000 more than the price the seller was asking (Marriott has no set ROFR level and they only ROFR when they need inventory), the buyer of the house would need to offer $5000 more than the seller's asking price because the neighborhood developer might buy it back for more, or that the car you are looking at needs a higher offer than the sticker price because the manufacturer is outbidding most buyers on their vehicles. If there were a lot of those buyers walking around, there would be a fortune to be made. I think those type of buyers are few and far between.


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## Icarus (Aug 26, 2008)

tombo said:


> I told them we could make ROFR work for them.



You might want to amend your post and delete the part where you admit to being at least an accessory to fraud.



> If you can't sell your Marriott do the same thing and you will actually make ROFR work for you.



Yeah, right. I certainly hope that most people here would not do what you suggest.

-David


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## thinze3 (Aug 26, 2008)

tombo said:


> .....We submitted a...  $3000 offer from a friend....





That's about as bad as having a friend bid up an eBay item.  

Terry

.


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## Icarus (Aug 26, 2008)

thinze3 said:


> That's about as bad as having a friend bid up an eBay item.
> 
> Terry
> 
> .



Which is also fraud.

-David


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## tombo (Aug 26, 2008)

Icarus said:


> You might want to amend your post and delete the part where you admit to being at least an accessory to fraud.
> 
> 
> 
> ...



You are right, I mistyped. They submitted the offer to Westgate because I didn't own any part of their week or make the offer, I simply mentioned that it might work in theory. Is that better?

After the lies they allegedly told those 2 widowed women to get them to buy, I don't feel one bit sorry that Wastgate might have been induced into ROFR'ing a week that they otherwise wouldn't have rofr'd. The women couldn't reserve a week they could use for 2 years in a row since they were sold a low season week for $12,000 even though they were promised tons of availability over the Thanksgiving and Christmas holidays. In fact Wastegate got out easy. They received $12,000 for a week which the owners only stayed in one time in 3 years. Then Wastegate bought it back for $3000 to sell to the next victim for another $9000 in gross profit. The only sympathy I have is for those poor women, one of who is on a fixed income and the other who makes very little.


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## Icarus (Aug 26, 2008)

tombo said:


> You are right, I mistyped. They submitted the offer to Westgate because I didn't own any part of their week or make the offer, I simply mentioned that it might work in theory. Is that better?
> 
> After the lies they allegedly told those 2 widowed women to get them to buy, I don't feel one bit sorry that Wastgate might have been induced into ROFR'ing a week that they otherwise wouldn't have rofr'd.



It's still fraud, no matter what the salesman did or said or how the company behaved. If you don't mind admitting to being part of it in a public forum, that's ok by me.

We probably shouldn't get into an ethical debate here, so I'll leave it at that.

-David


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## tombo (Aug 27, 2008)

Icarus said:


> It's still fraud, no matter what the salesman did or said or how the company behaved. If you don't mind admitting to being part of it in a public forum, that's ok by me.
> 
> We probably shouldn't get into an ethical debate here, so I'll leave it at that.
> 
> -David



This is a debate I feel sure I would lose and I agree to not debate it here. However, right or wrong, I am glad those women got a little revenge and a small bit of satisfaction.


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## BocaBum99 (Dec 13, 2008)

tombo said:


> Timeshare brokers are timeshare salesman. *They will say things true or not to try and get the highest price they can to make more commission.* However I don't think that most people don't believe the sales lines and I doubt that most people will  raise their offer to what the salesman suggests might pass ROFR. I wish I could be the salesman selling a timeshare, house, car, or any other high ticket item to a customer who would raise their offer on my suggestion. All I would have to say is that the current ROFR is $2000 more than the price the seller was asking (Marriott has no set ROFR level and they only ROFR when they need inventory), the buyer of the house would need to offer $5000 more than the seller's asking price because the neighborhood developer might buy it back for more, or that the car you are looking at needs a higher offer than the sticker price because the manufacturer is outbidding most buyers on their vehicles. If there were a lot of those buyers walking around, there would be a fortune to be made. I think those type of buyers are few and far between.



I had to come back to this thread since this is the official ROFR debate thread.

Your description of timeshare brokers motives are not accurate.  I know because I am a licensed real estate broker selling timeshares.  First of all, I don't lie to make a sale.  Most brokers I know don't lie either.  And, you don't necessarily maximize commission by trying to get the highest price.  In fact, just the opposite is true.  With ROFR, you maximize commission by getting the buyers and sellers to agree to the LOWEST price possible.  Think about it.  I'll leave it at that.


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## Dave M (Dec 13, 2008)

BocaBum99 said:


> With ROFR, you maximize commission by getting the buyers and sellers to agree to the LOWEST price possible.  Think about it.


I'm a real estate novice. I don't get it.  

Can you explain? Via PM, if you don't want to do it here?


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## BocaBum99 (Dec 13, 2008)

Dave M said:


> I'm a real estate novice. I don't get it.
> 
> Can you explain? Via PM, if you don't want to do it here?



PM sent.  I think that will clarify everything.  Lightbulb on.


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## Icarus (Dec 14, 2008)

Does the answer include multiple transactions?

-David


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## m61376 (Dec 14, 2008)

cp73 said:


> I assume the broker gets his commission as long as the sale goes through? Therefore they should be indifferent, if not happier, when Marriott exercises their ROFR. If they do exercise it they can then direct the would be purchaser to another unit and make another sale...Is this correct?



Succinctly explained.

Not to reopen the long-standing debate, but doesn't the current situation underline the effect of ROFR on pricing? I suppose one can argue that these bargain basement prices from desperate sellers would exist anyway, with Marriott otherwise becoming the richer for it rather than buyers, but every other post from buyers today looking to grab a deal is that ROFR isn't being exercised.

And, when I e-mailed a well respected broker here on Tug about a listing and tried to negotiate pricing down to what similar units have sold for on Ebay, he countered that they would likely be bought back by Marriott (according to him, Marriott is still buying back low priced weeks, although that's not what most Tuggers here are reporting); thus, he was arguing ROFR to bolster prices.

Desperate sellers will sell for what they can get, but I do believe the market is diving partially because buyers are able to benefit from seller's desperation at the present time. It becomes a domino effect; if someone paid "x" dollars for a unit, I won't pay "x+1."

Something to at least consider....


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## dioxide45 (Dec 14, 2008)

Icarus said:


> Does the answer include multiple transactions?
> 
> -David



I don't get it either


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## dioxide45 (Dec 14, 2008)

PerryM said:


> Cops don't need to be on every street corner, radar guns in hand, to instill fear into the hearts of speeders - just random enforcement is all that is needed to impact drivers behavior.
> 
> The ROFR is there when the developer needs it and if the developer doesn't need it only folks like us can tell the difference-for a while. If folks know the traffic cops are busy doing other things they speed.
> 
> The important thing is that some developers do work with owners to prop up resales if it makes sense. Some developers don't work with owners but against them to kill resale prices. Marriott seems to want to work with their owners - it makes sense to them.



I think you backed up my point. If random enforcement of speeding keeps people from speeding then random enforcement or the threat of enforcement should keep prices up?

That isn't making sense in today’s market. The threat of random enforcement of ROFR is always there with all resorts that have this. Marriott has the ability at any time to exercise ROFR. The threat of ROFR isn't doing anything to prop up prices right now. So the mere presence of ROFR means nothing.

Now if Marriott were always exercising ROFR at x price, then the market would have to meet that x price or the sale wouldn't happen. That may help keep prices up, but again it might not because the possibility is there that Marriott won't exercise ROFR.

Marriott isn't working with their owners right now to prop resale prices up. The proof is with the prices these weeks are selling for today. I don't think this can be argued otherwise.


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## m61376 (Dec 14, 2008)

dioxide45 said:


> That isn't making sense in today’s market. The threat of random enforcement of ROFR is always there with all resorts that have this. Marriott has the ability at any time to exercise ROFR. The threat of ROFR isn't doing anything to prop up prices right now. So the mere presence of ROFR means nothing.
> 
> N



But today the savvy buyers realize it is an empty threat and I think that makes a big difference. 

With or without ROFR there has and always will be an anxious or even desperate seller, but ROFR prevents that from becoming the new threshold for sales. What we have today is a combination of economic factors creating more desperate sellers coupled with nothing preventing buyers from purchasing at those bargain basement prices. Savvy buyers peruse the market and know what the bottom pricing has been, and since they have the potential to nab a unit at that price, they won't go higher. If Marriott was buying back units, then buyers might bid a little higher to get what they want, rather than taking advantage of someone else's need to sell. Let's face it- many of us bottom feeders could afford to pay a little more, but it is human nature to try to get the best deal we can. I think ROFR prevents the occasional desperate seller from setting a new price-mark for savvy buyers.


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## AwayWeGo (Dec 14, 2008)

*Sure It Can Be Argued Otherwise -- Just The Reverse, In Fact.*




dioxide45 said:


> Marriott isn't working with their owners right now to prop resale prices up. The proof is with the prices these weeks are selling for today. I don't think this can be argued otherwise.


Prices didn't tank because the timeshare company quit exercising ROFR.  

The timeshare company quit exercising ROFR because prices tanked.

Plus, back when the timeshare company was exercising ROFR, that didn't help owners -- i.e., did not keep resale prices from going "too low." 

Owners (sometimes) still got hosed when they sold off their weeks.  All that happened -- happens -- via ROFR is that nobody but the timeshare company gets to buy the big bargains. 

ROFR *=* ROFL. 

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


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## Pit (Dec 14, 2008)

dioxide45 said:


> I think you backed up my point. If random enforcement of speeding keeps people from speeding then random enforcement or the threat of enforcement should keep prices up?
> 
> That isn't making sense in today’s market. The threat of random enforcement of ROFR is always there with all resorts that have this. Marriott has the ability at any time to exercise ROFR. The threat of ROFR isn't doing anything to prop up prices right now. So the mere presence of ROFR means nothing.
> 
> ...



The current situation illustrates what many have been correctly stating for years - ROFR does not protect the owner from price declines. As we all know, random enforcement does not prevent speeding either.


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## PerryM (Dec 14, 2008)

Pit said:


> The current situation illustrates what many have been correctly stating for years - ROFR does not protect the owner from price declines. As we all know, *random enforcement does not prevent speeding either*.




True, but without it we would have the German Autobahn right outside your front door - it does impact human behavior - lots of behavior.


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## dioxide45 (Dec 14, 2008)

m61376 said:


> If Marriott was buying back units, then buyers might bid a little higher to get what they want, rather than taking advantage of someone else's need to sell. Let's face it- many of us bottom feeders could afford to pay a little more, but it is human nature to try to get the best deal we can. I think ROFR prevents the occasional desperate seller from setting a new price-mark for savvy buyers.



The important thing here is *"If"*. The thing is that there is no guaranty. We purchased a week in 2007 when ROFR was being more randomly exercised. That may have helped that seller then get the price we paid, but it didn't do anything to help me if I were a seller today. I may be lucky to get half of what was paid. So this is a good example of where ROFR hurt me as a buyer and could also hurt me as a seller. It also did nothing to prop up the potential selling price I could receive. Just because they are not exercising ROFR, you can't take the presence of it out of the logic. ROFR was there when we bought in 2007 and is there again today.

It is also important to note that the market was far different when we bought in 2007, the stock market had not yet peaked and everything was "humming" along. One could put a better argument forward that the current economic environment is what is effecting resale prices and not ROFR not being exercised.


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## PerryM (Dec 14, 2008)

*Look out below.....*

I think that everyone will find out just how much the ROFR has helped keep resale prices higher as Marriott declines the vast majority of resales.  Then when they start to exercise more of them the resale price will all of a sudden stabilize.  (Some here will shout "Coincidence" - I can just hear it now)

However expect Marriott to lower the ROFR to a much lower point – if I was Marriott I’d drop it to 25% - but that’s just me.  25% might seem a godsend at that time.  But in any case kiss 60% goodbye.  (Marriott has already learned that they can get lots of resales for much less than 60% of current sales price)


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## dioxide45 (Dec 14, 2008)

PerryM said:


> I think that everyone will find out just how much the ROFR has helped keep resale prices higher as Marriott declines the vast majority of resales.  Then when they start to exercise more of them the resale price will all of a sudden stabilize.
> 
> However expect Marriott to lower the ROFR to a much lower point – if I was Marriott I’d drop it to 25% - but that’s just me.  25% might seem a godsend at that time.  But in any case kiss 60% good bye.



Where did the magical number of 60% come from? When I bought in 2007 before the peak, my purchase passed at 37.5% of the current retail prices at that time. Now when Marriott sells a week for you they keep 40% and you get 60%, but I don't think a fixed number ever existed for ROFR.


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## PerryM (Dec 14, 2008)

dioxide45 said:


> Where did the magical number of 60% come from? When I bought in 2007 before the peak, my purchase passed at 37.5% of the current retail prices at that time. Now when Marriott sells a week for you they keep 40% and you get 60%, but I don't think a fixed number ever existed for ROFR.



Back when we bought our first MountainSide (1998 I believe) the ROFR was 75%.  That number came from the salesreps.  The 60% is empirical evidence when we sold our 5 Marriotts 3+ years ago.  I haven't kept up and don't know what Marriott has been exercising lately - it could be much less.

I believe a database is being kept here that will give the correct answer - mine's 3+ years old.

In any case Marriott probably will offer more for high demand Platinum holiday weeks and much less for Silver mud weeks (if any even exists).  I think we'd have to settle for an average of all ROFRs to gleam anything (trend wise).


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## BocaBum99 (Dec 14, 2008)

ROFR is primarily a tool that the resort developer uses to buy back the lowest priced inventory on the market.  When the developer uses it for that purpose, it creates the illusion that buying prices are higher than they are.  ROFR is not BOLR (buyer of last resort).  If ROFR and BOLR are combined, then the developer is actually truly propping up resale prices.   If the resort developer is not compelled to buyback, then some sellers end up getting far less than the price at which Marriott will likely exercise.

What buyers see is that at every turn, all they can do is purchase timeshares above a certain price point.   So, the savvy buyers are conditioned to purchase at or above a certain level which varies based on economic conditions, but it is a knowable level.   So, saavy buyers such as those on this message board perceive it as higher prices.   The problem with this logic is that buyers on this board have no idea how many deals are bought back by the developer for prices dramatically lower than the expected exercise price.  It is probably significant.  For instance, let's say that Marriott is exercising ROFR at $30k and below consistently over the past 3 months.  Members of this board will never see the deals that Marriot exercises at $5-10,000. 

That said, there is another behavior that ROFR creates which is to game the fact that the developer is buying back at certain prices.  If a smart and sophisticated timesharing person learns the game, they can get the developer to buy back lots of units at about their expected exercise price.  But, it is a game not without risk.

So, does ROFR help sellers?  The answer is sometimes yes.  Sometimes no.  It hurts sellers who don't know how to find brokers who know the exercise prices.  Those unknowledgable sellers sell for a price that is lower than they could have received.  It helps knowledgable sellers who team with brokers to get as close to the exercise price as possible.

ROFR, it is absolutely a distortion of the market.  Free market economics predicts that such ROFR would have negative effects on market participants and price.  But, I no longer believe that distortion is any worse than the fact that timeshare resales is far from an efficient market.  On a given day, someone will buy a timeshare for $2000 when another person will buy the exact same timeshare for $20,000.  That inefficiecy of the market is what must be compared against the real impact of ROFR.  After having seen it at work, I have changed my position.  I believe that ROFR is a net positive rather than a net negative to the timeshare industry.


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## BocaBum99 (Dec 14, 2008)

Icarus said:


> Does the answer include multiple transactions?
> 
> -David



Very good.  Yes, it does.


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## cp73 (Dec 14, 2008)

BocaBum99 said:


> That said, there is another behavior that ROFR creates which is to game the fact that the developer is buying back at certain prices.  If a smart and sophisticated timesharing person learns the game, they can get the developer to buy back lots of units at about their expected exercise price.  But, it is a game not without risk.



Can you please explain this further.


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## PerryM (Dec 14, 2008)

*Two things at work here folks...*

Marriott has two things intertwined here:

1)	The ROFR
2)	Their resale business

Marriott will gladly be your real estate broker and charge 40% commission to do so (If the resort is close to being sold out).  However, if the resale market is below that 60% that the owner gets for a resale folks will buy from eBay for pennies on the dollar.

