# Lets have a good ROFR argument!



## Clemson Fan (Feb 23, 2010)

Why is it that the one TS system (DVC) that still actively uses their ROFR still maintains good resale prices while other systems (Marriott, etc.) that stopped using ROFR have had their resale prices tank?  

Before people say it, I agree that I think the economy is the major reason.  However, I think DVC is a shining example in this lousy economy of how ROFR does protect owner resale prices as long as it's being exercised.

That's my opinion, but let the ROFR battles begin!


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## SueDonJ (Feb 23, 2010)

Several TUGgers have said that DVC can't really be compared to other timeshares because it's a unique product with a niche market - folks who consider Disney timeshares generally compare any cost savings to what they would otherwise pay for a Disney hotel on property, and not to other lodging options.  So it isn't simply ROFR that props up DVC prices, but the fact that DVC owners might not otherwise fit the mold for timeshare owners.  If DVC didn't exist, many of them would happily vacation at Disney hotels forever and never purchase any timeshares.  That makes sense to me.   

But that said, Disney has in this tough economy relaxed its ROFR and DVC is seeing relatively lower resale prices now than at any time.  The relaxation happened later than any other of the big companies, and DVC's prices were more stable than any others through the beginning of this poor economy.  Seems there may be a slight ROFR negative effect happening there ... I dunno.

I've always thought that ROFR exists so that the developers can pick up inventory cheap then turn around and sell it for developer prices to ready-and-waiting buyers.  And, that if ROFR is exercised, it stands to reason that buyers who want specific weeks/resorts/units will increase their offers until they are not undercut by the developers.  That makes no difference to sellers, whether a developer or a resale buyer buys for the low price that a developer can get when exercising ROFR, but it should drive the market somewhat for the buyers.

ROFR when it's not exercised makes absolutely no impact.  Neither do the speculative buyers whose only objectives are to buy the lowest-priced resale inventory no matter where/what it may be, so that they can possibly turn it around for a profit (less apt to happen in this economy) or use it to exchange for upgrades in II.

(I've never been a part of any of the rip-roarin' no-holds-barred ROFRfests on TUG but I hear they were legendary.  This is exciting, thanks for the opportunity.  :hysterical:  )


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## dioxide45 (Feb 23, 2010)

Clemson Fan said:


> Why is it that the one TS system (DVC) that still actively uses their ROFR still maintains good resale prices while other systems (Marriott, etc.) that stopped using ROFR have had their resale prices tank?
> 
> Before people say it, I agree that I think the economy is the major reason.  However, I think DVC is a shining example in this lousy economy of how ROFR does protect owner resale prices as long as it's being exercised.
> 
> That's my opinion, but let the ROFR battles begin!



I will bring up what I mentioned in the other thread. ROFR doesn't protect owner resale prices. DVC could drop ROFR tomorrow and what would happen, prices go down? Likely. Stay the same? Possible, due to the high rental prices that DVC weeks can garner.

However if they drop, it just shows that there was no protection for owners with regards to market price. There are no guaranties that DVC will continue to exercise ROFR. We know that very well from Marriott's example.


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## DeniseM (Feb 23, 2010)

I'm sorry, but we aren't scheduled for another ROFR argument until March...


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## chalee94 (Feb 23, 2010)

Clemson Fan said:


> Why is it that the one TS system (DVC) that still actively uses their ROFR still maintains good resale prices while other systems (Marriott, etc.) that stopped using ROFR have had their resale prices tank?



does disney still use ROFR to protect resale prices or because the value of a night on wdw property has been less impacted by the economy than other real estate?  you seem to think that DVC has good resale prices because they use ROFR...but maybe they use ROFR because the underlying value is still really there.  is ROFR the cause of demand-driven value or is ROFR the result of that market value?

does DVC ROFR their beach club villa contracts in the $80s and let their hilton head contracts fall into the $50s because there is more value a short walk from epcot than there is at hilton head resort off the beach?  or, as you seem to suggest, because DVC cares more about protecting BCV owners resale values than they do HHI owners?

no one is arguing correlation but that is a long way from establishing causation...


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## dougp26364 (Feb 23, 2010)

Clemson Fan said:


> Why is it that the one TS system (DVC) that still actively uses their ROFR still maintains good resale prices while other systems (Marriott, etc.) that stopped using ROFR have had their resale prices tank?
> 
> Before people say it, I agree that I think the economy is the major reason.  However, I think DVC is a shining example in this lousy economy of how ROFR does protect owner resale prices as long as it's being exercised.
> 
> That's my opinion, but let the ROFR battles begin!



It's my opinion the ROFR artificially props up resale prices. When it's acted upon, it's good for the developer in that they can reaquire inventory at prices less than what it would cost to build new properties. Thus they can churn profits out of units where the expense of building them has already been paid. It's also good for an owner wanting to sell their unit as they can get a better price than a market without ROFR will return. It's bad for someone wanting to buy resale because they have to compete with a corporation who is willing to pay more than the open market would normally demand. 

As an owner, ROFR is a good thing with the idea that, if I ever wanted to sell my week, I would stand a better chance of recovering more of my purchase price. It doesn't matter if I purchased resale or direct, the higher the price when I sell the better the chance I'll see a higher return. 

If I'm a resale buyer ROFR is a bad thing in that I'm competing with a corporation that's trying to churn profits from the same unit they've already sold once. It means I would have to pay a price higher than what an open market would demand. It's like going to an auction and competing with someone willing to overpay for an item I really wanted. 

Good or bad depends on where you stand in the process.


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## dougp26364 (Feb 23, 2010)

DeniseM said:


> I'm sorry, but we aren't scheduled for another ROFR argument until March...



True. Today's schedule calls for discussion on the supposed internal exchange system. Actually, I don't think we're slated for a ROFR discussion until sometime after June when Marriott is suppose to make their points based internal exchange system official.


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## SueDonJ (Feb 23, 2010)

The other thing that TUGgers have said about Disney exercising ROFR, at least at the theme park properties, is that if DVC prices fall due to ROFR not being exercised, they will effectively be undercutting the Disney hotel prices.  Now the hotels and DVC are under different umbrellas but it's a balancing act probably overseen closely by the parent company.


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## SueDonJ (Feb 23, 2010)

dougp26364 said:


> True. Today's schedule calls for discussion on the supposed internal exchange system. Actually, I don't think we're slated for a ROFR discussion until sometime after June when Marriott is suppose to make their points based internal exchange system official.



Like any good watchdog organization we TUGgers should be able to balance more than one topic at a time.  Besides, the dawg ate my schedule.


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## DanCali (Feb 23, 2010)

ROFR exists, imo, for the developer to exercise the "nuclear option" in a decade or two. 

How great is it that Marriott and Starwood and the likes can get people to pay them $20K-$80K for a timeshare? The retail buyers finance the construction of the timehares and the developers makes a profit. But it doesn't end here...

Those developers also get to control the level of MFs... and thus control resale prices (jack up MFs, down go resale prices). When resale prices inevitably hit $1, the developer steps in as the "white knight," picks up all those weeks for free and - Voila! They now own the hotel/timeshare and it didn't cost them a dime. Now they can book any week they want at 8:59am at 13 months out (they do control the reservation compuetrs) and rent it for way over MFs - It's brilliant!

How's that for a conspiracy theory?


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## SueDonJ (Feb 23, 2010)

DanCali said:


> ... How's that for a conspiracy theory?



Excellent, you covered it all from start to finish:  big bad developer profiteering, big bad management m/f gouging and mucking about with the reservation policies, and a nuclear implosion that puts the big bad developer back in charge while they owners slink away with their pockets picked.

Outstanding!  Excellent!  A+!!


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## Pit (Feb 24, 2010)

dougp26364 said:


> It's like going to an auction and competing with someone willing to overpay for an item I really wanted.



Au contraire. The developer doesn't actually compete in the bidding. So, from the seller's standpoint, the developer takes no action to boost the sales price.

From the buyer's standpoint, a better analogy is an auction with a reserve price. If bidding ends below the reserve price, no sale. Contrary to the myth perpetuated on TUG, a reserve price does not encourage more active bidding. Anyone who frequents ebay knows that reserve price auctions see far less action than similar no reserve auctions. The result is fewer buyers, fewer bids, and fewer sales.


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## Latravel (Feb 24, 2010)

I think recent the recent drop of resale prices due to Marriott not exercising ROFR makes me have no doubt in my mind that ROFR propped up resale prices.

ROFR was a win/win for Marriott and owners. As stated above, the people at the short end of the stick were people looking to buy resale.  In my mind, keeping up prices is a good thing.  I like that I own something nice and valuable.  When my timeshare reaches $100, it's no longer so nice or special.


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## DanCali (Feb 24, 2010)

Latravel said:


> When my timeshare reaches $100, it's no longer so nice or special.



But it's nicer for Marriott to buy it at $100 than at $10,000. They have nothing to lose by waiting... it's not like they are running out of inventory these days.


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## PerryM (Feb 24, 2010)

*ROFR argument is dead...*

This argument is moot - the simple test of Marriott removing the ROFR and watching resale price action has been shown.  *Removing the ROFR results in falling resale prices.*

To argue the opposite (Removing ROFR helps resale prices) has just been shown to not work.  Those that argue that falling resale prices resulted in the ROFR being removed must now argue that rising resale prices means the ROFR being exercised again.  What the heck is the difference?  Remove ROFR and prices fall - exercise ROFR and prices rise.  My argument for 5+ years is been just that.  I don't know of a test that's better.

This argument is over.

The next point will be when will Marriott exercise the ROFR and at what level.

I've guessed that the old 60% level will be reduced to 35% because the new Internal Exchange System will cause resale prices to fall at least 25%.