This is the SOLE reason Marriott uses the ROFR – to buy the cheapest units available for their sales offices.  As a side benefit Marriott owners enjoy an artificially higher resale rate and Marriott acting as your broker.

During these times folks aren’t buying timeshares so no need to worry about folks buying $1 Marriotts on eBay.  A timeshare comes with a lot of baggage – they are hard to understand , hard to make reservations, hard to maintain (MF) and hard to sell when you want to get out.

Once this relationship of sales in the sales office is linked to resale prices in eBay you then understand why Marriott uses the ROFR if it is to their advantage and why the ROFR closely follows the percentage Marriott owners get when Marriott sells their unit in their sales office.


Expect both the ROFR and the percentage you get from Marriott resales to plummet - there is a glut of timeshares up for sale.


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## BocaBum99 (Dec 14, 2008)

PerryM said:


> Marriott has two things intertwined here:
> 
> 1)	The ROFR
> 2)	Their resale business
> ...



You are missing the most important element which caused the entire timeshare crisis in the first place.... the availablity of financing.

Marriott is not exercising a lot of ROFR because they don't have the capital to make the purchases any more.  They are preserving cash so that they can continue operations.  So, even though they can profit more handsomely if they exercise ROFR, it is in their short term benefit to leave those assets on other owner's balance sheets while they just take a commission.  Lower profit, but much higher return on capital.

Once credit markets are restored, timeshare sales will resume.  Probably at a much lower annual rate and at lower prices.  But, I believe they will continue again.


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## PerryM (Dec 14, 2008)

*What credit problem?*



BocaBum99 said:


> You are missing the most important element which caused the entire timeshare crisis in the first place.... the availablity of financing.
> 
> Marriott is not exercising a lot of ROFR because they don't have the capital to make the purchases any more.  They are preserving cash so that they can continue operations.  So, even though they can profit more handsomely if they exercise ROFR, it is in their short term benefit to leave those assets on other owner's balance sheets while they just take a commission.  Lower profit, but much higher return on capital.
> 
> Once credit markets are restored, timeshare sales will resume.  Probably at a much lower annual rate and at lower prices.  But, I believe they will continue again.



I don’t know for a fact that Marriott has ANY problem financing ANY unit they sell – someone show me proof that they have this problem.  Marriott should have no problems getting loans so they can loan out money.  But, a simple link will prove me wrong.

Folks are rightly scared out of their minds – their government has gone insane and they can only withdrawal into a survival mode and hope that the "government fairy" waves a magic wand and makes this all go away.

Now Marriott might tighten up their credit requirements and weed out folks who will simply default in a few months - that I don't dispute at all.


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## timeos2 (Dec 14, 2008)

*Some apparently never learn*



BocaBum99 said:


> You are missing the most important element which caused the entire timeshare crisis in the first place.... the availablity of financing.
> 
> Marriott is not exercising a lot of ROFR because they don't have the capital to make the purchases any more.  They are preserving cash so that they can continue operations.  So, even though they can profit more handsomely if they exercise ROFR, it is in their short term benefit to leave those assets on other owner's balance sheets while they just take a commission.  Lower profit, but much higher return on capital.
> 
> Once credit markets are restored, timeshare sales will resume.  Probably at a much lower annual rate and at lower prices.  But, I believe they will continue again.



You are 100% correct on the first part - I'm in disagreement on the second but that won't be answered for awhile, possibly years. 

But if ROFR really protected the OWNER then in this time of crisis that would be the safety net. They would know ROFR would force a higher price for Marriott or any other ROFR encumbered weeks. (Of course that ALSO ignore the fact that only the best of the best is even likely to fall under ROFR even in the best times. If you own a mere Gold time or anything less than Platinum they hardly ever used ROFR anyway as even they know the value isn't there. A true owner protection would be a floor price at each ownership level that no one could buy under. No such floor exists.) 

 But, when it counts, Marriott ROFR is nowhere to be found. Sure, the possibility that they may cherry pick the best in the future exists but no guarantee. And pity those who 6-12 months ago didn't listen to the advice freely offered here to BID LOWER on any Marriott week they just had to have despite the ROFR. They paid way too much if they got suckered ito the ROFR trap.  

Now we hear that some resellers are still touting the myth that ROFR requires higher bids. Hogwash!  They KNOW it's been suspended - maybe forever, maybe not but its of no value to you as a buyer/seller anyway - but want the sellers to get more than market value and thus a higher commission.  Buy at your own risk and expect that ROFR will only apply if it helps the developer - it will NEVER help a buyer or seller. Never.  Remember the college professor who did an actual study - not opinion - and found it to be a total negative for all concerned except the ROFR holder.  That's not YOU.


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## PerryM (Dec 14, 2008)

*Sharks are good fellows...*



timeos2 said:


> You are 100% correct on the first part - I'm in disagreement on the second but that won't be answered for awhile, possibly years.
> 
> But if ROFR really protected the OWNER then in this time of crisis that would be the safety net. They would know ROFR would force a higher price for Marriott or any other ROFR encumbered weeks. (Of course that ALSO ignore the fact that only the best of the best is even likely to fall under ROFR even in the best times. If you own a mere Gold time or anything less than Platinum they hardly ever used ROFR anyway as even they know the value isn't there. A true owner protection would be a floor price at each ownership level that no one could buy under. No such floor exists.)
> 
> ...



I don’t know where the idea came from that the ROFR was designed to protect timeshare owners – the Twilight Zone?

The ROFR is simply the scraps of food that fall from the jowls of the developer as they conduct business – it is helpful to the owners.

But don’t take my word for it – watch as Marriott resale prices plummet until the developer can convince Ma and Pa to buy a timeshare while they vacation again.  Expect falling prices while the ROFR isn’t exercised.

It’s just supply and demand – the more the developer exercises the ROFR the higher the demand and increased prices - econ 101.

That’s all any of us have said I believe; it takes a vivid imagination to believe the developer cares about anything but every increasing profits to their stock holders.

It’s like those sucker fish that hitch a ride on man eating sharks – they live by eating the scraps of the big fish – and they must do well or they would go extinct.


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## BocaBum99 (Dec 14, 2008)

timeos2 said:


> But if ROFR really protected the OWNER then in this time of crisis that would be the safety net.



I'm not claiming that ROFR protects the owner.  I said above it's primary purpose is to ensure that Marriott can buy back the best deals.  Only if the resort developer acted as the buyer of last resort would they be protecting the owner.

The question of this thread is whether or not ROFR helps sellers.  It absolutely does help the sophisticated seller or the seller who works with a sophisticated broker.  That's because the sophisticated seller knows what the ROFR rate is and plays the buyer and Marriott against each other on who gets the unit from the seller.   In that scenario, two buyers is better than one as it is in any market.  So, the mere fact that they are buying and competing for inventory acts as a price support for market participants who know how to play the game.

For unsophisticated sellers, they are hosed.


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## AwayWeGo (Dec 14, 2008)

*Proving Once Again . . .*




PerryM said:


> This is the SOLE reason Marriott uses the ROFR – to buy the cheapest units available for their sales offices.


. . . that all timeshares are _used-used-used_ by the time the owner shows up & checks in.  

We know it.  The timeshare company knows it -- even if the full-freight owners don't catch on for a while. 

That's why, instead of building more timeshares, the timeshare company sometimes buys'm back cheap so they can sell'm again at full freight. 

Shux, they're all _used-used-used_ so it's not like the full-freight buyer is getting less by buying a used week reacquired via ROFR rather than a newly titled used week. 

Used is used any way you shake it -- not that there's anything wrong with that other than the fact that paying full freight means overpaying.  

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


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## BocaBum99 (Dec 14, 2008)

timeos2 said:


> It will NEVER help a buyer or seller. Never.  Remember the college professor who did an actual study - not opinion - and found it to be a total negative for all concerned except the ROFR holder.  That's not YOU.



You couldn't be more wrong on this statement.  You are saying that no buyer or seller ever benefited from ROFR?  That is completely wrong.  I can prove it and there are hundreds of posters on this message board who have sold timeshares for prices propped up by ROFR at artificially high prices.

The problem with a college professor is the old adage.  "Those who can do. Those who can't teach."  

I told you that ROFR distorts the free market.  That is what free market capitalism will predict.  That is what I've always thought until I compare the distorted ROFR market with the absolute chaos of the non-existent resale market where on a given day a similar timeshare unit will sell for $2000 and 20000.  ROFR is far from perfect, but it is better than the alternative of total chaos.


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## Dave M (Dec 14, 2008)

PerryM said:


> I don’t know for a fact that Marriott has ANY problem financing ANY unit they sell – someone show me proof that they have this problem.  Marriott should have no problems getting loans so they can loan out money.  But, a simple link will prove me wrong.


I can't give you a "simple link", but yes, it's fact, Perry.

In early November, Marriott discontinued providing incentives to purchasers for borrowing from Marriott. Amazingly, Marriott also discontinued giving incentive points for keeping such loans in place, despite having offered those continuing incentives as part of the purchase package. There are several threads here on that issue, such as this one. 

Thus, although Marriott is still making loans to buyers, it is no longer encouraging such loans.  As discussed in various Marriott meetings with analysts (which I have discussed and linked here approximately annually), Marriott typically packages many of those loans and sells them on the secondary market. (Example: See page 51 of this 2/26/08 presentation to security analysts, but be warned that the PDF file loads v-e-r-y slowly: "Note sales are a key aspect of Marriott’s overall capital recycling strategy"). However, the secondary market for packaging and selling those loans has completely dried up due to the credit crunch and the uncertainty of the value of such packaged loans in this economic environment.

I have had confirmed to me by a person inside of Marriott that I trust completely that Marriott has made significant changes in recent months to reduce its need for cash in its timeshare operations, at least temporarily. That's also one of the reasons why Marriott is significantly or completely stopped exercising ROFR temporarily.


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## AwayWeGo (Dec 14, 2008)

*That's Got It Backwards.*




PerryM said:


> Expect falling prices while the ROFR isn’t exercised.


What really happens is that when the prices drop down way low, then the timeshare company quits exercising ROFR. 

ROFR *=* ROFL. 

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


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## BocaBum99 (Dec 14, 2008)

Dave M said:


> I can't give you a "simple link", but yes, it's fact, Perry.
> 
> In early November, Marriott discontinued providing incentives to purchasers for borrowing from Marriott. Amazingly, Marriott also discontinued giving incentive points for keeping such loans in place, despite having offered those continuing incentives as part of the purchase package. There are several threads here on that issue, such as this one.
> 
> ...



This is effecting the entire industry.  They can't pacakge up the loans and sell them on the secondary market.  It's the same problem effecting the entire economy.


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## BocaBum99 (Dec 14, 2008)

Here are the economics of how sellers benefit from ROFR.  They don't always benefit, but it has proven to be very beneficial for many high end timeshares over the past several years.  The reason why ROFR provides an uplift to resale prices is that the developer can sell those units for a lot more than the general resale market and there has been sufficient demand for that higher priced product to force upward the average resale selling price for certain units.

Let's say that Marriott is selling 2br Ocean Pointe Gold weeks for about $20k at the resort.  For various reasons, they can sell it for a lot more than the general resale market.

Let's further say that the general resale market without ROFR has determined that the free market value of such a 2br Ocean Point Gold week is about $5k.  This is a hypothetical price point for illustration purposes.

If Marriott decides it needs to acquire inventory and starts exercising at $12k and saavy brokers figure this out, what happens is the average sales price of those resale Gold weeks trend upwards toward $12k.  It stops when Marriott has enough units that it can productively move at the $20k level.

THERE IS ABSOLUTELY NO DOUBT THAT WHEN THE ABOVE SITUATION OCCURS THAT THE SELLER BENEFITS DIRECTLY FROM ROFR AS LONG AS THEY HOLD OUT OR WORK WITH A BROKER THAN CAN FIND THEM BUYERS FOR A PRICE ABOVE $5K 

As long as Marriott has capital that it can productively use and a market for customers at the higher price point, then this model works.  And, it has worked for years.

The reason it is not in use now is that Marriott needs to preserve capital, so it is willing to take a reduced profit by brokering units instead of buying and selling for greater profit due to the reduced capital requirements.  And, even if it were exercising ROFR, the rate would be going down since demand at the resort level is going down.

On the other hand, these same economics could be such that Marriott can acquire as much inventory it needs at a level that is BELOW the free market level of resales.  When that happens, ROFR has no impact on the resale prices.  For example.  Using the above Marriott Gold Ocean Pointe example.  Let's say that Marriott determined it could sell 20 units for $20000 in 1Q09.  And, let's say that 20 units came up for sale below $3000.  They would snap up all of those 20 units.  But, the average resale price is $5000.  So, in this scenario, ROFR does nothing to prop up the price.

Both scenarios and more are possible.  For much of the last 5 years, ROFR has propped up resale prices.  Now, those price supports are gone and prices are plummeting far more than they would had ROFR never been exercised.


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## JimIg23 (Dec 14, 2008)

ROFR maintains a certain level during good or great economic times.  I was ROFR'ed 5 out of 7 times I bid on a Marriott.  This does create a level where, if you want to buy a Marriott timeshare, you need to be at unless you get very very lucky.  I was not.  I paid near ROFR with help of Tuggers.

Now, during bad economic times, ROFR means nothing.  Less people are buying timeshares and if they are, offer much less.  (Although less severe, people are buying less houses and the prices are falling)  I would think Marriott (like every other corp) wants debt off their books because no one is buying mortgage packages, especially timeshares.  Marriott probably wants to reserve their cash and probably is not adding units that do not pay MFs into the property (unless they have to pay the MFs, which is worse for them).  This is worse for sellers because everyone knows the market is depressed and the asking price will be smaller (just like the housing market, but more severe).  I am not equating the TS market to the housing market, but there are some similarities.

This is the best time for buyers who have the equity on hand, can afford the MFs and want to buy it to use.  

I think once the economy gets better, people will start buying timeshares again, Marriott may spend more cash on units to fill the demand, bundle more loans to sell (although after this mess, that may be a long long time) and ROFR will become active again.  Just my opinion.

I would not want to be a seller now, but buying seems good me to.  I, for one, will be looking for a fire sale on a EOY NCV so I can have 2 weeks EOY.  I don't plan on asking more than 2k.  Who knows, maybe I will find one.


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## PerryM (Dec 14, 2008)

*The eBay shuffle...*

This may come as a complete shock to some folks but the “eBay shuffle” (my name for it) has brought many new sales to market that normally would not have occurred-increased demand.  Here is how it worked (It isn’t working right now and I think many of you know about this):

You own a Platinum plus week that Marriott sells for $45k and that the ROFR has been executed at 60% of that or $27k.  You need the money fast and will gladly settle for $25k.  You list it on eBay with a starting price of $1 and a reserve of $25k.

Bidding starts and quickly goes to $5k and stops – no one wants it.  You then see two folks starting a bidding war and the price finally gets to $25k and you have a winner – turns out to be your brother-in-law – good for him.  (The other bidder was your next door neighbor; gee is this a small world or what?)

eBay auctions for timeshares are not real estate transactions and eBay collects their fee and is happy.  You fill out the paperwork to do a quit claim and send in the eMail to Marriott and pay the $99 fee for the ROFR.

Surprise, surprise Marriott decided to snap up the sale and save $2k over selling an owner’s unit that has been on the waiting list for 2 years.

You get your check from Marriott and they paid the closing fees.  Everyone won here – you felt sorry for your brother-in-law and send him on a great vacation to an II exchange.  Your next door neighbor got a fantastic Christmas present and Marriott saved $2k.  What’s not to like?

Well the owner waiting 2 years for Marriott to sell his unit never new any of this and has high hopes that year #3 will be the charm.

That’s the eBay shuffle and I have no doubt a lot of sales took place that caused prices to remain much higher than without it.  (I'm not saying Marriott knows about any of this).

As Sergeant Schultz from Hogan's Heros would say "I know nothing".


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## BocaBum99 (Dec 14, 2008)

PerryM said:


> This may come as a complete shock to some folks but the “eBay shuffle” (my name for it) has brought many new sales to market that normally would not have occurred-increased demand.  Here is how it worked (It isn’t working right now and I think many of you know about this):
> 
> You own a Platinum plus week that Marriott sells for $45k and that the ROFR has been executed at 60% of that or $27k.  You need the money fast and will gladly settle for $25k.  You list it on eBay with a starting price of $1 and a reserve of $25k.
> 
> ...



This is one example where sophisticated sellers leverage Marriott's ROFR to sell their unit to them.  There are 2 risks to this strategy.  First, Marriott doesn't buy it back.  Then, your BIL must complete the transaction.  Second, if you are found to have a pattern of doing this, Marriott identifies it and doesn't exercise just to spite you.  Yes, it has happened.


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## BocaBum99 (Dec 14, 2008)

cp73 said:


> Can you please explain this further.



Chris,

Perry's example above is one way.  There are many more.  All it takes is a bit of creativity.


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## timeos2 (Dec 14, 2008)

*Underhanded, sneaky, games, and whatever*



BocaBum99 said:


> Chris,
> 
> Perry's example above is one way.  There are many more.  All it takes is a bit of creativity.



You've got to love a system where the original sale is high pressure, overpriced and a bad deal in 99% of the cases. Then, for some resorts, the owners have to lower themselves to sneaky, underhanded, posssibly illegal moves to attempt to get 50% of what they paid back.  Wonderful.

And why would the BIL HAVE to complete the sale? He backed out - he doesn't want to deal with ROFR nonsense. Neither the seller nor Marriott can force the sale. The whole thing is a nigtmare game where the players are all trying to shaft each other.  No thanks. Just avoid any timeshare with ROFR and save yourself a ton of nightmares.


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## BocaBum99 (Dec 14, 2008)

timeos2 said:


> You've got to love a system where the original sale is high pressure, overpriced and a bad deal in 99% of the cases. Then, for some resorts, the owners have to lower themselves to sneaky, underhanded, posssibly illegal moves to attempt to get 50% of what they paid back.  Wonderful.
> 
> And why would the BIL HAVE to complete the sale? He backed out - he doesn't want to deal with ROFR nonsense. Neither the seller nor Marriott can force the sale. The whole thing is a nigtmare game where the players are all trying to shaft each other.  No thanks. Just avoid any timeshare with ROFR and save yourself a ton of nightmares.



I agree with both of your conclusions for me, personally.  I haven't purchased a Marriott Platinum week to date because ROFR has pushed up the prices to be not economically a good deal.  But, that's for me.  Some people believe those Marriott's are worth it even at the higher prices.  Since Marriott has been minimizing/eliminating ROFR, I believe it is the good time to buy NOW.

I also agree that the BIL thing is semi-shady, but not illegal.  I know people who have used a similar strategy to get Marriott to buy back units.  I've never sold a Marriott. So, I am not speaking from direct experience but from the experience of people whom I have met.


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## BocaBum99 (Dec 14, 2008)

timeos2 said:


> You've got to love a system where the original sale is high pressure, overpriced and a bad deal in 99% of the cases. Then, for some resorts, the owners have to lower themselves to sneaky, underhanded, posssibly illegal moves to attempt to get 50% of what they paid back.  Wonderful.
> 
> And why would the BIL HAVE to complete the sale? He backed out - he doesn't want to deal with ROFR nonsense. Neither the seller nor Marriott can force the sale. The whole thing is a nigtmare game where the players are all trying to shaft each other.  No thanks. Just avoid any timeshare with ROFR and save yourself a ton of nightmares.



By the way, I agree that the entire timeshare sales and marketing model is the root cause of the market price distortion for timeshares.  

I have stated before and still believe it now that the key to making timesharing an efficient market is for the economics of timesharing to be obvious to resale purchasers.  In other words, when a potential purchaser can make a simple buy vs. rent analysis and the economics of owning is superior to the economics of renting given the risks, then a real and efficient resale market can exist.  This will require resorts to dramatically reduce their maintenance fees and do a better job and marketing their timeshares destination for renters.

Once timeshare slum lords think they can make money renting, they will load up on timeshares and put in a price floor for timeshares.  As long as resorts don't follow this advice,  there will remain loads of timeshares with negative values since the price of renting will be below annual maintenance fees and dues.


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## BocaBum99 (Dec 14, 2008)

timeos2 said:


> You've got to love a system where the original sale is high pressure, overpriced and a bad deal in 99% of the cases. Then, for some resorts, the owners have to lower themselves to sneaky, underhanded, posssibly illegal moves to attempt to get 50% of what they paid back.  Wonderful.
> 
> And why would the BIL HAVE to complete the sale? He backed out - he doesn't want to deal with ROFR nonsense. Neither the seller nor Marriott can force the sale. The whole thing is a nigtmare game where the players are all trying to shaft each other.  No thanks. Just avoid any timeshare with ROFR and save yourself a ton of nightmares.



So, do you now concede that you were wrong that sellers NEVER benefit from ROFR?  In Perry's ebay shuffle, that seller clearly benefits from ROFR.  One case proves NEVER wrong.   He may have benefited in a semi-dirty way.  But, the seller benefited nonetheless.

By the way, there are other ways to make this happen without there being any sleaziness or perceived sleaziness.


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## timeos2 (Dec 14, 2008)

BocaBum99 said:


> So, do you now concede that you were wrong that sellers NEVER benefit from ROFR?  In Perry's ebay shuffle, that seller clearly benefits from ROFR.  One case proves NEVER wrong.   He may have benefited in a semi-dirty way.  But, the seller benefited nonetheless.
> 
> By the way, there are other ways to make this happen without there being any sleaziness or perceived sleaziness.



OK - never should have been rarely. And then the new buyer/future seller has placed themselves in the mostly losers spot. And the rarely winners are far outnumbered by the nearly sure losers.  Odds are not good for those who choose to play.


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## BocaBum99 (Dec 14, 2008)

timeos2 said:


> OK - never should have been rarely. And then the new buyer/future seller has placed themselves in the mostly losers spot. And the rarely winners are far outnumbered by the nearly sure losers.  Odds are not good for those who choose to play.



My whole thesis behind this being a good time to buy Marriott platinum weeks is based on two assumptions.

1) Since Marriott is no longer exercising ROFR, it is possible to get a smokin' great deal that is at or below the nominal resale market.  In fact, this creates a flip opportunity in Marriott's that didn't previously exist.

2) That there is a very good chance that ROFR will be reinstituted at a level that benefits buyers now when ROFR is not being exercised.

Point one ensures you can get a deal that makes economic sense.

Point two is a potential upside that could benefit lots of owners who are buying in this period.  It's not guaranteed, but I bet it will happen.

So, just as it is a risk to buyers during aggressive ROFR buying that their resale prices will plummet when ROFR stops.  The converse is also true which is that it is a potential boon to buyers in a non-ROFR period when it is likely that a new round of aggressive ROFR buying will occur.

The only questions are:

1) what is the expected time for ROFR to resume?
2) will it likely be at a rate higher than you are purchasing now? 
3) what can you do with the unit while you are waiting for that time to occur?
4) what if your purchase is worthless after 5 years, is it still a good deal?

If you have good answers to the above questions, you have a good buying opportunity.


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## AwayWeGo (Dec 14, 2008)

*One More Question - - -*




BocaBum99 said:


> The only questions are:
> 
> 1) what is the expected time for ROFR to resume?
> 2) will it likely be at a rate higher than you are purchasing now?
> ...


5) how long can you afford to keep on paying the annual maintenance fees & possible occasional special assessment while you're waiting for the balloon to go back up ? 

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


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## thinze3 (Dec 14, 2008)

AwayWeGo said:


> 5) how long can you afford to keep on paying the annual maintenance fees & possible occasional special assessment while you're waiting for the balloon to go back up ?
> 
> -- Alan Cole, McLean (Fairfax County), Virginia, USA.​



This is the reason why I mentioned BeachPlace to Boca. MBP is sold out and its 10 year renovations are complete. Also, the platinum units do rent for a minumum 1.5 times MF's. MBP can be purchased for 20-30% of retail. There are other deals like this as well to be had if one is patient.

The Marriotts in Palm Desert are pricing at 30-35% retail and can also rent very easily. If using them to trade, they offere AC's every year. Of course that can change, but I would bet that these become MORE in demand as Hawaii demand wanes.

IMHO there is NO reason to wait, hoping that prices will fall further. If tomorrow Marriott decides it will be cheaper to resale existing units than to build new ones, those who wait will most likely miss the boat.

Terry


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## timeos2 (Dec 14, 2008)

*Don't bet on it*



thinze3 said:


> This is the reason why I mentioned BeachPlace to Boca. MBP is sold out and its 10 year renovations are complete. Also, the platinum units do rent for a minumum 1.5 times MF's. MBP can be purchased for 20-30% of retail. There are other deals like this as well to be had if one is patient.



You mean rented (as in the past) for 1.5 the MF. Don't assume that is true now as rentals have been hit even harder than sales. Even RCI admits having problems renting - and if you believe some here they have the best of times to offer.  Every resort I know of has had a steep decline since the 3rd quarter in rentals (as have hotels). The price is most likely going to come down - perhaps substantially - to spur rentals.  Everything is in flux right now. The old rules don't apply.


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## taffy19 (Dec 14, 2008)

PerryM said:


> Marriott has two things intertwined here:
> 
> 1)	The ROFR
> 2)	Their resale business
> ...


I doubt if the percentage you'll get from the Marriott resale will plummet as that is their commission fee but they will stop taking resales for the time being as they can't sell fast enough what they have got already.  JMHO. 

I see resale prices go lower yet with the next phase of commercical RE foreclosures starting to show up now so more uncertainty in the economy.

I believe that renting a timeshare is much smarter than buying one today and being stuck with the maintenance fees that may have to increase because other timeshare owners are bailing out.    I see rents going down further too so why  buy?


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## billymach4 (Dec 14, 2008)

*ROFR is intended to placate brand new buyers that got snuckered by the salesman.*

I sat in a focus group a few years ago with some recent new buyers of Marriott TS's. Marriott execs, as well as Marriott advertising people were running the panel asking and prying for ideas. We were all brand new buyers within 12 months of our purchase. 

Some people expressed frustration that the Salesman did not present the EOY option. The Marriott exec also wanted to point out the ROFR and what the Marriott corporate line of intent was. The exec stated that Marriott wanted to protect new buyers, and help maintain the market price. Marriott's intent FWIW is to protect the new buyer. They want to assure the new buyer of a $50K TS that his investment is protected by at least 60% of value. 

Well fast forward to 2008, and we all know that is a crock. 

For better or worse I have no care or opinion what  ROFR does for Buyer or Seller. However it is simply a sales tool to benefit Marriott plain and simple.


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## beachlimey (Dec 14, 2008)

Sorry to jump in 6months into this debate but can someone please decipher EOY, ROFR and FWIW  for me!


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## Dave M (Dec 14, 2008)

EOY = a timeshare ownership that allows occupancy *E*very *O*ther *Y*ear

ROFR = Many developers have a *R*ight *O*f *F*irst *R*efusal to repurchase a resale timeshare at the same price that a buyer and seller have agreed upon.

FWIW = a common Imternet acronym meaning *F*or *W*hat *I*t's *W*orth

See this link in the TUG Advice section for more timeshare acronyms.


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## AwayWeGo (Dec 14, 2008)

*E. O. Y. Can Be Ambiguous.*




Dave M said:


> EOY = a timeshare ownership that allows occupancy *E*very *O*ther *Y*ear


Alternate-year timeshares come in 2 flavors -- EOY & EEY 

EOY = Every Odd Year. 

EEY = Every Even Year. 

There is even such a thing as "triangle" timeshare ownership -- the deeded occupancy comes up once every 3 years.  I have no idea how that's designated, or how they keep track of those. 

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


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## Dave M (Dec 14, 2008)

I agree, Alan. However, when the term "EOY" is used on these forums, it virtually always means either of those two alternatives, unless otherwise specified.


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## dioxide45 (Dec 14, 2008)

beachlimey said:


> Sorry to jump in 6months into this debate but can someone please decipher EOY, ROFR and FWIW  for me!



You aren't jumping in 6 months in to the debate. The debate has been raging far longer than that. Also this was just recently reprised with some new added passion. This tends to go in cycles here, this thread will die off in a week or so and then come back hot and heavy 2-3 months from now with pretty much all the same arguments, several of which will likely be from me rehashing what I said before.


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## Transit (Dec 15, 2008)

I know we have been through the ROFR debate a million times but DVC is still buying back and resales are still high.?


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## PerryM (Dec 15, 2008)

*Wait for it....wait...wait...*

I’d like to make something very clear:

“*Don’t buy a timeshare now under ANY circumstances*” – developer or resale.

I truly believe that in the next 2 – 4 years you will be able to buy MOST timeshares for $1 on eBay – all the name brands – Marriott, Westgate, Westin, Wyndham (that one you can do now), everyone of them but Disney.  (That's Platinum Marriott weeks too - probably not Platinum Plus holiday weeks - maybe $10 for those)

You can’t have an artificially accelerated market skyrocket for 40+ years and not have one single correction.  All those pent up corrections are about to hit all at once.  So wait and buy virtually anything you want for a buck.

In the mean time use eBay, VRBO, and other places to rent what you want and keep “your powder dry” until the mother of all timeshare corrections hits.

Just look at the debacle the 3 Detroit auto makers are in - that's what awaits the timeshare industry, only much worse.  Don't count on our insane Uncle Sam to bail us out.

Heck, those .99 cent stores might be the place you go to buy a timeshare in the not too distant future.  Maybe they'll throw in a Tootsie Roll as the free gift.  (Old habits are hard to break)


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## Icarus (Dec 15, 2008)

dioxide45 said:


> I don't get it either



I think I might, but I'm not sure. In my case, I priced my KBC 1BR OV at about 60% of retail and listed it on redweek. A broker, with a buyer, picked it up, tacked on her buyer paid fixed fee and after we agreed to terms, sent it to the ROFR desk. The sales price included her fee, tacked on to my price, because that is the selling price to the buyer.

Marriott decided to exercise ROFR, so the broker gets her commission (now paid by Marriott instead of the original buyer), I get what I wanted and the broker still has a buyer for another unit. So, I'm happy, the broker is happy, and the broker still has a buyer and can find another unit out there for the buyer and start all over again. Repeat until Marriott lets one go by either because they don't need any more units or the price is higher than their threshold that day or the buyer gives up. Presumably, if the buyer hangs in there and keeps trying, eventually one will get by ROFR (well, in a normal market, anyway.)

Of course, none of this applies in the current market.

That's why I asked if it included multiple transactions.

BTW, the brokers fee was not insignificant. (not like a 6% commission on a house.)

-David


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## dioxide45 (Dec 15, 2008)

Transit said:


> I know we have been through the ROFR debate a million times but DVC is still buying back and resales are still high.?



The difference with DVC is that they have almost created a floor with their ROFR. They are consistent and methodical with ROFR. As with any ROFR option, they have the ability to stop exercising it tomorrow, if that happens prices will drop. So as I have tried to point out, just because a developer has ROFR there is no guaranty that it will help you sell for a higher price.

A consistently exercised ROFR will help prop up prices, but all those who purchased when they were exercising will be burned when they stop.


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## PerryM (Dec 17, 2008)

*Bombs away......*

For those of you daredevil bargain hunters out there 20¢ on the dollar Marriotts are apparently becoming available.  Personally I’d wait until they get to $1 on eBay; but that’s just me.

We WM owners can only get about 28¢ on the dollar and we never had to worry about the ROFR.

Thank goodness that pesky ROFR is no longer being enforced by Marriott; bombs away.


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## BocaBum99 (Dec 17, 2008)

PerryM said:


> For those of you daredevil bargain hunters out there 20¢ on the dollar Marriotts are apparently becoming available.  Personally I’d wait until they get to $1 on eBay; but that’s just me.
> 
> We WM owners can only get about 28¢ on the dollar and we never had to worry about the ROFR.
> 
> Thank goodness that pesky ROFR is no longer being enforced by Marriott; bombs away.



I agree with your more moderate position rather than the don't buy any timeshare at any price recommendation.

The way to decide to buy or not is this.

Multiply the probability that you believe all timeshares will drop to $1.  Multiply the expected reduced value of ROFR that Marriott is likely to exercise times the probablity that that scenario shall return.  The sum of the two probabilities = 1.