So that's my guess 35% of current sales price and whenever Marriott needs inventory to recycle since they stopped making new timeshares.

Whatever helps resale prices fall is good for Marriott; hence the new Internal Exchange System.


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## Pit (Feb 24, 2010)

Latravel said:


> I think recent the recent drop of resale prices due to Marriott not exercising ROFR makes me have no doubt in my mind that ROFR propped up resale prices.



Do you also believe that home prices and commercial real estate have declined because Marriott stopped using rofr, or might that have something to do with supply and demand?


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## Pit (Feb 24, 2010)

PerryM said:


> This argument is over.



Not if you too believe that prices have fallen *because* Marriott stopped using rofr. This argument will never end.


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## ldanna (Feb 24, 2010)

SueDonJ said:


> I've always thought that ROFR exists so that the developers can pick up inventory cheap then turn around and sell it for developer prices to ready-and-waiting buyers.  And, that if ROFR is exercised, it stands to reason that buyers who want specific weeks/resorts/units will increase their offers until they are not undercut by the developers.  That makes no difference to sellers, whether a developer or a resale buyer buys for the low price that a developer can get when exercising ROFR, but it should drive the market somewhat for the buyers.



That's the main reason ROFR exists. If it helps (or not) increase resale value it's colateral.

Not using ROFR during this economic crisis help Marriott change the owner that might end up not paying MF for those who can pay MF, without spending money or incresing their inventory with weeks they can't sell (bronze and silver mainly).


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## timeos2 (Feb 24, 2010)

*A common human trait to want to believe things you own have more value*



Latravel said:


> I think recent the recent drop of resale prices due to Marriott not exercising ROFR makes me have no doubt in my mind that ROFR propped up resale prices.



Trying hard not to recreate the usual 20 paragraph reply to what is a complicated answer the simple fact is ROFR does not and cannot prop up prices because it is not a floor or guarantee. The owners only get whatever small amount the willing buyer finally offers - they just get it from someone other than the willing buyer. Then the transaction for the low price is buried as the seller has to slink away with the meager amount. Meanwhile the jilted buyer reports a ROFR but that didn't get the seller one penny more than the low price they had agreed to. 

ROFR creates the illusion of a price prop but as it is all smoke and mirrors (look back in the archives to find the university study that proves it does nothing) if you as a buyer fall into it you are exposed later (ask the Marriott  onwers and others who matched the ROFR minimum what they can get now if they need to sell) when the masquerade is dropped and you end up standing alone.   If any one offered a minimum price on resales THAT would be a price prop. ROFR is only a ploy to keep the buyers thinking they have a resale value. Fall for it at the risk of your own wallet. 

Only 2 paragraphs. Not bad. There really isn't much else to say. Those who want to fool themselves will no matter how much we warn them.


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## AwayWeGo (Feb 24, 2010)

*The Other Way Round.*




Latravel said:


> I think recent the recent drop of resale prices due to Marriott not exercising ROFR makes me have no doubt in my mind that ROFR propped up resale prices.


Leave room for some doubt -- at least for the possibility that resale prices dropped 1st & then after that the timeshare company quit exercising ROFR. 

Think about it. 

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


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## AwayWeGo (Feb 24, 2010)

*1 Thing More To Say.*




timeos2 said:


> There really isn't much else to say.


ROFR *=* ROFL. 

( You knew it was coming. ) 

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


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## timeos2 (Feb 24, 2010)

*Yes ROFR ended but was it the chicken or the egg?*



PerryM said:


> This argument is moot - the simple test of Marriott removing the ROFR and watching resale price action has been shown.  *Removing the ROFR results in falling resale prices.*
> 
> To argue the opposite (Removing ROFR helps resale prices) has just been shown to not work.  Those that argue that falling resale prices resulted in the ROFR being removed must now argue that rising resale prices means the ROFR being exercised again.  What the heck is the difference?  Remove ROFR and prices fall - exercise ROFR and prices rise.  My argument for 5+ years is been just that.  I don't know of a test that's better.
> 
> This argument is over.



Wrong cause and effect.  The economy and over supply pushed resale prices down. Even Marriott didn't have money to continue buy at the low prices they always met (not offered - they never triggered the sale only stole a sale to a willing buyer at the low price the seller had managed to obtain). 

Sellers become desperate when they can't get willing buyers. Willing buyers don't make offers when they feel the sale will be stolen from them. ROFR "buyers" won't buy until a third party creates the basis for the sale. The seller loses at every turn and gets only the low amount they manage to arrange a sale for - never a penny more. 

You are right that the argument is over. ROFR does nothing to prop up prices but does create an illusion of support from a greedy developer/organization that does nothing to help sellers.  Remember the  "ask more when your lower price doesn't sell" strategy has also proven to be a bit problematic when owners try to impose it. Seems buyers, those with the money, are just a bit resistant to the concept. The only real price prop that would work, and no one has it that I'm aware of, would be a standing buy back offer for XXX dollars. Then both seller and buyer would know that if they want that week they need to bid at least a dollar more or the developer will take it. That sets a minimum price & would likely push resale prices higher. ROFR tries to create the illusion of a price prop but at best muddies an already flimsy market. 

Trying to equate the collapse of timeshare resale prices to the end of ROFR is creative but we all know it was the economy that forced developers to stop the games.  Again your cause and effect are based on a faulty assumption.  Fools gold is still worthless no matter how much real gold rises in price.


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## kjd (Feb 24, 2010)

An idea that a Marriott scheme to drop ROFR in order to depress resale prices to $1.00 and then convert the timeshare to a hotel is pretty far-fetched.  Currently, there are a lot of examples of timeshares selling for less than $100 on the resale market.  I doubt many will eventually become hotels.

There are examples of someone trying to buy all the timeshares in a project. Short of obtaining a condemnation order of the property it is next to impossible for someone to acquire all units.  An example is the Jockey Club in LV.  City Center surrounds the JC today because owners wouldn't sell.  The JC did work out an arrangement with CC and a potential casino operator to use some of the JC property.

While I don't know all of the details of the JC situation I have observed a couple of things.  The JC now sits in a canyon between City Center and Ballagio barely visible from Las Vegas Blvd.  The resale prices for JC during construction of CC were very low.  Who knows?  It could get better. When you're at a $1.00 it can't get any worse.

There have been rumors that Polo Towers also faces similar problems but to a lesser extent.  I have seen hotels converted into timeshares  but I can't remember a timeshare converted into a hotel.  Maybe there are some.  

Right now Marriott lists timeshares for rent on their hotel web site as if they were hotel rooms.  Why would Marriott need to buy the entire property when they already are allowed to have daily rentals at most of their properties?

Marriott is above all a management company.  They do business as a hotelier.  They have developed a model business plan for developing and selling timeshares.  They are the leader in the industry.  The ability to manage the timeshare properties and collect a portion of the maintenance fees gives Marriott an annuity for years to come.  In my opinion that's their major interest.  ROFR is just another tool for them to implement their business plan.  While ROFR works for them, it may or may not work for timeshare owners.


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## m61376 (Feb 24, 2010)

Latravel said:


> I think recent the recent drop of resale prices due to Marriott not exercising ROFR makes me have no doubt in my mind that ROFR propped up resale prices.
> 
> ROFR was a win/win for Marriott and owners. As stated above, the people at the short end of the stick were people looking to buy resale.  In my mind, keeping up prices is a good thing.  I like that I own something nice and valuable.  When my timeshare reaches $100, it's no longer so nice or special.



We usually see things differently- I am impressed that we are in total agreement here  . While I think that the price declines we have seen would have happened to some extent regardless of whether Marriott was exercising ROFR (unless they were willing to stockpile large inventory) due to the generally economic decline, I think that some of the free-for-all price diving that has been seen at some resorts has some relationships to ROFR. In the past, there were always those desperate owners who sold for thousands less than the market would bear. For example, when I bought my SC unit a few years ago I initially had a deal which I knew was a real bargain. Clearly, the owner was anxious to sell and of course, I was willing to buy at the best price I could negotiate. I knew it was below market value- about 4K less than anything comparable was selling for. Long story short- Marriott nabbed it (no great surprise, bur it was worth a shot) and I ultimately did buy the same thing and paid the 4K more. While some might maintain that I was getting ripped off the second time around, the truth is many brokers essentially told me I was crazy and would never find a unit for the price I ultimately paid, so it was the bottom market price. If Marriott had not exercised ROFR, then that unbelievable deal, which was a market aberration, might become the norm because, in today's electronic environment, it is easy for people to get a grasp of the low end of the market. 

Now I know that some people maintain that if you lose a unit to ROFR next time you should just offer less, but if the buyer recognizes that the price was below market value it doesn't make sense to me not to offer something realistic; of course, if you can find a willing seller at a low price I also think it's always worth a shot, because sometimes inventory is high and Marriott passes on even great deals (before this economic crisis), so I wouldn't feel I had to offer more, but I would be realistic in my expectations.

Fast forward to a year and a half ago- Marriott began letting those great buys go through and buyers began to see that units were being transferred at new lower prices. Add more desperate sellers and willing buyers to take advantage of their desperation and prices continue to plummet. Those occasional "fire sale" type prices become the expected prices on the resale market, and set the bar for what buyers are willing to pay. The market continues its downward spiral. 

Your second point about keeping up prices and finding value in your property having retained value is exactly the point I was bringing up in the other thread about the inherent risks to all owners should Marriott adopt a program that makes resale buyers second class citizens (since that would likely cause resale prices to plummet).


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## winger (Feb 24, 2010)

DeniseM said:


> I'm sorry, but we aren't scheduled for another ROFR argument until March...


Why March?