This will give you the weighted average expected future value of that timeshare.  Don't buy it unless you can buy it at 50% of that value.

Perry believes most timeshares will be $1 on eBay with nearly 100% certainty. So, he should purchase at $.50.

I give it 10% that Perry is right and 90% that Marriott will exercise at 50-70% of the past ROFR values.

So, if a Marriott timeshare used to pass ROFR at $20k, I get (10% of $1 + 90% of 60% of 20000)/2 = $5400.

If Marriott was exercising at $20k just 8 months ago, I would have a hard time saying no to something selling for $5400 today.

If I want to own that destination and the maintenance fees aren't too bad, I'd probably be buying it.


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## PerryM (Dec 17, 2008)

BocaBum99 said:


> I agree with your more moderate position rather than the don't buy any timeshare at any price recommendation.
> 
> The way to decide to buy or not is this.
> 
> ...



*What else would you expect a timeshare real estate broker to say?*

This isn't rocket science folks - no need to use smoke and mirrors to cloud the fact that the timeshare industry WILL have a hell of a correction - it is not immune from the laws of supply and demand.


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## BocaBum99 (Dec 17, 2008)

PerryM said:


> *What else would you expect a timeshare real estate broker to say?*
> 
> This isn't rocket science folks - no need to use smoke and mirrors to cloud the fact that the timeshare industry WILL have a hell of a correction - it is not immune from the laws of supply and demand.



I am recommending that people sell their Wyndham points.  Does that mean I voluntarily inactivated my license today?  Do you have any other arguments?  Do you have any other buy/sell recommendations?  I'd love to take the opposite side of that trade to test out my new PerryM contrarian indictor.

I agree that the timeshare market will have a tremendous correction.  It's been happening all year in 2008.  It will continue in 2009.  But, that doesn't mean a) that someone can't make money in it and b) that there aren't really good deals out there.  The best business to be in today in timesharing is the closing company business.  Their volume will probably double this coming year.

In fact, there is no better time to buy when Perry says to sell.


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## PerryM (Dec 17, 2008)

*zero is zero*



BocaBum99 said:


> I am recommending that people sell their Wyndham points.  Does that mean I voluntarily inactivated my license today?  Do you have any other arguments?  Do you have any other buy/sell recommendations?  I'd love to take the opposite side of that trade to test out my new PerryM contrarian indictor.
> 
> I agree that the timeshare market will have a tremendous correction.  It's been happening all year in 2008.  It will continue in 2009.  But, that doesn't mean a) that someone can't make money in it and b) that there aren't really good deals out there.  The best business to be in today in timesharing is the closing company business.  Their volume will probably double this coming year.
> 
> In fact, there is no better time to buy when Perry says to sell.



I'm recommend that folks DO NOTHING.

I understand that timeshare real estate brokers make money:

Buying a timeshare
Selling a timeshare
.

But they just don't make any money when folks listen to Perry and don't buy or sell a timeshare right now.

I fully understand the rage.


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## BocaBum99 (Dec 17, 2008)

PerryM said:


> I'm recommend that folks DO NOTHING.
> 
> I understand that timeshare real estate brokers make money:
> 
> ...



They also don't make money if they don't buy, sell or broker the timeshares in question.  I wish they did.  That would be a fanastic new business.

Do nothing is fine with me, but why would you recommend standing pat if you believe it will tank to $1.  It seems to me it would be best to sell it yourself so no brokers make any money and then buy them back at $1.  If you want to vacation in the interim period, rent for below MF.

It sounds to me like you are not as confident about your position as you puff on these boards.  Otherwise, you are making a bad personal decision.


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## Latravel (Dec 17, 2008)

I think if you are buying a timeshare for enjoyment only, as everyone should, I would buy if you are happy with the price.  If I see a platinum selling at $3,000, I would feel very good at that price even if the price fell more.  Really, what's the big deal if the price fell another $500?  It already fell tens of thousands of dollars from retail!


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## BocaBum99 (Dec 17, 2008)

Latravel said:


> I think if you are buying a timeshare for enjoyment only, as everyone should, I would buy if you are happy with the price.  If I see a platinum selling at $3,000, I would feel very good at that price even if the price fell more.  Really, what's the big deal if the price fell another $500?  It already fell tens of thousands of dollars from retail!



Exactly.  In additon, I think there is a higher probability of an upside surprise than a downside surprise.


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## PerryM (Dec 17, 2008)

BocaBum99 said:


> They also don't make money if they don't buy, sell or broker the timeshares in question.  I wish they did.  That would be a fanastic new business.
> 
> Do nothing is fine with me, but why would you recommend standing pat if you believe it will tank to $1.  It seems to me it would be best to sell it yourself so no brokers make any money and then buy them back at $1.  If you want to vacation in the interim period, rent for below MF.
> 
> It sounds to me like you are not as confident about your position as you puff on these boards.  Otherwise, you are making a bad personal decision.



Our timeshares are used for vacations and to make a few bucks in rent to pay the MFs.

We have just the right number of timeshares for our use - thank you.

However, if my prediction of $1 Platinum Marriott's comes true we will reevaluate our timeshare portfolio.

But I don't need a timeshare real estate broker to handle the transactions - sorry BB; no joy here.


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## dioxide45 (Dec 30, 2008)

*The proof is there now.*

I think the proof is out there right now that ROFR is not helping protect prices. Sure people will say "butttt... Marriott isn't exercising right now." That doesn't matter, the option of ROFR is still there. There is no guaranty with ROFR. Is is there for Marriott's and only Marriott's benefit.

Marriott can still exercise ROFR and they have fairly recently at what people would agree is fairly high prices. I don't see MGV 2BR platinum going for over $12K on E-Bay.


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## dioxide45 (Dec 30, 2008)

thinze3 said:


> John, its a really simple concept that you cannot seem to grasp. Today there are five resale purchases and no Marriott purchases. Tomorrow there will be five resale purchases and possibly 5, 10 or 20 Marriott purchases.
> Terry



The thing is there is still only 5 resales in both scenarios. The only difference is that Marriott is getting 2 and the other three are going to the original seller. Sure the original buyers on those ROFR'd sales might go back out and offer more, though if they follow the proper rule of thumb they will offer even less.


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## m61376 (Dec 30, 2008)

dioxide45 said:


> I think the proof is out there right now that ROFR is not helping protect prices. Sure people will say "butttt... Marriott isn't exercising right now." That doesn't matter, the option of ROFR is still there. There is no guaranty with ROFR. Is is there for Marriott's and only Marriott's benefit.
> 
> Marriott can still exercise ROFR and they have fairly recently at what people would agree is fairly high prices. I don't see MGV 2BR platinum going for over $12K on E-Bay.



The flip side to the argument though is that ROFR only helps protect prices when it is actively being exercised. The mere threat of a remote possibility of it being exercised is not enough- it needs to be actively exercised for it to protect prices.

There will always be desperate sellers and, unfortunately, there are even more in this economy. Regardless of the presence of ROFR, there will be personal forces that will cause anxious sellers to sell at below market value in order to sell fast. Prior to 2 months or so (maybe 3...I am not sure when the credit crunch forced a change in Marriott's hand) Marriott was the only one to benefit (as you said, Marriott was the real beneficiary of ROFR). However, a buyer who really wanted a unit and was buying resale in order to save a few dollars over buying directly- but one who had made up his/her ind to buy- would look for another unit and, yes, oftentimes be willing to pay more so as to be able to finalize the purchase. 

I understand you maintain that a smart buyer would just keep on offering less. However, that so-called "smart" buyer would stand a good chance of never consummating a purchase and, if the buyer wanted the unit, would likely offer more. That scenario has been well documented many times here. There are savvy buyers who keep on playing the game and hoping that one will slip through ROFR (and oftentimes have lucked out) but I maintain that most anxious buyers will ultimately up their price if they really want the resort and have lost one or more to Marriott. For example, when I bought a unit 2 years ago I did initially get what I knew was an incredible price and Marriott nabbed it. I wanted to buy so I held out to find another good price, but still a few thousand more than the first one. I still paid much less than other resale units at the time, so I got a good price. 

What ROFR does, in my opinion, is it prevents those fire sales from becoming the expected norm. Once buyers realize that they can benefit from a desperate seller, savvy buyers will hold out for those steals. And that's exactly what is happening now. I think most of the Ebay buyers are more timeshare savvy and are willing to walk away from the deal unless they can nab it at a bargain basement price, because they are aware that they will likely be able to acquire the unit. Once this scenario happens, it becomes a downward spiral, because the next person wants even a better buy than the last.

Time will tell who is right in this argument. If Marriott starts exercising ROFR again (which I firmly believe they will) and if we then see prices slowly begin to restabilize and escalate, then that will be proof enough.


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## m61376 (Dec 30, 2008)

dioxide45 said:


> The thing is there is still only 5 resales in both scenarios. The only difference is that Marriott is getting 2 and the other three are going to the original seller. Sure the original buyers on those ROFR'd sales might go back out and offer more, though if they follow the proper rule of thumb they will offer even less.



That's assuming that the original 5 buyers don't keep on looking and aren't willing to pay more for a unit that they really want. I think the point being made here is that, if there are 5 buyers who have decided to buy 5 properties at the best price they can get them at, these 5 people will keep on trying until they can close on a deal, even if they have to pay a little more and can't get their initial bargain. If Marriott has nabbed a few along the way, then more than 5 seller may be happy.


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## AwayWeGo (Dec 30, 2008)

*Except Price Protection Doesn't Really Happen.*




m61376 said:


> The mere threat of a remote possibility of it being exercised is not enough- it needs to be actively exercised for it to protect prices.


Even then ROFR does not protect prices.  

All ROFR does is give the timeshare company the exclusive right to snap up the low-price resales that happen now & then anyway. 

ROFR *=* ROFL. 

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


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## BocaBum99 (Dec 30, 2008)

ROFR does NOT protect prices.  All ROFR does is artificially prop up resale prices when it is being exercised above what the nominal prices would be without it.  Anyone who disagrees with this statement does not understand the very basic economic principal of supply and demand and the clearing of markets based on price.

The supply and demand curve is what it is and changes with environmental conditions.  The resale price is the price where the number of buyers equals the number of sellers.  When ROFR is being exercised, Marriott is putting it's thumb on the demand side of the scale thereby shifting the balance and increasing prices.

If prices collapse to 1/4 of their previous value, that's because there is an influx of sellers who are willing to accept a lower price and a reduced number of buyers at a higher level.  No matter how much Marriott buys back, it can't prevent the price from falling when the shift is as dramatic as it has been.  However, the amount it falls will be less if Marriott is exercising.  Conversely, prices will fall more dramatically when ROFR stops being exercised.  The market price will then adjust to reflect the real supply and demand curve of the market with Marriott's thumb off the scale.

So, there is absolutely no doubt in my mind that ROFR acts as a temporary and artificial price support when it is being exercised.  And, there is absolutely a way to leverage and capitalize on opportunities that manifest themselves both when Marriott exercises and when they stop.  The price action is very predictable.


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## m61376 (Dec 30, 2008)

Boca- 
You are right- I didn't literally mean that it protected prices- I guess it was a poor choice of words- actually, you expressed what I was trying to say better: it "prop up resale prices when it is being exercised above what the nominal prices would be without it."  What I was trying to say (poorly I guess) is that it prevents the occasional fire sale- the desperate seller- from setting a new price floor to the general marketplace. 

Of course supply and demand ultimately determines pricing, regardless of ROFR, but even in good times there is the occasional aberration- the desperate seller- and ROFR does help prevent those sales from setting a new baseline. If people can't actually buy at prices which may be several thousand below the general market, it lowers their expectations of doing so and, if they really want the unit anyway, forces them in a sense to pay whatever the fair market value is.


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## timeos2 (Dec 30, 2008)

*For 1 winner in the game there are 10 or more losers. Play the winning hand*



m61376 said:


> Boca-
> You are right- I didn't literally mean that it protected prices- I guess it was a poor choice of words- actually, you expressed what I was trying to say better: it "prop up resale prices when it is being exercised above what the nominal prices would be without it."  What I was trying to say (poorly I guess) is that it prevents the occasional fire sale- the desperate seller- from setting a new price floor to the general marketplace.
> 
> Of course supply and demand ultimately determines pricing, regardless of ROFR, but even in good times there is the occasional aberration- the desperate seller- and ROFR does help prevent those sales from setting a new baseline. If people can't actually buy at prices which may be several thousand below the general market, it lowers their expectations of doing so and, if they really want the unit anyway, forces them in a sense to pay whatever the fair market value is.




Sorry but the logic fails when you say the price rises. Only the one potential buyer knows that ROFR stole the deal at say $5000 - all others have seen that price and that becomes the bar. No one is going to willingly offer $6000 thus those that try to sell at that price get zero offers (unless the actions of a slick, timeshare weasel like broker/agent talks the unwitting into "beating ROFR by raising the price".  Talk about anti-consumer and virtual fraud). 

So to get the only thing that will trigger ROFR - a real serious offer - that price will have to be lowered - not raised as Perry would suggest - or the unit will languish for sale forever.  Once it's lowered that's all the seller will get (we keep repeating that but it somehow goes over the head of the ROFR believers) and the buyer gets shut out.  Are they going to offer more? Only those that MUST have that resort (few and far between) or that are silly enough to play the game. Most will drop out or simply make another offer equal or less to the next seller. The developer never mention's the cheap sale as that lowers expectations even more so the marketplace see's a $5000 sale gone and $6000 offers going unsold. How does that help raise prices? 

And since any price increase is, even by those that think ROFR somehow raises prices for the average seller (are there any that actually believe that or is it a sales front?), admitted that it is a "temporary, artificial price" where does that leave anyone silly enough to pay a premium when THEY decide to unload it? Getting a lower price of course unless the ROFR stars happen to align on the second Tuesday of that week and they get nearly what the artificial price they mistakenly paid was.  Chances of that happening? Very low. Chances of them not recovering what they paid (just like most other  timeshares ROFR or not)? Good to Excellent.  Effect of ROFR? Negative for all but the developer (another point we all seem to agree on).  

So why defend the un-defendable?  Best to buy only at non-ROFR resorts OR only when ROFR is being ignored, as it is now. And buy to use with the assumption you will be lucky to get anything close to the price you pay in any future sale.  Any other time or playing the ROFR game you likely will be on the sucker side of a sucker bet. Not where anyone should try to be.


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## AwayWeGo (Dec 30, 2008)

*Agreed.  It's Too Much To Pay . . .*




timeos2 said:


> So why defend the un-defendable?


 *. . .* just to keep the riffraff out. 

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


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## m61376 (Dec 30, 2008)

I think one of the real disagreements here is whether people will walk away when they can't get the bargain basement deal or whether they will be willing to raise their offer. My contention is that, while I knew what the going market rate was for the unit I bought and I was more than willing to take advantage of a desperate seller (gee...that sounds awful, doesn't it?), when Marriott nabbed my "steal" I was willing to pay more the next time around, knowing that I was getting a good buy (the shopper in me made sure it was still at the bottom of the market at the time), but significantly more than my "steal." There have been many posts by others who have acted accordingly.

On the other hand, John and others contend that having a unit nabbed from them makes them walk away. I assume there are those that share those sentiments as well and, admittedly, if ROFR affects most buyers that way I would agree it would have a negative impact. However, I don't think most buyers react that way. Personally, I think most buyers, once they make the decision to buy, if they can afford it will pay a little more if they aren't able to get their bargain price. Human nature is such that people get vested in what they want to buy and, while more than happy to pay a lower price, will oftentimes increase their offering in order to close the deal.

Furthermore, most resale buyers aren't Tuggers and most are not aware of the bargain basement priced units. They contact brokers who simply tell them that such low-ball offers will never pass ROFR, and support it by telling prospective buyers that they had or know of similar units that were bought back by Marriott at that or even a higher price. Even now, in this market, I had a resale broker who has been recommended over and over again on Tug play essentially that game with me, when I was interested in a unit but wanted to pay only what an identical unit had just sold for on Ebay. And, even though everyone here has said that all the great deals have been passing ROFR lately, he was nevertheless insistent that such a low price would fail. I would venture to guess that sales line from resale brokers is effective with most buyers and causes them to offer more if they really want to buy (and, after all, they are still saving so much over retail developer's prices that it still seems like a good buy).