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## rsackett (Feb 24, 2010)

timeos2 said:


> ...ROFR creates the illusion of a price prop but as it is all smoke and mirrors (look back in the archives to find the university study that proves it does nothing) if you as a buyer fall into it you are exposed later (ask the Marriott  onwers and others who matched the ROFR minimum what they can get now if they need to sell) when the masquerade is dropped and you end up standing alone.   If any one offered a minimum price on resales THAT would be a price prop. ....




So you ARE saying that there are buyers that PAID more because ROFR was being exercised?  Sounds like as a result of ROFR buyers paid more for a week then they would have without it. 

Ray


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## timeos2 (Feb 24, 2010)

*A case study on how to lose $4000*



m61376 said:


> We usually see things differently- I am impressed that we are in total agreement here  . While I think that the price declines we have seen would have happened to some extent regardless of whether Marriott was exercising ROFR (unless they were willing to stockpile large inventory) due to the generally economic decline, I think that some of the free-for-all price diving that has been seen at some resorts has some relationships to ROFR. In the past, there were always those desperate owners who sold for thousands less than the market would bear. For example, when I bought my SC unit a few years ago I initially had a deal which I knew was a real bargain. Clearly, the owner was anxious to sell and of course, I was willing to buy at the best price I could negotiate. I knew it was below market value- about 4K less than anything comparable was selling for. Long story short- Marriott nabbed it (no great surprise, bur it was worth a shot) and I ultimately did buy the same thing and paid the 4K more. While some might maintain that I was getting ripped off the second time around, the truth is many brokers essentially told me I was crazy and would never find a unit for the price I ultimately paid, so it was the bottom market price. If Marriott had not exercised ROFR, then that unbelievable deal, which was a market aberration, might become the norm because, in today's electronic environment, it is easy for people to get a grasp of the low end of the market.
> .



So you understand then that the seller - who will someday be you - got the LOWER price you offered. Period. No increase in sale price received.  They had no opportunity to rebid. So how did ROFR raise the price of that week which was actually offered under the system when it was being used?  

Now you choose to bid again, apparently higher. That was your choice and did nothing for the previous seller and put your $4000 at risk. Yes the next seller benefited (and if they are still around must be smiling now) but meanwhile your $4000 would be gone if you tried to sell today. Why? Because ROFR is discretionary and offers no guarantees. Yes one seller (the one you decided to pay more than the market rate to) got a bonus because you believed ROFR  had to be met to  get the week. Your mistake. But ROFR didn't get them a dollar - your willingness to raise your price, based on a faulty assumption about ROFR, did. 

Now the reverse is true (you wouldn't raise your price not due to lack of ROFR but because you know the market is in free fall) and any one you sold to is going to offer far less. The illusion of a market prop convinced you to pay more but the ROFR didn't get the seller a penny. You willingly gave them a premium based on an understanding that Marriott now disavows. The premium is gone and you are the loser when the time to sell comes. 

Even if they started ROFR again tomorrow the buyers know the market has collapsed so you'll still get a figure far lower than you got convinced to offer before. ROFR cost you big time money you'll never get back.  

Sorry. But there is the very proof that ROFR doesn't help sellers but can help developers if they decide to use it. Why would anyone support that?


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## timeos2 (Feb 24, 2010)

*In stocks it would be called price fixing or fraud or worse*



rsackett said:


> So you ARE saying that there are buyers that PAID more because ROFR was being exercised?  Sounds like as a result of ROFR buyers paid more for a week then they would have without it.
> 
> Ray



The problem is the statement that ROFR supports higher prices. It does not. Yes there are the lucky few who benefit from the buyers delusion that they need to offer more, but once they do (see the last post) they have zero guarantee that the next buyer, the one THEY need, will also be duped. In fact now that even the illusion was dropped they in fact won't be fooled into paying the premium.   

It's partially a semantics thing. Yes, the threat of ROFR can cause an individual sale or two to be at a higher rate than the market would normally create. But it is all based on FUD, not an actual process to raise the resale price. And buying on a imaginary floor means when the deception ends even the chance of the bogus premium is gone. And the last man in the buyers pyramid takes the loss. Informed buyers shouldn't be in that spot but believing in ROFR as a price support will in fact leave you in a losers position. 

Here is a quote from a penny stock fraud case:

“As we allege in our complaint, Dynkowski and his accomplices around the country met through the Internet and together spun a web of deception that gave investors the false impression that there was a real demand for these stocks,” said Scott Friestad, Deputy Director of the SEC’s Division of Enforcement. “Dynkowski went so far as to himself write some of the misleading press releases that pumped these penny stocks so they could line their own pockets with millions of dollars.” 

Substitute timeshare for stock and the premise is the same. Pump up the value through deception and illusion (ROFR with others) meant to give an impression that the value is much higher than it is.  It is surprising that a good legal mind hasn't figured out a way to go after these groups on that basis.


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## PerryM (Feb 24, 2010)

*I love the ROFR and it has benefited me 5 times*

I sold 5 Marriotts on the resale market and used Marriott's ROFR support level of 60% to help sell all 5 timeshares.  The ROFR helped me out 5 times.

This is all that matters - the ROFR is/was a tool to help get higher resale prices if you use it to your advantage.

To argue that the ROFR hurts Marriott owners is ludicrous - I can just hear my sales pitch to my past prospective buyers "For heavens sake keep your bid below 60% of sales price since Marriott will screw you and take your place as the buyer".

Come one folks the argument is over and the ROFR was a fantastic tool to help you with your resales.  I could care less about Marriott.

However, as Marriott prices keep falling Marriott will reset the ROFR at a much lower level and that new low level will be used to bolster resales at the new lower levels which help Marriott recycle cheap weeks at retail prices.

The ROFR is simply a tool to be used by Marriott AND the owners who know how to use it to their advantage.

Marriott's involvement in resales is a double-edged tool - it can help you or hurt you depending on how you use, or don't use, it.


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## m61376 (Feb 24, 2010)

John- 
I think you missed my point. At the time I made my initial offer I realized that the price was an aberration and, if it had gone through, would likely be a price not likely to be matched. In fact, even in today's market, it would be a great price. Of course, since I had either an uninformed or desperate seller, I was willing to take advantage and negotiated the best deal I could. Marriott, by exercising ROFR, prevented this price from becoming the new lower end of the price spectrum.

True, the first seller didn't get anything more, but he clearly sold at below market price. While I would have liked to take advantage of that aberration, I recognized it as not the true market value. I was willing to pay up to the lower end of the market value, which is what I ultimately did; at the time, it was still several thousand dollars below what most resale units were selling for. I still got a good deal, but Marriott prevented me from getting a steal.

Yes, in the isolated case ROFR cost me money because I couldn't take advantage of an anomaly in the market. That individual seller didn't benefit and I didn't benefit- Marriott did. BUT- overall I think sellers benefit, because it prevents such anomalies from setting the market price. It is only human nature to want to get something for the same price that someone else did. Even though I knew at the time that I would have been underpaying, of course I would have taken advantage of the opportunity if I could have. By preventing buyers from taking advantage of below market aberrations I think ROFR does help sustain the market.

I do agree with you, however, that buyers shouldn't let the fear of ROFR make them bid higher than they could possibly negotiate a price for. In my case, I knew that I should have been paying more at the time; in fact, at least one of the brokers people rave about here basically told me I was crazy (in not so many words) and I would never find a unit at what I ultimately paid. So I was not being naive, just realistic. 

If Marriott was to start instituting ROFR it would help the market recover, because desperate sellers keep on lowering the price and once word gets out of the transactions it starts to become the norm, and the spiral continues. Of course, it will take a lot more than ROFR to impact this market.


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## DanCali (Feb 24, 2010)

m61376 said:


> BUT- overall I think sellers benefit, because it prevents such anomalies from setting the market price. It is only human nature to want to get something for the same price that someone else did. Even though I knew at the time that I would have been underpaying, of course I would have taken advantage of the opportunity if I could have. By preventing buyers from taking advantage of below market aberrations I think ROFR does help sustain the market.



If you were getting it at $4000 "below market" and you knew that and then broadcasted your "catch" to the world that's one thing...

But otherwise, how would others find out about the abberation? Transaction prices are not public information... you were not buying on eBay.... you were not buying via a broker... 

I don't see why that abberation would become the new market price unless you were directly responsible for that. And that doesn't seem like a wise thing to do to your newly purchased "investment." 

If I got something at $4000 below market I would either flip it, or keep it to myself and enjoy it.


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## DanCali (Feb 24, 2010)

kjd said:


> An idea that a Marriott scheme to drop ROFR in order to depress resale prices to $1.00 and then convert the timeshare to a hotel is pretty far-fetched.



I agree. But it's not impossible...

With Marriott there is certainly no reason to make it happen now because (i) the economy is in the gutter, (ii) they have enough unsold inventory and/or inventory from point conversions and (iii) resale prices at many resorts in Platinum seasons (most rentable) are still in the high 4 figures or even 5 figures at some.

If the economy turns, resorts sell out, and points keep getting devalued Marriott's incentives may change. Resale prices are not likely to recover with the economy since MF increases (and let's not forget Marriott has a say on those) over the coming years will put a cap on resale prices and we'll see an increase the number of sellers. In 10-15 years things may look a lot diferent...

Since Starwood is unfortunately light years ahead of Marriott on this front and has managed to already severely depress resale prices at some prime resorts with high MFs and the "voluntary" designation - we can watch and learn from what happens there over the next few years. :annoyed:


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## SueDonJ (Feb 24, 2010)

DanCali said:


> If you were getting it at $4000 "below market" and you knew that and then broadcasted your "catch" to the world that's one thing...
> 
> But otherwise, how would others find out about the abberation? Transaction prices are not public information... you were not buying on eBay.... you were not buying via a broker...
> 
> I don't see why that abberation would become the new market price unless you were directly responsible for that. And that doesn't seem like a wise thing to do to your newly purchased "investment."