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## BocaBum99 (Dec 30, 2008)

timeos2 said:


> Sorry but the logic fails when you say the price rises. Only the one potential buyer knows that ROFR stole the deal at say $5000 - all others have seen that price and that becomes the bar. *No one is going to willingly offer $6000 thus those that try to sell at that price get zero *offers (unless the actions of a slick, timeshare weasel like broker/agent talks the unwitting into "beating ROFR by raising the price".  Talk about anti-consumer and virtual fraud).



There you go again.  You claim that "No one is going to willingly offer $6000" when they lose a deal to ROFR at $5000.  M61376 just said that he did just that.  

So, once again you are proven wrong beyond any reasonable doubt.  

The ONLY way you are right is if M61376 is lying.  Do you believe that to be true?  Or, will you concede that you are wrong on this point?


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## thinze3 (Dec 30, 2008)

m61376 said:


> ... Personally, I think most buyers, once they make the decision to buy, if they can afford it will pay a little more if they aren't able to get their bargain price. Human nature is such that people get vested in what they want to buy and, while more than happy to pay a lower price, will oftentimes increase their offering in order to close the deal.
> 
> Furthermore, most resale buyers aren't Tuggers and most are not aware of the bargain basement priced units. They contact brokers who simply tell them that such low-ball offers will never pass ROFR, and support it by telling prospective buyers that they had or know of similar units that were bought back by Marriott at that or even a higher price ...



I agree with this statement and personally do not know anyone who would walk away simply because a developer ROFR'd a unit from them. The buyer will try again on another unit, most likely with a slightly higher price. Before long experienced sellers like Seth would be advising buyers on ROFR price points keeping many buyers from making lowball offers.

Terry


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## thinze3 (Dec 30, 2008)

timeos2 said:


> Sorry but the logic fails when you say the price rises. Only the one potential buyer knows that ROFR stole the deal at say $5000 - all others have seen that price and that becomes the bar. No one is going to willingly offer $6000 ...




And *"No one"* would NEVER own that Marriott unit!


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## BocaBum99 (Dec 30, 2008)

timeos2 said:


> (unless the actions of a slick, timeshare weasel like broker/agent talks the unwitting into "beating ROFR by raising the price". Talk about anti-consumer and virtual fraud).



Your parenthetical statement suggests that it is possible for a potential buyer to raise their offer price from $5000 to $6000 if Marriott buys back the unit from $5000, but only if an unethical broker/agent somehow fraudulently gets them to do this.

Are you serious?  So, you are saying that Seth Nock is a criminal?  He is the single largest Marriott broker I know.  Please, I defy you to find ONE person out of the THOUSANDS who believes that Seth cheated them.  Hundreds of them post on this board.

I ask you to retract your slanderous remarks.

Seth and many other Marriott resale brokers provide a value added service to potential buyers to help them navigate through the ROFR process.  And, they can often times get them deals better than they can get for themselves.  This is the OVERWHELMING response you will get from resale broker clients.

Most resale buyers who use a broker and thankful that they found the resale broker who saved them thousands of dollars off of the developer price for virtually the same  product.


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## thinze3 (Dec 30, 2008)

dioxide45 said:


> ... Sure the original buyers on those ROFR'd sales might go back out and offer more, though if they follow the proper rule of thumb they will offer even less.



If Marriott has made up its mind to purchase all units at that price or below in lieu of spending double that for new construction, that poor "original buyer" will never own that Marriott, now would he.  

Terry


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## timeos2 (Dec 30, 2008)

*Once you make a wrong assumption everything else is wrong as well*



m61376 said:


> I think one of the real disagreements here is whether people will walk away when they can't get the bargain basement deal or whether they will be willing to raise their offer. My contention is that, while I knew what the going market rate was for the unit I bought and I was more than willing to take advantage of a desperate seller (gee...that sounds awful, doesn't it?), when Marriott nabbed my "steal" I was willing to pay more the next time around, knowing that I was getting a good buy (the shopper in me made sure it was still at the bottom of the market at the time), but significantly more than my "steal." There have been many posts by others who have acted accordingly.
> 
> On the other hand, John and others contend that having a unit nabbed from them makes them walk away. I assume there are those that share those sentiments as well and, admittedly, if ROFR affects most buyers that way I would agree it would have a negative impact. However, I don't think most buyers react that way. Personally, I think most buyers, once they make the decision to buy, if they can afford it will pay a little more if they aren't able to get their bargain price. Human nature is such that people get vested in what they want to buy and, while more than happy to pay a lower price, will oftentimes increase their offering in order to close the deal.



So now I'm curious. How do you feel knowing you went ahead and played the game and now, today, if you wanted to sell Marriott has taken the ball and gone home leaving you with a week you paid an inflated price for due to their games? What good is a price prop if it isn't there when actually needed? Hope you REALLY wanted that week as you paid too much and now aren't likely to ever have a chance of recovering it based on misrepresentations from Marriott and resellers. If you did just want that week and didn't care what you paid or what the future value might be (a perfectly legitimate approach to a personal decision about value) then you did OK.  



m61376 said:


> Furthermore, most resale buyers aren't Tuggers and most are not aware of the bargain basement priced units. They contact brokers who simply tell them that such low-ball offers will never pass ROFR, and support it by telling prospective buyers that they had or know of similar units that were bought back by Marriott at that or even a higher price. Even now, in this market, I had a resale broker who has been recommended over and over again on Tug play essentially that game with me, when I was interested in a unit but wanted to pay only what an identical unit had just sold for on Ebay. And, even though everyone here has said that all the great deals have been passing ROFR lately, he was nevertheless insistent that such a low price would fail. I would venture to guess that sales line from resale brokers is effective with most buyers and causes them to offer more if they really want to buy (and, after all, they are still saving so much over retail developer's prices that it still seems like a good buy).



Exactly what I'm saying above. Lke Wyndham VIP, ROFR is a house of cards with zero guarantees that plays to the greed of a developer at the direct cost to owners/buyers. And I'm in full agreement that any reseller who preaches the ROFR nonsense as a reason to pay more is barely a step above the common retail weasel hawking 50%+ premium price for nothing but hot air.  It is a self serving sham that costs the very buyers they claim to be supposedly helping.  

Basically the best advice is and will remain to stay away from any resort/system with ROFR. Second best is always bid less on any ROFR week and hold out until you get your price or walk away.  It was not just luck that anyone who listened to that advice in the past year has done very well if they purchased and those who ignored it paid too much.  While anything can happen the likelihood is that going forward those that continue to follow that path will be happy owners of low priced weeks they desire and those that ignore it with the idea that somehow they will be guaranteeing themselves a better resale later will be burned. Only time will tell but I sure know the side I feel will prevail.  Only those who actually try to sell a ROFR week are eligible to report back as all the theoretical values people love to talk about are meaningless until the deal materializes and closes. I shudder when I hear so many talk about how a ski week or a beach week "is worth more now than when I bought it" or "The developer price is up 30% since I bought" as if that somehow translates to a higher value for their week. It is instantly obvious they have never actually tried to sell it or ever dealt with ROFR as a seller. Only then does the hard truth hit home.


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## BocaBum99 (Dec 30, 2008)

timeos2 said:


> So to get the only thing that will trigger ROFR - a real serious offer - that price will have to be lowered - not raised as Perry would suggest - or the unit will languish for sale forever. Once it's lowered that's all the seller will get (we keep repeating that but it somehow goes over the head of the ROFR believers) and the buyer gets shut out. Are they going to offer more? Only those that MUST have that resort (few and far between) or that are silly enough to play the game. Most will drop out or simply make another offer equal or less to the next seller. The developer never mention's the cheap sale as that lowers expectations even more so the marketplace see's a $5000 sale gone and $6000 offers going unsold. How does that help raise prices?



First of all, I think you may be labelling me as an ROFR true believer.  That's fine.  What I actually am is a scientist.  I develop theories based on various economic principles, then I run experiments to test my hypotheses and I accept what I see with my own eyes are the reality instead of the make believe world of what is only in my head.  So, technically, this doesn't make me an ROFR true believer.  On the othe hand, you simply ignore all of the evidence to the contrary and make blanket statements that are so easy to disprove that you must constantly retract your statements like you will certainly do on this thread regarding criminal behavior of brokers and the existence of at least one person who would try more than once to buy a Marriott.  So, the label of true believer is more aptly descriptive of you.

Secondly, you bring up a valid point about what happens to sellers when ROFR is exercised.  What happens is that some potential buyers who would normally make offers on lower priced units will drop out of the market.   That is a real drop in demand for product.  But, only for units at the lower end of the demand curve.  Sellers in this predicament either keep what they have, turn to a PCC or someone else and give away their unit or work with a resale broker who knows the market and has access to buyers at the higer end of the demand curve.  In either case, the active buyers market who have a price point higher than ROFR will never see those units.  So, those buyers will only have access to those units and will buy at those prices.

Here is the KEY point.  THOSE SELLERS WHO PARTNER WITH RESALE BROKERS OR WHO ARE EDUCATED ENOUGH THEMSELVES ON THE EXISTENCE AND LEVELS AT WHICH PRICES ARE BEING ROFR'ED AT SELL THEIR UNITS AT OR ABOVE THE ROFR PRICE WHICH AS I HAVE ALREADY PROVEN CAN BE HIGHER THAN THE NOMINAL RESALE PRICE.

The unwitting sellers who do NOT know how to work the system to make ROFR work for them get hosed.  So, as is the case with just about everything in timesharing, those with the knowledge of how to work the system win big time and those who don't lose big time.

So, ROFR is absolutely a positive factor for all knowledgeable timeshare buyers and sellers who know who to work the ROFR system.  To play the game, you can learn it yourself by mining these message boards for information or you can simply work with a knowledgable resale broker who is skilled in this area.


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## timeos2 (Dec 30, 2008)

*Creating little scenerios in a controlled way isn't the real world*



BocaBum99 said:


> There you go again.  You claim that "No one is going to willingly offer $6000" when they lose a deal to ROFR at $5000.  M61376 just said that he did just that.
> 
> So, once again you are proven wrong beyond any reasonable doubt.
> 
> The ONLY way you are right is if M61376 is lying.  Do you believe that to be true?  Or, will you concede that you are wrong on this point?



So it should be "No informed buyer will willingly offer $6000". Maybe one that is getting bad advice or gets caught up in the auction mentality of "I gotta win" but no average, knowledgeable buyer is going to offer more than the going rate for any product. The fact that some do on a rare occasion doesn't disprove the theory but goes to show people can and are fooled into bad purchases. Never done that? We all have.  Go back to the sticker price car buyer or the rack rate hotel guest. But hopefully you learn and don't make the mistake a second time (or a second, higher bid on a ROFR property).


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## BocaBum99 (Dec 30, 2008)

timeos2 said:


> So now I'm curious. How do you feel knowing you went ahead and played the game and now, today, if you wanted to sell Marriott has taken the ball and gone home leaving you with a week you paid an inflated price for due to their games? What good is a price prop if it isn't there when actually needed? Hope you REALLY wanted that week as you paid too much and now aren't likely to ever have a chance of recovering it based on misrepresentations from Marriott and resellers. If you did just want that week and didn't care what you paid or what the future value might be (a perfectly legitimate approach to a personal decision about value) then you did OK.



I also agree with your sentiment in this post.  What you seem to be acknowledging is that prices are indeed propped up by ROFR because when they stop it prices drop.  Therefore the buyer is hurt by paying an artificially higher price.  I completely agree with that assertion.    That is the single reason I have never bought a platinum Marriott up until today because I knew I could never get it at a price that I was willing to pay since Marriott would grab it.

There are two follow on points that must also be made.

First, when ROFR is removed, that makes it a buying opportunity for those who were latent buyers who dropped out when ROFR was being exercised.  This explains my personal change in opinion about whether or not I should buy a platinum Marriott.  If I am ever going to pick up a platinum Marriott, this is the time to do it.  

Second, just because I am not willing to purchase a Marriott at a level above ROFR, it does NOT mean that others do not still find value in a Marriott timeshare at that price.  It just means their willingness to pay for a platinum Marriott timeshare is higher than mine is.  That's what makes a market.  People who know the situation and still buy.  They are not wrong.  They are just different.

A supply demand curve is by definition a chart of the number of market participants at every price point who are willing to buy a product at that price point mapped against the number of market participants who are willing to sell the same product at that price point.  Here is what a supply demand curve looks like:






Notice that there is a point at which supply equals demand in terms of number of participants.  It is at that quantity that the number of sellers and buyers equal and the market can clear.   Can you see how adding demand will shift up the cross over point of these curves?  That is how increasing demand increases prices.  When ROFR is exercised, it distorts these curves.

The problem in this discussion is that some on this board believe that if a person is willing to pay $5000 for a product that they are NOT willing to pay $6000.  That is NOT true.  All participants who are willing to accept $7000 as a purchase price are also willing to accept a price of $5000 or $4000.  That is why the curve is always increasing or decreasing.  Same is true of sellers.  All sellers who are willing to accept $5000 will also be willing to accept $6000 in a sale.   That is the point that is lost when discussing supply and demand and the clearing of markets.


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## Stefa (Dec 30, 2008)

thinze3 said:


> I agree with this statement and personally do not know anyone who would walk away simply because a developer ROFR'd a unit from them. The buyer will try again on another unit, most likely with a slightly higher price. Before long experienced sellers like Seth would be advising buyers on ROFR price points keeping many buyers from making lowball offers.
> 
> Terry



I actually did walk away simply because Marriott ROFRd my resale purchase.  I only wanted the timeshare if I could get it for my lowball price.   Had I really wanted that resort/season that badly, I might have tried again at a higher price.

And I'm not sure Seth is the best example because I'd bet he gets a significant amount of business from TUG (I could be wrong) and therefore he would be representing the kinds of buyers who would make the lowball offers where ROFR would come into play.   I'm not suggesting that buyers don't raise there price because of the advice of Seth or another broker, I'm nust not sure how often the ROFR really came into play before Marriott stopped exercising.  Obviously it's a big deal here at TUG, but I wonder what percentage of resales were really impacted by ROFR.   (I know there is no way to know this.)


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## AwayWeGo (Dec 30, 2008)

*No, No.  It's The Other Way Round.*




BocaBum99 said:


> What you seem to be acknowledging is that prices are indeed propped up by ROFR because when they stop it prices drop.


Just the opposite -- when the prices drop, the timeshare companies quit exercising ROFR. 

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


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## grupp (Dec 30, 2008)

BocaBum99 said:


> When ROFR is exercised, it distorts these curves.



You may want to brush up on your Econ basics. The ROFR does nothing to move the curves, but would move the supply and demand ALONG the curves. 

For example, if you have a price floor (which could be a ROFR) above the market price, supply will exceed demand. For those who are able to sell at that price, there will be a benefit of a higher selling price. For those who are unable to sell due to lack of demand, they are at a disadvantage. 

So does a ROFR help good for sellers or not? I quess it depends on each particular circumstance.

There may have been a shift in the demand curve moving it down as depicted in your graphic, but this has to do with other things occurring in today's economy and nothing to do with ROFR 

Gary


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## timeos2 (Dec 30, 2008)

BocaBum99 said:


> Are you serious?  So, you are saying that Seth Nock is a criminal?  He is the single largest Marriott broker I know.  Please, I defy you to find ONE person out of the THOUSANDS who believes that Seth cheated them.  Hundreds of them post on this board.
> 
> I ask you to retract your slanderous remarks.
> 
> ...



I said nothing about Seth specifically (and he does hold a sterling reputation here) or anything about criminal. I have never spoken to him or tried to purchase anything from his services. 

I do have a serious problem with anyone who would give advice to pay more for anything they stand to profit from in the guise of "helping". If in fact Seth or anyone else does that without serious, fully detailed qualifications as to the reasoning then that is someone I would feel is taking unfair advantage of a client/customer.  Again I don't know how Seth conducts business and given your description of the satisfied clients I hope it is clearly stated what he is recommending and why. If a fully informed buyer decides based on truthful information to make a bid for a higher amount then there is no issue. If the "help" is the typical timeshare presentation type of self-serving "facts" designed to get the sale then I would have serious problems with it. 

I have nothing to retract.


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## thinze3 (Dec 30, 2008)

You had one buyer and with Marriott you have two buyers.
And Marriott can be a REALLY BIG BUYER when exercising ROFR.
Demand goes up. It really is that simple.

Terry

P.S. - John, I think a salesman telling someone what Marriott has been doing recently is a service to his clients.


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## BocaBum99 (Dec 30, 2008)

grupp said:


> You may want to brush up on your Econ basics. The ROFR does nothing to move the curves, but would move the supply and demand ALONG the curves.
> 
> For example, if you have a price floor (which could be a ROFR) above the market price, supply will exceed demand. For those who are able to sell at that price, there will be a benefit of a higher selling price. For those who are unable to sell due to lack of demand, they are at a disadvantage.
> 
> ...



Perhaps I was too ambiguous and unclear in my previous post.  Let me fix that.  You are correct that if you measure aggregate demand with Marriott exercising ROFR that that aggregate demand is represented by a single demand curve.  I was trying to describe that as D2 in the above chart.  Given that demand curve, there is an equilibrium point which represents the market price and any demand below a certain price point (the ROFR level) removes the buyers from the market along that curve.  You can actually theoretically measure how many participants there are if you get the demand curve right.  However, that is NOT what I am trying to describe.  I was sloppy in my description by discussing two different topics together in a convoluted way.  Let me try to clarify it.

First, here is the description of the shift in the demand curve I posted above:



> When consumers increase the quantity demanded at a given price, it is referred to as an increase in demand. Increased demand can be represented on the graph as the curve being shifted outward. At each price point, a greater quantity is demanded, as from the initial curve D1 to the new curve D2. More people wanting coffee is an example. In the diagram, this raises the equilibrium price from P1 to the higher P2. This raises the equilibrium quantity from Q1 to the higher Q2. A movement along the curve is described as a "change in the quantity demanded" to distinguish it from a "change in demand," that is, a shift of the curve. In the example above, there has been an increase in demand which has caused an increase in (equilibrium) quantity. The increase in demand could also come from changing tastes and fads, incomes, complementary and substitute price changes, market expectations, and number of buyers. This would cause the entire demand curve to shift changing the equilibrium price and quantity.
> 
> If the demand decreases, then the opposite happens: an inward shift of the curve. If the demand starts at D2, and decreases to D1, the price will decrease, and the quantity will decrease. This is an effect of demand changing. The quantity supplied at each price is the same as before the demand shift (at both Q1 and Q2). The equilibrium quantity, price and demand are different. At each point, a greater amount is demanded (when there is a shift from D1 to D2).



What I should have said to be more clear is that Marriott entering the market with ROFR shifts the demand curve which is an artificial market distortion.  One demand curve describes the aggregrate demand for a given set of circumstances and environmental conditions.  In the example I cite, D1 is the curve when Marriott is NOT exercising ROFR.  The aggregate demand is lower.  

When the market conditions change and Marriott enters in as a market participant, aggregate demand increases and the curve shifts to the right because of their entry into the market of total demand represented by D2.  What I am saying is that everything else in the market is the same.  The only difference is whether or not Marriott is exercising ROFR.  

The demand curve shifts due to the artificially increased demand from Marriott.  The shift in the curve is the market distortion I am discussing.  It results in a different equilibrium point.  The distortion in the demand curve will determine whether or not the resale prices will go up or down.  If the curve simply stays the same and shifts to the right, then prices wil  l increase.  If the demand curve steepens, equilibrium price can go down.  In both cases, the resulting demand curve is a distortion from the original which is where the real market demand is represented.

In addition, it is worth noting that if the increased demand by Marriott is not large enough to change materially the demand curve, then ROFR truly does not impact prices.  I believe this is what many on this board believe.  They believe it adds demand, but not enough to change the curve.  I used to be in the camp until I saw it change with my own eyes.

Moreover, this entire discussion is only addressing the demand curve.  If the supply curve shifts, then that will also impact market price.  Probably one of the biggest shifts in the supply curve was introduced by the advent of the PCC.  Now, foreclosures will also add supply and therefore shift the supply curve.  I believe this dramatically increased supply has severely limited the impact ROFR in raising prices.  The question is whether or not environmental conditions change in the future back to its more normal state or if it permanently stays where it is now or gets worse.


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## tombo (Dec 30, 2008)

grupp said:


> You may want to brush up on your Econ basics. The ROFR does nothing to move the curves, but would move the supply and demand ALONG the curves.
> 
> For example, if you have a price floor (which could be a ROFR) above the market price, supply will exceed demand. For those who are able to sell at that price, there will be a benefit of a higher selling price. For those who are unable to sell due to lack of demand, they are at a disadvantage.
> 
> ...



 ROFR doesn't set a floor price as it is a moving price exercised sporadically. If ROFR did set a floor price it would be good for all owners and it would actually prop up prices. As you said it can move supply and demand along the curves.

I got ROFR'd once and the seller got what he agreed to sell it to me for from Marriott. I will never bid on any resort with ROFR again. Any seller with a week he needs to sell who is willing to take a price I would pay has lost a buyer (me). Any seller selling on e-bay has one less bidder raising the auction price on the week he has for sale. Any seller who wants to sell their week for a price that is reasonable in todays market has reason to hate ROFR because of the loss of potential buyers like Stef and myself it has alienated. I have purchased over 15 weeks since I swore off ROFR resorts, and at least 5 of them would have been Marriott except for ROFR. If a developer or other buyer beats me in bidding on an auction or by offering the buyer more than I will pay, then they deserve the week. If Developers lawyer  me out of a week I rightfully purchased by using ROFR, then they can have that week and all others that are for sale at any price.

There are the brokers and sellers who get more money using ROFR. The customer offers them $5000 for example and they say I will take that but I think it will take $6000 to beat ROFR. Some people fall for that just like some people fall for the line that there are 2 buyers looking at that used car you want so you better buy it now. Many fall for the my boss won't take that for that car, but for a little more you can get it. Then there is always the developers cry of this price is only good today. Some would call that tactic salesmanship, some would call it a lie, some would call it fraud. I guess it just depends on your morals and point of view. 

Some people are suckers, some are simply too trusting, but the only way ROFR increases prices is by being used as a bargaining tool (ie threat) by sellers who actually have no idea if a week will be ROFR'd, or at what price ROFR would be exercised. Only the resorts know if, when, where, or at what price they will ROFR. As many have said here just the threat of ROFR raises prices... Thank goodness I don't have to threaten ROFR to the uneducated to make a living or sell my weeks.


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## m61376 (Dec 30, 2008)

timeos2 said:


> So now I'm curious. How do you feel knowing you went ahead and played the game and now, today, if you wanted to sell Marriott has taken the ball and gone home leaving you with a week you paid an inflated price for due to their games? What good is a price prop if it isn't there when actually needed? Hope you REALLY wanted that week as you paid too much and now aren't likely to ever have a chance of recovering it based on misrepresentations from Marriott and resellers. If you did just want that week and didn't care what you paid or what the future value might be (a perfectly legitimate approach to a personal decision about value) then you did OK.



First of all, since you don't know me, let me tell you that I am the consummate shopper, and generally buy great stuff at the lowest price possible. My friends come to me for advice and marvel at my shopping expertise, so I am certainly no fool.

Secondly, you are missing my point entirely. Two years ago, when I tried to buy the first unit, I was well aware that it was priced several thousand dollars lower than anything else. I was, in all honesty, probably taking advantage of either someone's lack of knowledge of the market or, more likely, someone who needed the money for whatever reason and wanted to sell (not something to be proud about, but I was taking advantage of the best deal I could find). When Marriott nabbed it, I did find another good buy, but still more money. 

At the time of purchase most other brokers told me I would never find a unit at the price I ultimately paid- so I did NOT overpay- it just wasn't the steal that the first unit was. ROFR, in this case, prevented a bargain basement price from becoming the norm.

As for your other question- as how do I feel in today's market- interesting question and my answer will probably shock you. If I had known what the market would become, the shopper in me would have waited. HOWEVER- the first year I took two wonderful trips with my parents, who were thankfully healthy and fine and I thought they'd be around forever. My Dad died a year ago unexpectedly and, well, to sound corny, those memories are priceless. So, I am very happy that I didn't have a crystal ball and bought when I did, and I will never regret that decision. After all, isn't that the whole purpose of timeshare purchases?


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## m61376 (Dec 30, 2008)

timeos2 said:


> So it should be "No informed buyer will willingly offer $6000". Maybe one that is getting bad advice or gets caught up in the auction mentality of "I gotta win" but no average, knowledgeable buyer is going to offer more than the going rate for any product. The fact that some do on a rare occasion doesn't disprove the theory but goes to show people can and are fooled into bad purchases. Never done that? We all have.  Go back to the sticker price car buyer or the rack rate hotel guest. But hopefully you learn and don't make the mistake a second time (or a second, higher bid on a ROFR property).



As I commented above, no one who knows me would ever characterize me as an uninformed buyer on anything. I am the consummate shopper. And, as I said, I got a really good buy at the time, just not a fire sale price.

And, just to set the record straight, I have never paid either sticker price for a car or a hotel rack rate and do not believe that is, in any respect, analogous to upping a price on a ROFR, as long as the second price is within market parameters.


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## grupp (Dec 30, 2008)

BocaBum99 said:


> What I should have said is that it shifts the curves.



I guess we have a fundamental disagreement on whether the ROFR moves along the existing curve or actually moves the curves. I would argue (and I believe correctly) that the Marriotts ROFR does nothing to move the curves. They are not actively out seeking properties and only jump into to transactions that are already agreed upon. If they were actively in the Market seeking properties, that would be different story. That would increase demand moving the curve to the right.  

I would agree that now or in the near future certainly may be a good time to purchase for several reasons. As you point out the demand curve has certainly moved down due to the current economic situation. (absolutely nothing to do with ROFR). Second, the fact that Marriott is not using their ROFR is an advantage. Not necessarily price wise, but prevents you form wasting your time working out a deal only to have Marriott take it away from you. 

If you do a little Econ refresher class, you would most likely agree with me on the demand curves. 

Hope you have a Happy New Year. 

Gary


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## timeos2 (Dec 30, 2008)

*The true believers are hoping they are right.*



BocaBum99 said:


> First of all, I think you may be labelling me as an ROFR true believer.  That's fine.  What I actually am is a scientist.  I develop theories based on various economic principles, then I run experiments to test my hypotheses and I accept what I see with my own eyes are the reality instead of the make believe world of what is only in my head.  So, technically, this doesn't make me an ROFR true believer.  On the othe hand, you simply ignore all of the evidence to the contrary and make blanket statements that are so easy to disprove that you must constantly retract your statements like you will certainly do on this thread regarding criminal behavior of brokers and the existence of at least one person who would try more than once to buy a Marriott.  So, the label of true believer is more aptly descriptive of you.



Actually I don't think you are a true believer or you would buy into the system. So far at least you haven't from what I read. Like Bill O'Reily I don't want to hear the theoretical idealism of a controlled experiment - look at the way the real world behaves for your facts. Unless you subscribe to the Perry espoused, twisted "raise the price and they will buy" theory the real world says once a potential buyer sees a low price they are going to limit how much over that price they are willing to spend in most cases. While there may be a case of a sale a few hundred or thousand above the actual market value it is not due to any action of RFOR but of misconstrued credit to that system when supply/demand is the true driver. There are a limited number of truly quality weeks and those will, by nature, sell for more than average. No ROFR required. 

The real problem here is removing unrelated factors from the picture. You say ROFR raises the value. I would maintain the specific demand for a week (top value time, name brand or top resort, maybe special view, etc) drives the value up and ROFR is only a detriment to the process. It isn't raising the price, it's another roadblock to a sale. How can you state that the few dollars you credit to ROFR wouldn't have been twice or three times as much if the week was offered unencumbered by ROFR? We all seem to agree there are buyers who refuse to deal with or drop out due to ROFR. Maybe they, if bidding, would raise the value even more.  Can't be proved but, again, the real world says that's the case.  Every study says when you cut the number of potential buyers- ROFR is a proven method of doing that - you reduce the potential price received.   

And of course we tend to view the whole world through the TUG lens. Most buyers / sellers have no clue and thus the uninformed and real world scenarios become the determining factors.  And no lab to control the results either.    

Obviously this thread will never reach a definitive conclusion as each side has a case and neither can prove it at anything approaching 100% of the time. So I'll put you down for lukewarm support of ROFR as a temporary, artificial price booster with no future guarantees. I go with the avoid ROFR / buy low crowd that sees it as a big negative to all but developers.  A few here would be the ROFR true believers at least until they try to actually sell (although human nature being what it is it's unlikely they will admit they were wrong even when the inevitable lower price sale occurs).   Too bad we can never really tally which side gets the most actual results.


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## BocaBum99 (Dec 30, 2008)

timeos2 said:


> So it should be "No informed buyer will willingly offer $6000". Maybe one that is getting bad advice or gets caught up in the auction mentality of "I gotta win" but no average, knowledgeable buyer is going to offer more than the going rate for any product. The fact that some do on a rare occasion doesn't disprove the theory but goes to show people can and are fooled into bad purchases. Never done that? We all have.  Go back to the sticker price car buyer or the rack rate hotel guest. But hopefully you learn and don't make the mistake a second time (or a second, higher bid on a ROFR property).



I think this is a very important point to probe because I think it is the root assumption underlying your whole argument.  And, I believe that assumption can be proven to be false.

As I mentioned above, there are buyers who would willingly pay $7000 or more for a Marriott timeshare in question who are fully educated and apprised of the pros and cons of that price point and would not at all be upset if their lowball offer of $5000 were bought back by Marriott.  Many of those buyers think that they took a shot and lost.  No skin off their back.  They just find another deal.  If a broker is involved, that is very easy to do.  Next time, they would be willing to offer $6000 for it.  This doesn't violate any trust or confidence and it's a decision that can be made legitimately by any potential buyer.  To them, for whatever reason, they believe it is worth $7000 to them.  So, if they bid and get it for $6000, they can legitimately be happy.  Your paradigm seems to preclude an intelligent buyer from being in this situation.

You even use the example that it suggests that if the buyer were intelligent and educated that only an unscrupulous broker/agent would bamboozle that buyer to make the purchase.  I used Seth Nock as an example because I know that you and I both agree that he is a reputable broker who sells Marriotts.  That is a known fact.  Your theory is if ROFR is being exercised, then it by definition is a bad decision to purchase above that price.  The only logical conclusion a person can make from your statement is that then Seth Nock must be acting unethically.  The piece of information that absolves brokers like Seth is that buyers have different willingness to pay for various products.  A price for one buyer is not necessarily the same price point for another one.   And, if a person is willing to pay a higher price, that is their freedom to do so.  And, it happens all the time without any ethics issues.

The reason for bringing up the supply/demand curves is to show that a price point is nothing more than an equilibrium point where supply and demand is equal, but actual prices paid vary dramatically.  This curve represents a distirbution of willingness to buy and willingness to sell by all buyers and sellers.  That distribution has a mean or average amount and a standard deviation that is actually quite high indicating a very chaotic market.

So, I believe your underlying assumption that no educated buyer with full disclosure would ever make a $6000 offer after losing a unit for $5000 due to ROFR is simply not true and isn't even consistent with the experiences of many buyers on this message board.


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## m61376 (Dec 30, 2008)

Boca- Kudos for a great explanation!


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## BocaBum99 (Dec 30, 2008)

> I would maintain the specific demand for a week (top value time, name brand or top resort, maybe special view, etc) drives the value up and ROFR is only a detriment to the process



I think you will agree with me that this is the key point of disagreement between those who believe that ROFR effects resale prices vs those who don't.

In summary, you believe that the demand curve (and therefore aggregate demand) for Marriott timeshares is about the same whether or not Marriott exercises ROFR.  In other words, it doesn't matter how much Marriott exercises, it does not materially impact aggregrate demand or aggregate supply.  If this is true, then your theory is correct.  ROFR has no impact on resale prices since the equilibrium point does not change due to ROFR.  Other things such as PCCs, sellers dumping weeks, buyers getting religion for timeshare, and other factors have such an overwhelming impact on overall supply and demand that ROFR should merely a considered a footnote in the discussion.  ROFR only steals units from buyers who would have otherwise got them had it not been in effect.   Does this adequately describe your view?