Ah, yes!  Something near that thought has been rattling around my brain for quite a while but I didn't know how to put it into words!  Every time I saw the link for that database here on TUG (dioxide's?) I wondered why an owner in a system would take pleasure in advertising the lowest prices.


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## SueDonJ (Feb 24, 2010)

DanCali said:


> I agree. But it's not impossible...
> 
> With Marriott there is certainly no reason to make it happen now because (i) the economy is in the gutter, (ii) they have enough unsold inventory and/or inventory from point conversions and (iii) resale prices at many resorts in Platinum seasons (most rentable) are still in the high 4 figures or even 5 figures at some.
> 
> ...



I do believe that every timeshare has a shelf-life, at least insofar as the time period during which the newer resorts are considered the cream of the crop.  And of course as m/f increase some folks will think that the ongoing m/f commitment doesn't make ownership worthwhile - especially in a depressed economy/tourism industry where less-expensive rentals are abundant.

But I'm not sure that I understand why you are adding Marriott's "say" in m/f to this - those are set by the BODs to cover costs and can't be set arbitrarily by Marriott.  Sure, Marriott collects a management fee of 10%, which is probably why the contracts contain stipulations that the resorts be upheld to a "brand standard," but Marriott doesn't have free reign to increase m/f so that their cut is increased.  Costs need to be justified.  (I realize some owners think it isn't necessary to maintain Marriott's "brand standard" in order for a resort to be considered a quality resort, but that's a separate discussion.)


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## Latravel (Feb 24, 2010)

Pit said:


> Do you also believe that home prices and commercial real estate have declined because Marriott stopped using rofr, or might that have something to do with supply and demand?



Home prices and commercial real estate have always been subject to the supply and demand grids.  Prices are determined by supply and demand.

Your statement explains my position exactly.  When ROFR was in effect, timeshares were not free to be at the mercy of supply and demand.  They were artificially propped up.  ROFR inhibits the performance of supply and demand forces.  

Once ROFR was eliminated or not enforced, the normal forces of supply and demand took over and prices dropped to what they should be, not what Marriott wanted them to be.


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## chriskre (Feb 24, 2010)

SueDonJ said:


> Ah, yes!  Something near that thought has been rattling around my brain for quite a while but I didn't know how to put it into words!  Every time I saw the link for that database here on TUG (dioxide's?) I wondered why an owner in a system would take pleasure in advertising the lowest prices.



I think part of it is the thrill of "the deal", but also because this is such a nice friendly community it's nice to help out your neighbors so they don't overpay and I think that's the point of the ROFR threads.   

I know I appreciated them when I was shopping for my HGVC units and although I didn't get the rock bottom prices as others did, I did get a fair deal that I can live with.  I didn't want to make shopping for a TS a full time job.  A fair price is something I can live with and will.


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## SueDonJ (Feb 24, 2010)

chriskre said:


> I think part of it is the thrill of "the deal", but also because this is such a nice friendly community it's nice to help out your neighbors so they don't overpay and I think that's the point of the ROFR threads.
> 
> I know I appreciated them when I was shopping for my HGVC units and although I didn't get the rock bottom prices as others did, I did get a fair deal that I can live with.  I didn't want to make shopping for a TS a full time job.  A fair price is something I can live with and will.



Of course.  There's nothing wrong with "shopping the sales" - I do it all the time with shoes.  :rofl: 

I guess I'm just bringing baggage from that other "devalue" thread over into this one.  It seems that on the one hand, resale buyers love to buy at the depressed prices of a market where Marriott's ROFR doesn't prop up prices; but on the other, they hate any other devaluation that might depress the prices of what they own.  It confuses me, is all.


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## DanCali (Feb 24, 2010)

chriskre said:


> I think part of it is the thrill of "the deal", but also because this is such a nice friendly community it's nice to help out your neighbors so they don't overpay and I think that's the point of the ROFR threads.
> 
> I know I appreciated them when I was shopping for my HGVC units and although I didn't get the rock bottom prices as others did, I did get a fair deal that I can live with.  I didn't want to make shopping for a TS a full time job.  A fair price is something I can live with and will.



Yes, it's a nice friendly community.

Yes, it's nice to help people.

Yes, I used information from the ROFR database too when i shopped for my Marriott units.

But if you get something at $4000 "below market", and you actually know it's an abberation, you are only shooting yourself in the foot by advertising it and turning that number into the de-facto new "market price"... you just devalued your property by $4000!


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## AwayWeGo (Feb 24, 2010)

*The Other Way Round.*




Latravel said:


> Once ROFR was eliminated or not enforced, the normal forces of supply and demand took over and prices dropped to what they should be, not what Marriott wanted them to be.


What actually happened was that resale timeshare prices dropped way, way down & then after that -- one might even be tempted to say _because_ of that -- the timeshare companies quit exercising ROFR. 

You could look it up. 

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


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## chalee94 (Feb 24, 2010)

PerryM said:


> To argue that the ROFR hurts Marriott owners is ludicrous...



who is making this imaginary argument?

the argument is whether ROFR causes higher valuations or merely chases market valuations.  no one is saying that it hurts owners...just that any help to them is just a side-effect of the developer taking advantage of any misjudgments on the true market value of the property.

i would agree that ROFR can result in small, incremental price increases since buyers know that lowball/below-market offers will result in the developer taking advantage of their negotiation skills rather than the original buyer.  but the fundamental market value of the property determines whether the developer is willing to pursue a ROFR strategy in the first place. 

if demand falls off a cliff and prices fall, ROFR will go away (as it has) to reflect that change in underlying market value...because ROFR was never propping up the prices, generally speaking, to begin with...ROFR was just there to ensure that any fire sale pricing turned into a benefit for the developer.



PerryM said:


> However, as Marriott prices keep falling Marriott will reset the ROFR at a much lower level and that new low level will be used to bolster resales at the new lower levels which help Marriott recycle cheap weeks at retail prices.



so was ROFR bolstering prices in the first place or has it always been a result of the market valuation at any given time?


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## yumdrey (Feb 24, 2010)

DanCali said:


> If you were getting it at $4000 "below market" and you knew that and then broadcasted your "catch" to the world that's one thing...
> 
> But otherwise, how would others find out about the abberation? Transaction prices are not public information... you were not buying on eBay.... you were not buying via a broker...
> 
> ...


I agree. Even though I bought my latest HGVC for rock bottom price (about $3000 lower than usual ebay price), I don't think it is a new market price. It was an "exception" and resale market didn't change that much ever since. Fair market price is not the lowest price sold... It is the price buyers are willing to pay for it.
It is hard to track Hilton's resale prices, there are many ebay auctions but we never know if they were passes ROFR or not after the auctions were done. So I thought sharing ROFR info would be useful to other HGVC owners and potential owners.
Hilton didn't excercise ROFR until 2009, but they did excercise for 5 las vegas property which were sold under $9000 recently.


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## AwayWeGo (Feb 24, 2010)

*Exactly Right -- That's The Whole ROFR Hornswoggle In A Nutshell.*




chalee94 said:


> if demand falls off a cliff and prices fall, ROFR will go away (as it has) to reflect that change in underlying market value...because ROFR was never propping up the prices, generally speaking, to begin with...ROFR was just there to ensure that any fire sale pricing turned into a benefit for the developer.


You typed a mouthful. 

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


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## m61376 (Feb 24, 2010)

DanCali said:


> If you were getting it at $4000 "below market" and you knew that and then broadcasted your "catch" to the world that's one thing...
> 
> But otherwise, how would others find out about the abberation? Transaction prices are not public information... you were not buying on eBay.... you were not buying via a broker...
> 
> ...


Actually, it was negotiated through a broker, but that's not the point. Whether or not I would have broadcasted it is immaterial; people post on Dioxide's ROFR all the time, and there have been many posts about great deals people have gotten over the past year. Once that happens, the next person expects to do as well, or even better...and prices spiral downward. I think ROFR helped prevent the occasional aberration from becoming the norm.


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## m61376 (Feb 24, 2010)

SueDonJ said:


> Ah, yes!  Something near that thought has been rattling around my brain for quite a while but I didn't know how to put it into words!  Every time I saw the link for that database here on TUG (dioxide's?) I wondered why an owner in a system would take pleasure in advertising the lowest prices.



I agree- but people do it for two reasons: one, to be helpful and informative to others and some because getting a price lower than everyone else is felt to be something to brag about.


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## chriskre (Feb 24, 2010)

DanCali said:


> Yes, it's a nice friendly community.
> 
> Yes, it's nice to help people.
> 
> ...



How is that unless you plan to flip it?  Then I'm sure those owners will not be announcing their great deal.  

I own a few timeshares and never bought them with the intent to sell them right away.  Who knows what the market will be when I do decide to sell.  I don't think most buyers are thinking of selling just after they close.  Personally I feel that any timeshare that I buy will probably have zero value when I decide to sell, if I decide to sell, so I'm definetely gonna get my moneys worth out of my investment.  I think most resale buyers think the same way. 

 I think people waste way too much energy worrying about ROFR and holding up their values.  As long as it brings me great vacations at great prices I personally don't care what I sell it for in the future.  

I find this amusing on the DVC sites because everyone is always concerned with ROFR.  In 50 years when my DVC expires I probably won't even be alive and maybe Disney will be closed down and gone the way of Coney Island.  

I'm glad that I have had access to ROFR info because it makes us resale buyers much better consumers.  There is no wondering if we did okay.  We know it pretty quickly.  I'm only glad I can pay it forward for the time being. 

Thanks Dioxide for maintaining that thread.


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## DanCali (Feb 24, 2010)

chriskre said:


> I don't think most buyers are thinking of selling just after they close.  Personally I feel that any timeshare that I buy will probably have zero value when I decide to sell, if I decide to sell, so I'm definetely gonna get my moneys worth out of my investment.  I think most resale buyers think the same way.



I respectfully disagree...

Here is what I think... I think anyone buying resale is probably more aware than a retail buyer of the fact that they may be a seller one day as well. As such, they should care about resale prices. If someone's need to brag is worth dropping the value of their investment (around that momoment in time) by $4000 who am I to judge that... I just wouldn't do it if I realized the consequences.

I also think that anyone assuming a timeshare will have zero value when they eventually sell and still buys that timeshare for 5 figures because they think it will save them money is doing a lot of fuzzy math or is probably missing something in their calculations. This applies to both retail and resale purchases.

Here is an example of approximately how the math should be done...

Say I bought a resale Platinum NCV for $12K and assume I use it for the next 12 years and then sell it for zero dollars.



Opportunity cost @5%: (assuming I invest in treasuries or a relatively safe investment like a long term CD) - $600 per year


Actual cost: depreciation of unit - $1000 per year


Actual cost: annual MFs + taxes about $1100 per year (this goes up every year)
So, under the assumption that I sell it for zero, my true cost is $2700 per year or almost $400/night. Moreover, the actual cost will increase as MFs do tend to go up. In fact, at 6% increase a year, MF double every 12 years so assuming average MFs of $1600 a year is much more conservative... and brings the total annual cost to $3200 or about $460 per night. 

For that money, I believe you can rent pretty much any night of the year directly from Marriott, stay any number of nights, have a great cancellation policy, and get daily housekeeping too.

I'll skip the math for a retail purchase... (but you can see that the opportunity cost will be much higher as well as the annual equity loss due to the value depreciating assumption)

I am not saying timeshares don't make financial sense. I am just saying the expensive ones are hard to justify under that assumption... It's certainly not an assumption Marriott would want you to make.

If most resale buyers thought their timeshares would be worthless when they eventually sold, Marriott would have a hard time selling timeshares for $20K, let alone $70K...


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## PerryM (Feb 24, 2010)

*Einstein's theories put to the test...*



chalee94 said:


> who is making this imaginary argument?
> 
> the argument is whether ROFR causes higher valuations or merely chases market valuations.  no one is saying that it hurts owners...just that any help to them is just a side-effect of the developer taking advantage of any misjudgments on the true market value of the property.
> 
> ...



My point is that the ROFR helps Marriott and owners and does not harm them.

When Marriott exercises the ROFR this is great for them and for the buyer who should have used the ROFR as a tool to sell their timeshare.

The ONLY person hurt in this arrangement is the low ball buyer who lost another one.

If Marriott does reset the ROFR to 35% as I expect the old level at 60% was a fantastic support level.  Folks here will gripe about 35% but they griped at 60% - the one conclusion is that Marriott did shore up resales at the ROFR whether its 60% or 35% and when removed prices fall.

If you want to use Relativity Theory and say that both arguments are valid at the same time go ahead - ROFR causes falling prices AND falling prices result in ROFR being removed.  Too wacky for my taste though.


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## AwayWeGo (Feb 24, 2010)

*Lowball Sellers Don't Make Out So Well, Either.*




PerryM said:


> The ONLY person hurt in this arrangement is the low ball buyer who lost another one.


 *. . .* to say nothing of the naive lowball sellers who went round assuming (because the timeshare sellers said so) that somehow ROFR would keep resale values from going "too low" -- only to find out otherwise when the timeshare company bought'm out on the cheap. 

At least no bottom-feeding bargain hunters were able to buy _in_ cheap, eh ?  That's got to be worth _something*,*_ no?  (At least to some people.) 

ROFR *=* ROFL. 

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


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## kjd (Feb 24, 2010)

In order to have ROFR affect any sale don't you first have to have a buyer and agree on a price?  If so, why would sensible buyers bother to compete with ROFR?  They can just go on to the next seller.  It can be frustrating for buyers who are ROFR'ed several times but that goes with the territory when you're seeking a low-ball deal for choice property.

Historically there has been no shortage of sellers.  With so many more sellers than buyers ROFR has had little affect.  However, if the number of sellers of a given property would drop then ROFR would seem to be more of a benefit to sellers.  That's happened at times at high-demand resorts like NCV, MGO, MNO, MKO, and others.  In those cases Marriott becomes just one more buyer.  It's supply and demand that determines prices.  

The seller knows that there is a guaranteed deal when Marriott exercises ROFR.  To that extent ROFR helps the seller.  Deals can go bad for any number of reasons.  ROFR does provide more assurance to sellers.

ROFR may not support resale prices because Marriott's willingness to exercise it changes often depending upon the situation.  If the sale price exceeds the amount that Marriott is willing to pay or if Marriott has a glut of inventory there will be no ROFR.

Therefore IMO, ROFR does benefit some sellers but it's questionable if it provides a floor for resale pricing.  I really don't see any benefits for buyers.


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## chriskre (Feb 24, 2010)

DanCali said:


> I respectfully disagree...
> 
> Here is what I think... I think anyone buying resale is probably more aware than a retail buyer of the fact that they may be a seller one day as well. As such, they should care about resale prices. If someone's need to brag is worth dropping the value of their investment (around that momoment in time) by $4000 who am I to judge that... I just wouldn't do it if I realized the consequences.
> 
> ...



Dan, You make alot of assumptions about the resale buyers.  

I haven't paid more than $2350 for any of my resales and most were under $1000 with 2 being $1.  So my $1 acquisiton cost me $1.00 plus $160 closing costs and $450 a year MF's.  To stay at this resort it would cost me $171 a night times 7 nights.  Total would have been $1197.  So I broke even, no actually I was ahead in my first year by $586.  I've owned it for 5 years and even before I purchased was paying $900 to rent a 2 bedroom similar unit.
So as I see it I'm spot on with my analysis and it's a resort I plan to use every year.  So do I care if I sell it for $1.00 or what it's resale value is?  
No, I don't.  And if I analyzed all my purchases for you they would be about the same except for my DVC which I could rent my points and recoup alot of my costs if need be without selling it.  

The only developer bought unit was DVC for $13,500 but the rest have already paid for themselves or will shortly.  Can't do anything about my direct purchase now except enjoy it and chalk it up to a very expensive education.   

Before my expensive education I was in the motel 6 crowd or looking for cheap TS rentals from owners.  Now that I discovered TUG and TS's I've moved on up and there is no going back now.:whoopie:


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## love2travelguy (Feb 24, 2010)

Forgive me for being new to this stuff but what's an ROFR? Thanks.


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## DanCali (Feb 24, 2010)

chriskre said:


> Dan, You make alot of assumptions about the resale buyers.
> 
> I haven't paid more than $2350 for any of my resales and most were under $1000 with 2 being $1.  So my $1 acquisiton cost me $1.00 plus $160 closing costs and $450 a year MF's.  To stay at this resort it would cost me $171 a night times 7 nights.  Total would have been $1197.  So I broke even, no actually I was ahead in my first year by $586.  I've owned it for 5 years and even before I purchased was paying $900 to rent a 2 bedroom similar unit.
> So as I see it I'm spot on with my analysis and it's a resort I plan to use every year.  So do I care if I sell it for $1.00 or what it's resale value is?
> ...





DanCali said:


> I also think that anyone assuming a timeshare will have zero value when they eventually sell* and still buys that timeshare for 5 figures* because they think it will save them money is doing a lot of fuzzy math or is probably missing something in their calculations. This applies to both retail and resale purchases.



I did emphasize that I was talking about "expensive" timeshares so I stand behind what I said 

Your initial post didn't really clarify you were making the assumption you will eventually give your timeshare away with a timeshare that you bought for next to nothing - but in this case that's of course a reaonable assumption. There is no opportunity cost and not much equity to lose... For the "expensive" (say 5 figures) timeshares it's hard come out ahead when you make that assumption. For retail purchases it's probably impossible if you make that assumption.

For full disclosure, my timeshares were bought resale but can be categorized as "expensive". I just chose to assume that they will have a reasonable value when I eventually sell them. Given the hundreds of thousands of retail purchases, I think most people don't assume their timeshare will be worthless if and when they eventually sell.


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## AwayWeGo (Feb 24, 2010)

*Right Of 1st Refusal.*




love2travelguy said:


> Forgive me for being new to this stuff but what's an ROFR?


Sometimes real estate is sold with a binding provision attached to the deed giving the original seller the right to buy back the property by matching any purchase offer that comes along later, even though the original seller may be long out of the picture & no longer have anything to do with ownership of the property.  

That's variously called _First Right Of Refusal_ & R_ight Of First Refusal,_ etc., because if the original seller retaining ROFR "refuses" to match the purchase offer that comes along later, then the sale can go ahead as arranged between the seller & the buyer.  

But if the original seller claims his or her rights under the ROFR provision, then _-- WHAP ! --_ the original seller buys the property right out from under the intended purchaser at whatever price the seller & the intended purchaser had already agreed upon. 

Certain timeshare companies are notorious for retaining ROFR, & for citing as justification the claim that ROFR keeps resale values from going "too low." 

_Balderdash ! _

The really evil part is that some timeshare companies which clearly do not have ROFR nevertheless go round acting as though they _do_ have ROFR, making buyers & sellers jump through "waiver" hoops, etc., for which the company may even charge a fee or try to collect a commission. 