I (and others) believe that the aggregate resale demand is small enough that one large player like Marriott can materially effect the demand curve.  Therefore, the demand curve shifts and the resale price goes up or down based on the actions of a single market participant.

I am fine with this difference in belief systems.  Time will tell who is right.

I just ask you to concede the point that it MAY be possible for the buying and selling actions of a single player is large enough that the underlying demand curve can shift and market price can change based on those actions.

If you can agree to that, I think we have found the crux of the disagreement.


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## BocaBum99 (Dec 30, 2008)

grupp said:


> I guess we have a fundamental disagreement on whether the ROFR moves along the existing curve or actually moves the curves. I would argue (and I believe correctly) that the Marriotts ROFR does nothing to move the curves.
> Gary



Gary,

As I mentioned to John, I believe this now to be the crux of the difference in opinions about ROFR.  I believe there are circumstances that ROFR buying is large enough to shift the demand curve and therefore impact the equilibrium price.

You and John don't agree.  That's fine.  I used to believe that, too.  For a thinly traded product like a small Marriott resort, I believe the entire demand curve can be changed by one large player especially since the overwhelming 
number of sales has been by the developer. At many resorts, 90% or more of all sales (developer sales plus resales) are made by the developer  If Marriott shifts 10% of its buying at these resorts to reclaim resales instead of building new buildings, then it could double the aggregate demand for a given resort by itself.  That would have a material effect on price.

So, whether or not you believe ROFR results in a change on a given demand curve or is big enough to shift it depends on your point of view about the market and how big the supply and demand is.


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## dioxide45 (Dec 30, 2008)

BocaBum99 said:


> Are you serious?  So, you are saying that Seth Nock is a criminal?  He is the single largest Marriott broker I know.  Please, I defy you to find ONE person out of the THOUSANDS who believes that Seth cheated them.  Hundreds of them post on this board.
> 
> I ask you to retract your slanderous remarks.
> .



I don't think this is a fair assessment of John's opinion. You mentioned a specific broker by name, not John. So you made an assumption that may not have been true. If anything should be retracted, it should be your post. Slander did not happen in John's posts. I think you owe John an apology.


----------



## dioxide45 (Dec 30, 2008)

*Pool*

Who is in???

On what date will this thread die?

On what date will some fool (me in this most recent case with this thread) bring it back to life?


----------



## dioxide45 (Dec 30, 2008)

*Brokers*

Do realize that the person who pays a broker is the seller, from the selling price. So it is the responsibility of the broker to get the best price for their buyer.


----------



## BocaBum99 (Dec 30, 2008)

dioxide45 said:


> Do realize that the person who pays a broker is the seller, from the selling price. So it is the responsibility of the broker to get the best price for their buyer.



Actually, there is a whole body of law related to agency.  If you are a buyer's agent, you are loyal to the buyer.  If you are a seller's agent, you are loyal to the seller.  In some states, you can be can a dual agent under certain circumstances.  In Florida, the default relationship is called a transaction broker where the agents are loyal to neither the buyer, nor the seller, but to the transaction.  And, they owe limited confidentialty to both parties with other responsibilities described in the appropriate disclosures.
This is a topic that most people don't understand well and it would behoove them to study it before entering into any relationship with an agent of any kind.


----------



## BocaBum99 (Dec 30, 2008)

dioxide45 said:


> I don't think this is a fair assessment of John's opinion. You mentioned a specific broker by name, not John. So you made an assumption that may not have been true. If anything should be retracted, it should be your post. Slander did not happen in John's posts. I think you owe John an apology.



John and I are friends.  We have known each other for years and we have been on the same side of most arguments.  I think we just disagree on ROFR and the risks associated with Trusts vs. non-Trust deeds.  Well, I guess we also disagree about Interval International.  But, we both agree on Disney, points vs. weeks and many other things.

More importantly, we both know Seth Nock.  The only reason I used Seth like I did with John is because I knew he knew what I meant by it.  And, it was to turn his argument into something real instead of something abstract.  The logic of my post is true.  If you or John were offended by it, my apologies.


----------



## dioxide45 (Dec 30, 2008)

BocaBum99 said:


> Actually, there is a whole body of law related to agency.  If you are a buyer's agent, you are loyal to the buyer.  If you are a seller's agent, you are loyal to the seller.  In some states, you can be can a dual agent under certain circumstances.  In Florida, the default relationship is called a transaction broker where the agents are loyal to neither the buyer, nor the seller, but to the transaction.  And, they owe limited confidentialty to both parties with other responsibilities described in the appropriate disclosures.
> This is a topic that most people don't understand well and it would behoove them to study it before entering into any relationship with an agent of any kind.



I stand corrected. Do note though that any brokers paycheck is tied to the purchase price they negotiate with the buyer. So it is in their best interest to drive that price up. There have been specific experiences posed where brokers have told people that their price was too low and would get taken by ROFR. While some brokers may have a lot of experience with ROFR, even the best don't know where the moving target is and they know that the chances of Marriott exercising at any given time are slim.


----------



## BocaBum99 (Dec 30, 2008)

dioxide45 said:


> Who is in???
> 
> On what date will this thread die?
> 
> On what date will some fool (me in this most recent case with this thread) bring it back to life?



It will never end.  Just be happy we aren't discussing weeks vs. points against Carolinian.  That would be a few hundred point thread.  It would have PerryM, John and me all on the same side barely holding our own against Carolinian.  We actually need these debates every now and then.  They rehash the exact same arguments over and over and it makes the message board interesting again.  Most just roll their eyes and ignore it.  Others love the debate.

At least we aren't discussing Global Warming.  In that discussion, Carolinian and I would be in the same camp.  It's fun being on his side.  He does all the posting and I just cheer him on.  LOL.


----------



## BocaBum99 (Dec 30, 2008)

dioxide45 said:


> I stand corrected. Do note though that any brokers paycheck is tied to the purchase price they negotiate with the buyer. So it is in their best interest to drive that price up. There have been specific experiences posed where brokers have told people that their price was too low and would get taken by ROFR. While some brokers may have a lot of experience with ROFR, even the best don't know where the moving target is and they know that the chances of Marriott exercising at any given time are slim.



In theory this is true, but in reality it doesn't work that way.  Brokers don't try to drive up the price.  We just try to get a meeting of the minds between buyers and sellers.  Any transaction is better than no transaction.  It's more important to ensure that both parties feel like they are getting a good deal.  If they don't, then one can back out later which happens a lot.  It is very easy for sellers to back out of deals.  If they refuse to sign the warranty deed or the transfer papers, the buyer must sue for performance of the contract and it's just not worth it to do that.  It's much easier just to find another deal.  And, escrow disputes are painful.  So, everyone is just trying to make sure everyone is happy.  It's not worth the fight for such small dollars.  If we were talking million dollar homes with $75,000 commission checks, then yes.  Fight until the bitter end.  Problem free escrows is what most brokers want.

Also, the numbers we are talking about are not material.  Let's say the commission is 15%.  On a $10,000 purchase, that is $1500.  If the price is driven up to $12,000, then the commission is $1800.  It's not worth risking the $1500 to drive up the price 20% to get $300 extra.  It is worth taking $1200 if you could guarantee it would close with no problems.


----------



## dioxide45 (Dec 30, 2008)

thinze3 said:


> If Marriott has made up its mind to purchase all units at that price or below in lieu of spending double that for new construction, that poor "original buyer" will never own that Marriott, now would he.
> 
> Terry



I don't think this business model would work for Marriott. There is only a limited supply of resale weeks. Say only 5% of all weeks owned are on the resale market at one time. Less than 5% of those sellers are serious about their asking price. I don't think Marriott could sustain this model very long before it would max out. Also if as you state ROFR drives up prices, then they wouldn't be able to buy them for half of building new, they would quickly be having to ROFR at prices close to developer.

New construction privides profit growth, buying and reselling will only sustain some profits for a period of time before it runs out and is no longer provides a profit base.


----------



## BocaBum99 (Dec 30, 2008)

dioxide45 said:


> I don't think this business model would work for Marriott. There is only a limited supply of resale weeks. Say only 5% of all weeks owned are on the resale market at one time. Less than 5% of those sellers are serious about their asking price. I don't think Marriott could sustain this model very long before it would max out. Also if as you state ROFR drives up prices, then they wouldn't be able to buy them for half of building new, they would quickly be having to ROFR at prices close to developer.
> 
> New construction privides profit growth, buying and reselling will only sustain some profits for a period of time before it runs out and is no longer provides a profit base.



I think you are exactly right on these points.  I believe that for certain Marriott resorts and more normal economic conditions that the supply of resale weeks is so small that it cannot meet the demand that the resort developer is creating through its tour program.   Therefore, they would be wise to soak up every unit of inventory that is either below their construction costs or is below the price at which they have a deficit of product to sell.  When this happens, it is ripe for resale prices to rise since the actions of a single large player is single handedly shifting the demand curve.

What I have never understood completely is why Wyndham doesn't implement an ROFR program.  They have so much excess inventory in the resale market the price points have dropped to nearly zero.  It seems that even though they can buy on the open market without ROFR at prices well below their construction costs, they have always seemed to favor new development over recycling of resale points package.  If they did this from the start, I believe that resale prices for Wyndham resorts would be significantly higher.  And, what concerns me about their business model is that they don't appear to care about what happens to the resale value of points.  So, they just drop toward zero with no end in sight.  It seems to me that their own intersts would be far better served by strengthening the resale market while at the same time having higher margins by having lower cost of inventory.  What I am missing with Wyndham?


----------



## dioxide45 (Dec 30, 2008)

*Debate Resolved*

Okay okay okay. I will resolve this debate. No, ROFR does not help sellers. Now we can move on.


----------



## BocaBum99 (Dec 30, 2008)

dioxide45 said:


> Okay okay okay. I will resolve this debate. No, ROFR does not help sellers. Now we can move on.



LOL.  I think you just started it all over.


----------



## dioxide45 (Dec 30, 2008)

BocaBum99 said:


> LOL.  I think you just started it all over.



I say this because I maintain the ROFR database and that qualifies me to provide the final end all and be all answer.


----------



## timeos2 (Dec 30, 2008)

NOW what are we going to do?


----------



## BocaBum99 (Dec 30, 2008)

timeos2 said:


> NOW what are we going to do?



Well since this debate is over, we probably need to start a new one on the merits of weeks vs. points systems.  I have forgotten on the arguments on which system is better.


----------



## dioxide45 (Dec 30, 2008)

timeos2 said:


> NOW what are we going to do?



Sorry, didn't realize I would rain on everyone's fun.



BocaBum99 said:


> Well since this debate is over, we probably need to start a new one on the merits of weeks vs. points systems.  I have forgotten on the arguments on which system is better.



I don't think I have experienced that debate yet. I guess I am from the weeks camp, only because I don't own a points TS. Gotta pick sides early.


----------



## BocaBum99 (Dec 30, 2008)

dioxide45 said:


> I don't think I have experienced that debate yet. I guess I am from the weeks camp, only because I don't own a points TS. Gotta pick sides early.



We will have to call back Carolinian from eastern Europe to join in the fun.  Those debates always resulted in 100+ post threads.  We used to have them about every couple months.  

It would also get intermixed in with debates about RCI and renting spacebank weeks and how that relates to the RCI points program.  Maybe I'll take and defend the Carolinian position.  I think I may be able to do it.  But never with his passion, energy and drive.  He is one of a kind who never backs down from an argument that he believes in.


----------



## AwayWeGo (Dec 30, 2008)

*Pressing The Hot Buttons.*




BocaBum99 said:


> We will have to call back Carolinian from eastern Europe to join in the fun.  Those debates always resulted in 100+ post threads.  We used to have them about every couple months.


As I recall, 1 of his favorite hobby horses is _Raiding The Weeks Inventory_. 

Is this a great web site or what ?

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


----------



## BocaBum99 (Dec 30, 2008)

AwayWeGo said:


> As I recall, 1 of his favorite hobby horses is _Raiding The Weeks Inventory_.
> 
> Is this a great web site or what ?
> 
> -- Alan Cole, McLean (Fairfax County), Virginia, USA.​



My favorite parody of the debate was hatrack's old MacDonald story.  I wish that didn't get deleted.  It was the single funniest thread ever on this message board.


----------



## thinze3 (Dec 31, 2008)

timeos2 said:


> NOW what are we going to do?




How about start a new database!

One that shows the cheap prices now that Marriott is NOT exercising ROFR and the comparable prices when Marriott IS exercising ROFR in the future!  Dioxide?

Terry


----------



## dioxide45 (Jan 4, 2009)

thinze3 said:


> How about start a new database!
> 
> One that shows the cheap prices now that Marriott is NOT exercising ROFR and the comparable prices when Marriott IS exercising ROFR in the future!  Dioxide?
> 
> Terry



The current database will do this. Though I have a feeling when the economy turns around and prices start to go up and then Marriott begins to exercise ROFR all those ROFR proponents will say "see, now that Marriott is exercising prices are up" when it simply a turn around in the general market and prices went up before they begun exercising.


----------



## taffy19 (Jan 4, 2009)

BocaBum99 said:


> Once timeshare slum lords think they can make money renting, they will load up on timeshares and put in a price floor for timeshares. As long as resorts don't follow this advice, there will remain loads of timeshares with negative values since the price of renting will be below annual maintenance fees and dues.


Jim, I have lost you now but will ask you once in person what you mean.  Are there timeshare slum lords too?  I never heard that before.     Nothing amazes me anymore.


----------



## taffy19 (Jan 4, 2009)

BocaBum99 said:


> My favorite parody of the debate was hatrack's old MacDonald story. I wish that didn't get deleted. It was the single funniest thread ever on this message board.


Yes, I remember his post and it was hilarious and so true! I was looking for it but can't find it but I found your thread here and it is almost four years later now. Quite interesting to read it again, Boca, but off topic a little.  

The RE bubble has burst and even CA is hit hard. Who would have thought that in May 2005? If you want to buy real estate, I would invest in CA pretty soon again as prices will go back up sooner or later because people are living and working here at many different companies. 

For rental properties you need to invest in the basic 3 BR houses so it is easy to rent them out and hope to get the appreciation too while someone else is paying for it. I don't think that homes on the beach have suffered that much yet but I may be wrong as I haven't kept track of it lately. We have six weeks on the beach every year at a fraction of the cost of what it would cost us to buy one of these homes today. When we first married, the price of a home on the beach was about what a brand name developer charges today for a single week oceanfront timeshare condo! Who would have ever thought that this would happen?  

This is INFLATION for you and we will get a lot more of it coming so buying rental property is not a bad idea at all! JMHO. Timeshares are a luxury item and not an investment except for quality vacations with the people you love.


----------



## taffy19 (Jan 5, 2009)

BocaBum99 said:


> It will never end. Just be happy we aren't discussing weeks vs. points against Carolinian. That would be a few hundred point thread. It would have PerryM, John and me all on the same side barely holding our own against Carolinian. We actually need these debates every now and then. They rehash the exact same arguments over and over and it makes the message board interesting again. Most just roll their eyes and ignore it. Others love the debate.
> 
> At least we aren't discussing Global Warming. In that discussion, Carolinian and I would be in the same camp. It's fun being on his side. He does all the posting and I just cheer him on. LOL.


I enjoy reading these debates and am reading this multiple page thread over again.

Carolinian must have owned timeshares since the 70's so that is why he feels that way and I agree with him, if you bought a red week. The system was good for red week owners but not for people who bought the blue weeks. He must have bought a red week too so had excellent trading power. The people, who bought the blue weeks, are the ones who were really unhappy. They may have paid less for the week in the beginning and thought they were smart but they got the short end of the stick because they paid the same maintenance fees every year but got very poor trading power.

The point system is more fair in this respect and more flexible too but what do you own as the developers can make changes any time they feel like it. This is one drawback of the point system. JMHO. Did I start this debate again?  

Isn't the Marriott the only resort left that is still selling weeks and weekly stays versus points and daily stays? We keep reading rumors that they may go over to points but how could they have daily stays if we have the right to a full week? They would have to let the people, who want to stay a whole week, reserve first and then let the people reserve who want a partial week or a daily stay. I wonder how they can make this change successfully and keep everyone happy?