If ROFR is not in the original deed, then it does not exist.  No retroactive ROFR claims are allowed.  

But if a timeshare company bluffs it out with a bogus retroactive ROFR claim, it's possible for the owner to be stuck between going along on the 1 hand or on the other hand running up major attorney fees in fighting the claim, fees that could even exceed the value of the timeshare in question. 

The main fact to keep in mind is that ROFR or no-ROFR _mox nix,_ resale timeshare values can & do still sink ever so low.  ROFR is not a floor value.  ROFR is not a guarantee to buy back.  All ROFR does is prevent anybody but timeshare companies from snapping up timeshare bargains any time (unlike now) when there's actually any property value in owning a timeshare deed. 

ROFR *=* ROFL*,* plain & simple. 

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


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## chriskre (Feb 24, 2010)

DanCali said:


> I did emphasize that I was talking about "expensive" timeshares so I stand behind what I said
> 
> Your initial post didn't really clarify you were making the assumption you will eventually give your timeshare away with a timeshare that you bought for next to nothing - but in this case that's of course a reaonable assumption. There is no opportunity cost and not much equity to lose... For the "expensive" (say 5 figures) timeshares it's hard come out ahead when you make that assumption. For retail purchases it's probably impossible if you make that assumption.
> 
> For full disclosure, my timeshares were bought resale but can be categorized as "expensive". I just chose to assume that they will have a reasonable value when I eventually sell them. Given the hundreds of thousands of retail purchases, I think most people don't assume their timeshare will be worthless if and when they eventually sell.



I guess viewing it your way makes sense also.   I guess we all have to use some justification for why we think the way we think about our TS purchases.  

I just happen to also be a realtor so from my perspective I have always had it drilled into me that even though TS's are "real estate", they are definetely not a real estate investment.  

Obviously the majority of TS owners don't think like me which was a very wrong assumption on my part.   

Not that it's the buyers fault, obviously some of my colleagues have been pushing the "real estate" aspect to the limit so I totally see your point.  :annoyed:  Now I understand why people make such a fuss about ROFR being so important to them.  To me it still means next to nothing.  :ignore:


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## chriskre (Feb 24, 2010)

love2travelguy said:


> Forgive me for being new to this stuff but what's an ROFR? Thanks.



ROFR = Right of First Refusal. 

It's something developers build into their condo docs so that they can buy back good deals that would otherwise be available to the public in an open market.  Most associations don't exercise this right anymore but TS's have been notorious at using this provision since technically they fall under the condo laws in most states.  IMO it only benefits the developers not the buyers nor the sellers.  :ignore:

Obviously there are opinions.


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## JimC (Feb 24, 2010)

DVC uses ROFR to support sales at new resorts and to provide inventory at sold out resorts for add-on sales.  It is hard to read because the exercise price changes by resort and day depending on a number of variables including contract terms, resort termination date, demand for that resort and use year as well as general sales strength at open resorts.



Clemson Fan said:


> Why is it that the one TS system (DVC) that still actively uses their ROFR still maintains good resale prices while other systems (Marriott, etc.) that stopped using ROFR have had their resale prices tank?
> 
> Before people say it, I agree that I think the economy is the major reason.  However, I think DVC is a shining example in this lousy economy of how ROFR does protect owner resale prices as long as it's being exercised.
> 
> That's my opinion, but let the ROFR battles begin!


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## dioxide45 (Feb 24, 2010)

SueDonJ said:


> Ah, yes!  Something near that thought has been rattling around my brain for quite a while but I didn't know how to put it into words!  Every time I saw the link for that database here on TUG (dioxide's?) I wondered why an owner in a system would take pleasure in advertising the lowest prices.



I am not sure if I am supposed to be offended by this or not. The database is really there as a tool to help other Tuggers. I don't think however that it helped to drive down price and led to the demise of the resale market and overall timeshare market. So it isn't like I take pleasure on seeing real low prices posted to it.




SueDonJ said:


> Of course.  There's nothing wrong with "shopping the sales" - I do it all the time with shoes.  :rofl:
> 
> I guess I'm just bringing baggage from that other "devalue" thread over into this one.  It seems that on the one hand, resale buyers love to buy at the depressed prices of a market where Marriott's ROFR doesn't prop up prices; but on the other, they hate any other devaluation that might depress the prices of what they own.  It confuses me, is all.



I am not so much concerned with the devaluation of the equity that I have in our Marriott timeshares with regards to the rumored internal exchange system. Our purchase price was low enough that any lost equity wouldn't hurt us that much. My concern is regarding the devaluation of our usage. We can currently get great "per night" rates using our timeshares. A points system would likely eliminate much of that. Losing usage rights that we currently have today wouldn't be fun.



chriskre said:


> Thanks Dioxide for maintaining that thread.



Your welcome, I am glad you like it.


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## JimC (Feb 24, 2010)

AwayWeGo said:


> ...But if a timeshare company bluffs it out with a bogus retroactive ROFR claim, it's possible for the owner to be stuck between going along on the 1 hand or on the other hand running up major attorney fees in fighting the claim, fees that could even exceed the value of the timeshare in question. ...
> -- Alan Cole, McLean (Fairfax County), Virginia, USA.​




The seller could care less about ROFR.  The seller gets the same deal whether it is exercised or not.

The buyer only loses a deal as their deposit is returned to them and they go back on the hunt.

On what basis would anyone litigate a timeshare exercise of ROFR?  I don't see any damages.


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## dioxide45 (Feb 24, 2010)

PerryM said:


> If Marriott does reset the ROFR to 35% as I expect the old level at 60% was a fantastic support level.  Folks here will gripe about 35% but they griped at 60% - the one conclusion is that Marriott did shore up resales at the ROFR whether its 60% or 35% and when removed prices fall.



Where are you getting this from? There never was a 60% number and there won't ever be a 35% number either. We bought our first resale week at the peak of the bubble and bought if for less than 35% of the developer prices at the time.

The truth is that Marriott exercises ROFR when it is best for them, regardless of the price point. If they have someone in the wings waiting to buy a week they will exercise at just about any resale price. Weeks have been exercised at 60% one day and then only a few days later they passed on 40%.

There is no and will never be any magic number. If there was, then I would buy in to ROFR propping up resale prices, but since there isn't and right now there doesn't seem to be a price low enough for them to exercise, I stand behind my stance that ROFR does nothing to protect sellers, owners, or resale prices.


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## AwayWeGo (Feb 24, 2010)

*I Resemble That Remark.*




dioxide45 said:


> I stand behind my stance that ROFR does nothing to protect sellers, owners, or resale prices.


You typed a mouthful. 

ROFR *=* ROFL *.* 

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


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## rsackett (Feb 24, 2010)

AwayWeGo said:


> You typed a mouthful.
> 
> ROFR *=* ROFL *.*
> 
> -- Alan Cole, McLean (Fairfax County), Virginia, USA.​



So I have been seeing you say ROFR=ROFL for years,  what is ROFL? 

Ray


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## Pit (Feb 24, 2010)

ROFL = :rofl: :rofl: :rofl:


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## SueDonJ (Feb 24, 2010)

dioxide45 said:


> I am not sure if I am supposed to be offended by this or not. The database is really there as a tool to help other Tuggers. I don't think however that it helped to drive down price and led to the demise of the resale market and overall timeshare market. So it isn't like I take pleasure on seeing real low prices posted to it.



Oh, I hope you're not offended, that wasn't what was supposed to happen.     It is a great resource for folks in the market, no doubt, but when I see it  the thought does cross my mind that it's sort of a marker of timeshare devaluation in this site where we love timeshares.  I don't mean any insult here, honestly.



dioxide45 said:


> I am not so much concerned with the devaluation of the equity that I have in our Marriott timeshares with regards to the rumored internal exchange system. Our purchase price was low enough that any lost equity wouldn't hurt us that much. My concern is regarding the devaluation of our usage. We can currently get great "per night" rates using our timeshares. A points system would likely eliminate much of that. Losing usage rights that we currently have today wouldn't be fun.



I guess that's why I'm not understanding the panic - I just don't think that the difference between direct- and resale-purchases in a new internal exchange system will amount to anything more than the difference in initiation fees.  If something else is affected, if usage is devalued for only one certain group of owners, I'll be surprised.


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## dioxide45 (Feb 24, 2010)

SueDonJ said:


> I guess that's why I'm not understanding the panic - I just don't think that the difference between direct- and resale-purchases in a new internal exchange system will amount to anything more than the difference in initiation fees.  If something else is affected, if usage is devalued for only one certain group of owners, I'll be surprised.



I don't think for us it will be a resale vs developer devaluation, but a usage devaluation overall. There are developer buyers who like me split their week and trade both weeks for two 2BR units. In a points system this just doesn't happen unless you can travel at the two or three month mark. Right now we can do it at the 10-12 month mark. It has been said that it will be possible to still trade within II, however if Marriott markets and prices the conversion well, then there will be fewer weeks in II to pick from. Guess this should all be in the other thread. So an internal exchange system could hurt some developer buyers as much as resale ones.


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## AwayWeGo (Feb 24, 2010)

*See, That's How They Get Away With It.*




JimC said:


> On what basis would anyone litigate a timeshare exercise of ROFR?  I don't see any damages.


Nobody would ever get anywhere trying to litigate a legitimate exercise of ROFR. 

The trouble is when some corner-cutting, public-be-damned timeshare company that _does not have_ ROFR gums up a timeshare resale by exercising ROFR anyhow, never mind the fact that there is no ROFR.   

I mean, on what basis would anybody litigate that, not only given the significant court costs & attorney fees, etc., but the paltry values involved ?  

Fraud ?  

Unlawful interference with private right of contract ?

Illegal restraint of trade ? 

Shux, those aren't even civil matters. 

The ethics-compromised timeshare company knows there's little chance anybody will try to thwart their bogus exercise of phantom ROFR, so they just go ahead & bluff it through &, sure enough, nobody calls their bluff & so they get away with it. 

I suspect it will take the involvement of a state attorney general somewhere to throw sand in those shady gears. 

I am not holding my breath waiting for that. 

Meanwhile, the best the best advice for us regular walking-around timeshare buyers is to stay far, far away from the timeshares with ROFR attached to the deeds, & even father away from the execrable timeshare companies that that knowingly go with phony ROFR. 

ROFR *=* ROFR. 

_Fake_ ROFR *=* truly contemptible corporate behavior. 

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


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## PerryM (Feb 24, 2010)

*Thrashing maching is a harvesting machine*



dioxide45 said:


> Where are you getting this from? There never was a 60% number and there won't ever be a 35% number either. We bought our first resale week at the peak of the bubble and bought if for less than 35% of the developer prices at the time.
> 
> The truth is that Marriott exercises ROFR when it is best for them, regardless of the price point. If they have someone in the wings waiting to buy a week they will exercise at just about any resale price. Weeks have been exercised at 60% one day and then only a few days later they passed on 40%.
> 
> There is no and will never be any magic number. If there was, then I would buy in to ROFR propping up resale prices, but since there isn't and right now there doesn't seem to be a price low enough for them to exercise, I stand behind my stance that ROFR does nothing to protect sellers, owners, or resale prices.



When I sold my 5 Marriotts folks here reported the ROFR was being exercised at 60% of current sales.  All 5 of my buyers were scared into paying more (Wonder how that happened) and paid about 62% and Marriott declined all 5.

I haven't been keeping up with what Marriott used to do before real estate got yanked back to reality for a while - so I can't give a figure.

But whatever that last level was count on it declining about 25% to a new set point.  Marriott has every incentive now to kill resales in order to recycle cheap units for developer prices.

Where did I get 25% - I guessed since we are talking about the future.

That 25% could easily be 10% or 40% depending on how onerous Marriott wants to make the new thrashing system and how much more profit they believe they can harvest from us owners.

Line 'em up and mow 'em down....


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## dioxide45 (Feb 25, 2010)

PerryM said:


> When I sold my 5 Marriotts folks here reported the ROFR was being exercised at 60% of current sales.  All 5 of my buyers were scared into paying more (Wonder how that happened) and paid about 62% and Marriott declined all 5.



So how is this any different than what you claim Marriott sales reps are doing? No 60% number ever existed, but yet you lied to buyers in to thinking their was. Marriott likely would have passed on a 40% number, you would never know. I guess it is okay for the little guy to pull a fast one, but not big bad Marriott.


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## chalee94 (Feb 25, 2010)

Latravel said:


> Home prices and commercial real estate have always been subject to the supply and demand grids.  Prices are determined by supply and demand.
> 
> Your statement explains my position exactly.  When ROFR was in effect, timeshares were not free to be at the mercy of supply and demand.  They were artificially propped up.  ROFR inhibits the performance of supply and demand forces.
> 
> Once ROFR was eliminated or not enforced, the normal forces of supply and demand took over and prices dropped to what they should be, not what Marriott wanted them to be.



so you're saying that there was a theoretical market value determined by supply and demand for these timeshares.  but that by exercising ROFR, DVC and marriott chose to pay above-market prices to reacquire ROFRed properties.  isn't that a strange behavior for a business?

i still think that where supply and demand are fairly stable, a developer like DVC has pretty good idea of where those lines intersect based on all of the data: direct buyers and rate of sales, resale buyers and prices offered, cash flows from renting the property...it would make sense for me for a developer to scoop up deals that fall too far below the projected market value, but i don't understand why any sensibly run business would regularly make deals for above market value...

and when things aren't stable (and demand falls off a cliff), ROFR will adjust accordingly (as has been the case)...because it is a result of supply and demand forces and not a cause of them.


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## mstoyanov (Feb 25, 2010)

OK, I am a lurker but can not restrain myself not to post in this thread. 
I really do not understand why there are such a large discussions about ROFR.
It is really simple (as in Economics 101) - ROFR does increase prices (although in my opinion in most Marriott cases only slightly).
Price depends on only 2 things - supply and demand. All external factors (economy, desirability of specific resort, available substitutes and so on) are already factored in either supply or demand functions. Lets just say that for a specific resort/week there are X amount of resale buyers. Adding ROFR at that price point by Y amount coming from developer will make total demand X+Y with exactly the same supply. Of course in this simplified model it is assumed that each non developer buyer gets back to the marketplace after his unit was snatched by ROFR. In reality some buyers never return to the marketplace due to being frustrated or finds substitute resorts. In reality new demand is X+Y-Y1 where Y1 is number of buyers that get frustrated or finds another timeshare substitutes. But as long as Y1 is not equal to Y(i.e. some buyers  tries again to purchase a new VOI) ROFR has non zero effect. 
Now ROFR is not a good mechanism to protect resell prices - in fact it is the worst mechanism from the sellers point of view. Much better price control mechanisms are "price floors" or direct developer participation in the market (so that there are no buyer disappointed by the process and Y1 is close to 0). Unfortunately ROFR is the best for developer since their goal is actually aligned with other buyers not with sellers - it is to get the VOI at the minimum available price. And currently IMHO there are much stronger factors that influence both supply and demand than ROFR - like economy and huge amount of available substitutes on the market. Also one very strong driver for demand is developer presentations and winter is not the strongest time for these at most resorts (excluding ski resorts since this is their prime time). Also EBay is very far from perfect market due to the limited timeframe for the information to propagate to all potential buyers and since PCC have already being paid a lot by mis-informed owners trying to get rid of their VOI so they do not care to put a lot of effort to maximize selling price.
Now finally to get back to the Disney case - the strongest reason why their prices are much more stable is due to relatively limited supply (not a lot of resorts) and lack of good substitutes since most of their resorts are "specialty items". But ROFR still matters even for Disney and I am pretty sure they watch the demand and supply carefully and will use it up to the point that suits them best.


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## Pit (Feb 25, 2010)

Marriott doesn't add to overall demand, because they are simply flipping the units they scoop up with rofr.  They maintain some level of inventory. Beyond that they sell one unit for every one they buy.


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## AwayWeGo (Feb 25, 2010)

*You Build'm & I'll Buy'm & We'll See Who Has Inventory Soonest.*




Pit said:


> Marriott doesn't add to overall demand, because they are simply flipping the units they scoop up with rofr.  They maintain some level of inventory. Beyond that they sell one unit for every one they buy.


Isn't it cheaper for timeshare companies to _buy_ unwanted timeshares -- ROFR or non-ROFR _mox nix_ -- than to _build_ more timeshares ? 

I mean, shux, why keep on adding to the glut ? 

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


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## mstoyanov (Feb 25, 2010)

Pit said:


> Marriott doesn't add to overall demand, because they are simply flipping the units they scoop up with rofr.  They maintain some level of inventory. Beyond that they sell one unit for every one they buy.



That is definitely not true. EBay market may be imperfect due to PCC and limited time frame for the auctions but the market for timeshares purchased from developer are way worse. In general timeshares purchased from developers are made to a lot of people with 0 information coerced to participate in presentation lured by "free gifts". In my opinion there is very little intersection between market from VOI sold by Developers and VOI bought resale. While resale market is much closer to the "ideal market" where all participants have all the information available, developer market is completely distorted market with only 1 side (developer) having relevant market information. and supply/demand on both markets has very few in common - mostly the demand on the resale market comes from people attending presentation or an owners that already purchased from the developer but that is not true for the demand function on developer market.


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## Pit (Feb 25, 2010)

What is not true? You think Marriott exercises rofr with no intention to resell the unit? 

There's a group of really smart people at UCLA who have studied the ins and outs of rofr. Here's what they say...



> When the seller of an asset grants a right-of-first-refusal to a buyer, this special buyer has the opportunity to purchase the asset at the best price the seller can obtain from the other potential buyers. We show that the right-of-first-refusal is inefficient, and it benefits the special buyer at the expense of the seller and other buyers.





> We have shown that granting the ROFR to a special buyer reduces the selling price of the object in a second-price auction: *the seller is always worse off when a buyer has been granted the ROFR.*


(emphasis added)

http://papers.ssrn.com/sol3/papers.cfm?abstract_id=621181


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## AwayWeGo (Feb 25, 2010)

*That's What I've Been Trying To Tell You.*




> the seller is always worse off when a buyer has been granted the ROFR


ROFR *=* ROFL -- & I was able to figure that out even though I'm just some regular walking-around doofus on TUG-BBS & not some really smart guy over at UCLA. 

Here's 1 clue*:*  When the timeshare sellers say that _The Purpose Of ROFR Is To Keep Resale Prices From Going Too Low,_ their lips are always moving. 

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


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## mstoyanov (Feb 25, 2010)

What I think is not true is that statement of yours: "Marriott doesn't add to overall demand,..". The effect of the ROFR is actually more like decreasing the supply available on the secondary market but it has non-zero effect to increase the price for the sellers since that VOI is simply moved to a almost unrelated market.
As for the paper that you cited I only did a quick glance at it but I am pretty sure it does not apply here at all. The paper discus the effect of a seller granting(!) a special right of first refusal (see page 1 - abstract) which is completely difficult situation when the ROFR is already part of the item sold before and current seller has no control whether to grant ROFR or not to a third party.
BTW I probably will have some objections to some of the assumptions in that paper but I don't think I will take a time to write a paper to correct some of these assumptions in this that article since I am not actively working in that field (disclosure - I have a degree in economics but I am currently working in a completely different field and never did any econ research since I graduated more than 10 years ago).