This industry keeps changing constantly but is it for the better? I am not so sure.


----------



## Seth Nock (Jan 5, 2009)

timeos2 said:


> I said nothing about Seth specifically (and he does hold a sterling reputation here) or anything about criminal. I have never spoken to him or tried to purchase anything from his services.
> 
> I do have a serious problem with anyone who would give advice to pay more for anything they stand to profit from in the guise of "helping". If in fact Seth or anyone else does that without serious, fully detailed qualifications as to the reasoning then that is someone I would feel is taking unfair advantage of a client/customer.  Again I don't know how Seth conducts business and given your description of the satisfied clients I hope it is clearly stated what he is recommending and why. If a fully informed buyer decides based on truthful information to make a bid for a higher amount then there is no issue. If the "help" is the typical timeshare presentation type of self-serving "facts" designed to get the sale then I would have serious problems with it.
> 
> I have nothing to retract.



I just happened to notice the questions on ROFR, so I figure I would respond.  A year ago, about 35% of my Marriott's were bought back under right of First Refusal.  I present all offers and let my buyers know whether or not I think it will pass right of first refusal.    In the last month, only 1 of my Marriott units was bought back.  As a result, I have gotten many of my buyers very good deals recently.  

Hilton and Disney are both still actively buying units back.  About 25 % of my Hiltons and over 40% of my Disneys are being bought back.


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## thinze3 (Jan 5, 2009)

iconnections said:


> ... (Marriott) We keep reading rumors that they may go over to points but how could they have daily stays if we have the right to a full week? They would have to let the people, who want to stay a whole week, reserve first and then let the people reserve who want a partial week or a daily stay. I wonder how they can make this change successfully and keep everyone happy? ...



Daily stays may come at 3 months out when all weekly vacations should have already been booked. I think Marriott would be banking on the fact that MANY MANY points would go unused each year.




Seth Nock said:


> ... Hilton and Disney are both still actively buying units back.  About 25 % of my Hiltons and over 40% of my Disneys are being bought back.




It does appear from Seth's post that as we suspected ROFR is all but absent within Marriott. I assure you that if Hilton and Disney are still buying Marriott will too soon enough. (Well, I guess it could go the other way and Hilton and Disney STOP buying. Haha)

Also, both Starwood's and Marriott's stock has just about doubled from their mid-November lows. As soon as Marriott starts buying *IMHO* there will be a solid bounce in prices at those resorts.


----------



## TSResalez (Jan 5, 2009)

dioxide45 said:


> Sorry, didn't realize I would rain on everyone's fun.
> 
> 
> 
> I don't think I have experienced that debate yet. I guess I am from the weeks camp, only because I don't own a points TS. Gotta pick sides early.



How about a what is better: points vs deed?


----------



## dioxide45 (Jan 5, 2009)

TSResalez said:


> How about a what is better: points vs deed?



I think you may mean deeded vs RTU? Since points can be deeded and deeds can also be weeks.


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## dioxide45 (Jul 24, 2009)

To not hijack another thread, I will post here. Also it is good for society to stir this up every once and a while.

http://www.tugbbs.com/forums/showpost.php?p=762534&postcount=18



m61376 said:


> ROFR, if it works, can only work if it is being exercised. The current climate isn't proof of anything, since Marriott has stopped exercising ROFR.



While we may need to agree to disagree, I think the current economic environment proves exactly that ROFR doesn't protect prices in any way.

While you say that it only works when it is being exercised, that isn't how ROFR works. The developer always has the option to never exercise, sometimes exercise or always exercise. You can't have it both ways. To say it only works when it is being exercised is meaningless because developers don't and as we can see now, at times almost never exercise their right.

We paid $7500 for a resale gold MGV week two years ago, what is ROFR doing for me now? Similar weeks now regularly sell for ~$4000 on E-Bay. ROFR isn't helping the resale price of our week one bit. To say it doesn't matter since Marriott isn't exercising ROFR right now doesn't make me feel any better. There is no guaranty that Marriott will ever exercise ROFR in any high volume again, but ROFR still exists, you can't deny that.


----------



## Pit (Jul 28, 2009)

This is a reply to another thread, so as not to hijack said thread.



BocaBum99 said:


> I believe that when a develoer exercises actively ROFR that it does provide price supports for the resorts.  Are they articifial?  Yes.  When they start exercising it again, prices will firm up for those resorts.



Boca, I think you put the proverbial cart before the horse. Resale prices will not increase until real demand increases. Demand is the price driver, not rofr. As I'm sure you know, price will increase with demand. Likewise, price will fall in the face of weak demand, rofr or no rofr. If by "firm up," you mean to suggest increase to pre-recession levels, I disagree.

Some here have argued that rofr increases demand, as there is now another buyer in the market. I don't believe this view is accurate for two reasons. First, Marriott is not an active participant in price discovery between buyer and seller. They do not bid against other prospective buyers. They simply step in, or not, after price has been negotiated. Second, every week they purchase via rofr is presumably sold to another buyer. In effect, they have simply substituted one buyer for another. This does nothing to increase real demand, any more than a resale broker increases demand. They are a pass-through entity wrt resales.

While I believe Marriott will resume its exercise of rofr in 2010, I don't expect demand for resale weeks to improve significantly. Thus, Marriott can resume its exercise of rofr - but at price points much lower than in years past. I believe those who are counting on a rofr comeback to restore prices to 2007 levels will be disappointed. It's my opinon that resale prices will continue to decline from current levels, in spite of rofr.

Of course, this is all just my opinion, to which I am entitled.


----------



## BocaBum99 (Jul 28, 2009)

Pit said:


> This is a reply to another thread, so as not to hijack said thread.
> 
> 
> 
> ...



By firming up, I mean higher than they would otherwise be.  Not necessarily to levels of 2008, but certainly higher than today.

Perhaps the main difference between our views is whether or not there is ONE or TWO markets for Marriott's.  I believe there are 2 markets.  One for resale demand of weeks without the effects of Marriott as a buyer.  The second is the effect of Marriott as the buyer.  If you view the market in this way, then it is obvious that whenever Marriott exercises ROFR, prices firm up because there are new demand or they reduce supply.  Either way you look at it, prices firm up.  

Now, the question is to prove whether or not there are 2 distinct markets.  I claim that more than 90% of buyers of Marriott's purchase directly from Marriott.  And, that when someone makes a resale purchase, they rarely go back to buy from the developer.  And, conversely, most buyers just keep buying directly from the developer.   If this is true, then the markets for developer vs. resale weeks are in fact distinct.  In only rare circumstances does a resale buyer become a developer buyer.  The product and even the prices are different.  It's not readily apparent today since the products look pretty much the same with only the Marriott Rewards program differentiating them.

Now, envision the developer product being a points product like in Dave M's new thread today.  I don't think anyone would argue that the points product is the same as the weeks product.  Then, it is very obvious that the products and the markets are different.  In that case, when Marriott wants to buy back inventory, it can any time it wants.  It's reduction of the supply of weeks in the resale market therefore increases price.

Marriott doesn't have to do price discovery.  It has a census of all prices paid via the ROFR submissions.  All it needs to do is take the distribution of the resale prices, create a mean and standard deviation to that price distibution and it has a full price census of the market.  It can then determine the price point it will exercise at based on how many units it thinks it needs to fullfill its demand for developer inventory.   That pretty much takes out the low end of the supply curve increasing prices.  Prices are therefore higher than they would have otherwise been.

Cart before horse?  I think not.  The nominal market for resales is determined by how many current sellers there are in the market and how many current resale buyers there are.  That gives you a price point albeit with a very high standard deviation due to the inefficiency of the market.  If something as simple as financial markets normalizing and credit becomes available for developer purchases, that alone is enough to put Marriott into a situation where developer weeks are sold in greater numbers.  Marriott is doing nothing to stimulate resale demand by increasing in such as situation.  There is exactly the same population.  Rather, there is less supply because Marriott is draining off inventory via ROFR that would otherwise be available to the resale market.  Marriott decreasing supply means the resale market increases prices.  So, for prices to increase, it does NOT require that resale demand increases.  There is no cart.  There is no horse.  QED.


----------



## Pit (Jul 28, 2009)

BocaBum99 said:


> Now, the question is to prove whether or not there are 2 distinct markets. I claim that more than 90% of buyers of Marriott's purchase directly from Marriott.



You may be correct about this. I have no data with which to validate or refute this claim.



BocaBum99 said:


> Now, envision the developer product being a points product like in Dave M's new thread today. I don't think anyone would argue that the points product is the same as the weeks product. Then, it is very obvious that the products and the markets are different. In that case, when Marriott wants to buy back inventory, it can any time it wants. It's reduction of the supply of weeks in the resale market therefore increases price.



I agree with your premise, but not your conclusion (increasing prices). I believe the product differentiation that results from a point system will further devalue resale weeks. Thus, I expect resale prices to further weaken from here, not to increase. I believe this is precisely the effect Marriott wants to produce with their point system introduction, and it will allow them to exercise rofr at even lower prices in the future.



BocaBum99 said:


> Marriott doesn't have to do price discovery. It has a census of all prices paid via the ROFR submissions. All it needs to do is take the distribution of the resale prices, create a mean and standard deviation to that price distibution and it has a full price census of the market. It can then determine the price point it will exercise at based on how many units it thinks it needs to fullfill its demand for developer inventory. That pretty much takes out the low end of the supply curve increasing prices. Prices are therefore higher than they would have otherwise been.



I'm not suggesting that Marriott is unaware of resale prices, but rather that Marriott does not act as an interested buyer in the market. They do not participate in price negotiation, as would you or I. Thus, the seller does not benefit from price competition between Marriott and other prospective buyers.

Some argue that there exists a psychological affect of rofr that causes buyers to increase their offer prices. Based on the comments of some owners here, that appears to be true. Yet, based on other comments, it seems there are just as many prospective resale buyers who avoid Marriott altogether because of rofr.

Taking out the low end of the supply curve, as you put it, does not increase prices. It makes no difference who the buyer is. Note that the high end of the price curve is also taken out, by other buyers. In each case, the seller gets only the negotiated price. Thus, the exercise of rofr on low-priced units, does not move the mean price one iota. Moving the mean requires an increase in demand. 

I agree that with the introduction of a point system, the markets are distinct and Marriott rofr acts to increase demand in the resale market (Marriott has no control over resale supply). Yet, I believe the Marriott increase will be more than offset by a decrease in demand from other prospective buyers. The net effect will be lower, not higher, prices - in spite of rofr.

That's my 2010 forecast - a further decline in resale prices and the return of rofr. Now, I'll wait and see what becomes of this point system.


----------



## Bill4728 (Jul 28, 2009)

PIT said:
			
		

> Marriott rofr acts to increase demand in the resale market (Marriott has no control over resale supply). Yet, I believe the Marriott increase will be more than offset by a decrease in demand from other prospective buyers. The net effect will be lower, not higher, prices - in spite of rofr.


Interesting idea. 

I too thought since Marriott will start using ROFR again, that anyone wishing to buy a Marriott will have to increase their offers to get pass ROFR, therefore increasing price. 

BUT if you're saying that the new point based system, may seem to most buyers a complete new and different system than what is offered resale, then maybe there will be even fewer buyers and even less demand, therefore lower prices.


----------



## PerryM (Jul 28, 2009)

*ROFR - its a good/bad thing*

I believe the ROFR is a good thing for owners - that's my opinion.

I know of no way to prove the ROFR acts as price support - my contention is that every buyer in the market adds to increasing prices; lack of buyers reduces prices.

What's the alternative?  A developer who cares little about resales.  That's what Wyndham does and why their resales are 5% of current developer's sales prices.

If you believe that the ROFR is harmful to owners then you should feel victorious - Marriott is not exercising the ROFR now; you got your wish.

But notice that when the ROFR is in effect resale prices are steady or increasing and when the ROFR is not in effect resale prices are falling.

I don't know if the ROFR is causing this but that's what is happening.

So should you be happy that the ROFR is not in effect right now?


----------



## AwayWeGo (Jul 28, 2009)

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




PerryM said:


> But notice that when the ROFR is in effect resale prices are steady or increasing and when the ROFR is not in effect resale prices are falling.


It's the other way round. 

When timeshare prices are dropping, the timeshare companies don't even bother with ROFR. 

When timeshare prices are steady or increasing, then the timeshare companies -- at their option -- may (or may not) use ROFR to snatch up a lowball deal that otherwise would have gone to 1 of us regular walking around bottom-feeding bargain hunters.  

_Mox nix_ for the seller, who gets the same lowball amount either way.

ROFR *=* ROFL.  (Still does.  So it goes.) 

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


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## JimC (Jul 28, 2009)

PerryM said:


> I believe the ROFR is a good thing for owners - that's my opinion.
> 
> I know of no way to prove the ROFR acts as price support - my contention is that every buyer in the market adds to increasing prices; lack of buyers reduces prices....But notice that when the ROFR is in effect resale prices are steady or increasing and when the ROFR is not in effect resale prices are falling.
> 
> I don't know if the ROFR is causing this but that's what is happening....



DVC may serve as proof of your position.  DVC used ROFR to support direct sales at open resorts and to provide inventory for sales at closed resorts.  It appeared that ROFR supported prices of resales at about 85% of developer for many years.  When DVC began to selectively alter how they used ROFR market prices adjusted downward.  

DVC has the added twist of a deeded property with a termination date.  For the first ten years of the program all properties had the same termination date.  Since then all new properties have a full 50 year deeded interest.  There is also the original property that has had a deeded rights extension which some owners have and other opted out of.  DVC ROFR will be far more interesting in this environment.


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## Pit (Jul 28, 2009)

Bill4728 said:


> Interesting idea.
> 
> I too thought since Marriott will start using ROFR again, that anyone wishing to buy a Marriott will have to increase their offers to get pass ROFR, therefore increasing price.
> 
> BUT if you're saying that the new point based system, may seem to most buyers a complete new and different system than what is offered resale, then maybe there will be even fewer buyers and even less demand, therefore lower prices.



My opinion is based on observations of Starwood SVN. There is a sizeable difference in resale value between mandatory weeks (where point system membership transfers with the resale at no additional cost) versus voluntary weeks (point system does not transfer with resale). 

I am assuming that MVC point system membership will not trasfer with the resale - as with SVN voluntary weeks. That being the case, I expect there will be a glut of owners looking to dump their week(s) and fewer buyers interested in a devalued product. Prices will decline, Marriott will pick up the resales via rofr, pull them into the point system, and resell them as pointed, developer weeks.

Perry, this will give us an opportunity to see if Marriott really cares about their owners. If they do, they will grandfather current owners into the system and allow point membership to transfer with the resale. Let's see if they pass this test. I'm not expecting it, but who knows.  

I agree with Alan, that rofr does not cause price stability. Demand is what provides for price stability. Rofr is just a symptom.


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## dioxide45 (Jul 28, 2009)

The question that is always asked is, does ROFR protect sellers or owners from low resale prices? The answer is NO. ROFR always exists regardless if it is being exercised or not. So even today we have ROFR but it is not protecting the price for anyone. Just because Marriott is not exercising, is meaningless to the answer to the question. ROFR is always there and always an option. Sure it may prop up prices if they actively and consistently exercise, but there is no guaranty for that, thus no guaranty protecting the owners and sellers.


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## AwayWeGo (Jul 28, 2009)

*The Ongoing Timeshare Comedy.*




dioxide45 said:


> ROFR is always there and always an option. Sure it may prop up prices if they actively and consistently exercise, but there is no guaranty for that, thus no guaranty protecting the owners and sellers.


Jacking up prices resale buyers have to pay is not the same as propping up the amounts that sellers receive.  

Via ROFR, only the timeshare companies get to buy cheap -- if they choose (their option).  And when they do, that same _el cheapo_ price is all the seller gets -- not a nickel more. 

ROFR *=* ROFL.

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


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## Pit (Aug 4, 2009)

Any guesses as to when Marriott will resume rofr? Timeshare sales improved last quarter, but still well below pre-recession levels.

Here is a chart showing the ratio between Marriott timeshare inventory vs. sales for the past 6 quarters. I'm guessing we won't see any significant comeback of ROFR until this ratio drops back to 6ish. At the current rate of sales, they are sitting on > 2 years of inventory.


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