Pit said:


> What is not true? You think Marriott exercises rofr with no intention to resell the unit?
> 
> 
> There's a group of really smart people at UCLA who have studied the ins and outs of rofr. Here's what they say...
> ...


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## Pit (Feb 25, 2010)

Nothing "regular" about you, Alan. You're a well informed, resale timeshare owner, educating others about the pitfalls of rofr. Now, that's something to be proud of.


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## kjd (Feb 25, 2010)

Of course ROFR is an inefficient system, especially when there is a large imbalance of sellers or buyers.  Not even Marriott has enough money to buy the number of their timeshare units that have been for sale in this market.  Once they start buying you can be sure that there would be even more sellers.

Not withstanding the unproven assumption that there are smart people in the economics department at UCLA, it seems that they were only interested in the effect of ROFR prices upon a market.  A mistake that's often repeated by many economists who fail to account for the human element in a financial transaction.  Former Fed chairman Alan Greenspan noted how unemployment was a good thing in an overheated economy but failed to consider the emotional side-effects of it.

The only advantage of ROFR to the seller that I can see is the "piece of mind" that the transaction will close in a timely fashion.  That alone may be enough for some sellers to think of it as an advantage.  They wouldn't be wrong if they did.


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## Pit (Feb 25, 2010)

mstoyanov said:


> What I think is not true is that statement of yours: "Marriott doesn't add to overall demand,..". The effect of the ROFR is actually more like decreasing the supply available on the secondary market but it has non-zero effect to increase the price for the sellers since that VOI is simply moved to a almost unrelated market.



Marriott particpates directly in the resale market. They sell both new and used timeshares.

When I go to buy a used car, I can buy one from a stranger on ebay, or I can make a deal with my neighbor to buy his car, or I can go to the dealer lot and pay more for the same used car there. The dealer might take my neighbor's car on a trade-in, mark it up, and sell it to me. But, by doing so, the dealer has not increased demand for used cars.

If the dealer had a rofr on my neighbor's car, he could step in and assume the purchase contract I negotiate with my neighbor. Then, the dealer would wash it, vacuum out the inside, mark it up and offer it to me at a higher price. That makes me less inclined to negotiate a deal with my neighbor in the first place -- so the effect of the rofr is to reduce demand, not increase it.



mstoyanov said:


> As for the paper that you cited I only did a quick glance at it but I am pretty sure it does not apply here at all. The paper discus the effect of a seller granting(!) a special right of first refusal (see page 1 - abstract) which is completely difficult situation when the ROFR is already part of the item sold before and current seller has no control whether to grant ROFR or not to a third party.



But, it is relevant. By purchasing a timeshare subject to rofr (regardless of how and where purchased), you place yourself in the same position as the seller described in the paper that day you go to resell it. As the seller, you have granted Marriott special buyer status through rofr. Of course, you made this decision at the time of purchase not at the time of resale (unlike in the paper). But that doesn't alter the outcome.


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## AwayWeGo (Feb 25, 2010)

*All Timeshares Are Used-Used-Used.*




Pit said:


> They sell both new and used timeshares.


There is no such thing as a new timeshare. 

By the time the timeshare owner shows up & checks in, other people will previously have been staying right there in the owner's very own deeded or RTU unit. 

That goes for newly deeded & newly leased RTU timeshares as well as resale timeshares. 

Likewise, that goes for Marriott timeshares & unbranded timeshares _mox nix. _

_Full Disclosure*:*_  I know somebody who actually did stay in a new timeshare unit 1 time.  When he & his family opened the condo door & went in, they were the very 1st occupants of that particular unit.  Nobody had ever stayed in that unit up till then.  As it happened, they didn't even own there -- they were there on RCI exchange.  After they checked out, everybody else staying there afterward (owners, renters, subsequent exchange guests, everybody) was in a _used_ timeshare unit any way you shake it.  Grasping that reality about timeshare ownership makes clear why paying new prices for an item that is no such thing is a complete non-starter.  Nothing the timeshare companies sell at full freight is worth the money, specially not "new" timeshares which are no such thing. 

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


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## Pit (Feb 25, 2010)

AwayWeGo said:


> There is no such thing as a new timeshare.
> 
> By the time the timeshare owner shows up & checks in, other people will previously have been staying right there in the owner's very own deeded or RTU unit.



Tuggers know that, but developers pretend not to. What "new" means to the developer is that no one has purchased that deed before. That piece of paper is brand new.


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## mstoyanov (Feb 25, 2010)

Pit said:


> Marriott particpates directly in the resale market. They sell both new and used timeshares.


That would be true if Marriott was listing timeshares on EBay or other resales websites but that is not true. Marriott is selling resale bought timeshare only on the specific segmented market that gets potential buyers from the street lured by "free gifts". Just because Marriott obtained some VOI from the secondary market does not mean that they participate as a seller on that secondary market. The same is true in reverse - neither you nor any other owner can participate in the primary market where Marriott sells timeshares. And if you can not understand the difference between these 2 almost completely unrelated market places - one close to the "ideal market" with all participants having almost all market info and the second one being distorted market with only Marriott having relevant market info, I do not see the point to argue with you anymore.



Pit said:


> When I go to buy a used car, I can buy one from a stranger on ebay, or I can make a deal with my neighbor to buy his car, or I can go to the dealer lot and pay more for the same used car there. The dealer might take my neighbor's car on a trade-in, mark it up, and sell it to me. But, by doing so, the dealer has not increased demand for used cars.
> 
> If the dealer had a rofr on my neighbor's car, he could step in and assume the purchase contract I negotiate with my neighbor. Then, the dealer would wash it, vacuum out the inside, mark it up and offer it to me at a higher price. That makes me less inclined to negotiate a deal with my neighbor in the first place -- so the effect of the rofr is to reduce demand, not increase it.


 If your dealer had ROFR not only on your neighbor car but on all the cars from the same brand I am sorry but the situation will be different - if you wanted to buy that brand of car you would either have to pay more and buy it from the dealer or you would be subject to the ROFR regardless of whether you buy it from a neighbor or a person from the street or EBay. In such case the dealer can easily decrease the supply of this brand of the car to the optimal profit point for him. And if you can not easily substitute the brand you want to buy with another brand (i.e. some rare "specialty car") you are at the mercy of your dealer to set the supply/demand curves.
So your example shows how much different an "ideal market" is (the auto market is close to such market with a lot of substitutes and easily increased production numbers) versus a fractured and distorted market such as timeshare market. In a car terminology such "specialty item" can be a rare or celebrity car in which buyers do not have an option of finding a suitable substitute. For example even if you can buy a regular Ferrari for $250K a certain Ferrari owned by a celebrity may easily bring $10M because it is "specialty item" and market for it is extremely limited (despite not being so distorted as in timeshare market).



Pit said:


> But, it is relevant. By purchasing a timeshare subject to rofr (regardless of how and where purchased), you place yourself in the same position as the seller described in the paper that day you go to resell it. As the seller, you have granted Marriott special buyer status through rofr. Of course, you made this decision at the time of purchase not at the time of resale (unlike in the paper). But that doesn't alter the outcome.



As for why the current paper has no relevance to the situation we discuss if you actually bother to read it you will see that authors presume that if the seller does not grand that ROFR to that special buyer, the same special buyer will be a participant of the market. I am sorry but that is definitely not true in the case of Marriott timeshare that already has ROFR. If it didn't had such ROFR I am pretty sure Marriott would still not participate directly in the secondary marketplace. Marriott has an option that you do not have - to build a new timeshare and sell it. So they don't need to buy anything from secondary market. See for example Wyndham or Starwood - they don't have ROFR (some Starwood have but it is never used) and they do not buy back timeshares at ANY price - even for $1. The same is true for almost all other TS Developers. Even Hilton that do exercise ROFR regularly does not go out and buy from secondary market VOI in the several resorts that do not have ROFR.


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## kjd (Feb 25, 2010)

The "new or used" terminology doesn't fit timeshares.  It would be like joining a new golf course and after playing your first round, claim you were sold used merchandise.  You are buying a lifetime of vacations.  People buy homes in Europe that are 200 over years old and think nothing of it.

All you are buying with a timeshare is the usage, regardless of whether you have a deed or not.  People like myself who bought pre-construction still purchased a "used" unit unless they were the first occupants.  You cannot confuse resale and used with a direct purchase and new.  Those terms simply don't apply.


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## AwayWeGo (Feb 25, 2010)

*In Reality, You Don't Even Get Any Usage When You Buy Timeshares.*




kjd said:


> All you are buying with a timeshare is the usage, regardless of whether you have a deed or not.


What you're really buying is the right -- & the obligation -- to pay annually for each year's usage. 

Simply buying the timeshare initially -- full freight or resale _mox nix_ -- gets you _zippity-doo-dah_ in terms of actual usage. 

It's those ongoing annual fees that are the real cost of timeshare vacationing -- just 1 more reason it's important to pay as little as possible to get your name on the deed or on the RTU lease. 

Remember that the next time some timeshare seller tries telling you that buying timeshare is purchasing "prepaid" luxury vacation accommodations. 

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


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## PerryM (Feb 25, 2010)

dioxide45 said:


> So how is this any different than what you claim Marriott sales reps are doing? No 60% number ever existed, but yet you lied to buyers in to thinking their was. Marriott likely would have passed on a 40% number, you would never know. I guess it is okay for the little guy to pull a fast one, but not big bad Marriott.



I simply told the various folks bidding that they could go to TUG and check for themselves - Marriott was snapping up resales below 60% and especially for hot Platinum Holiday weeks that I owned.  You decide if that was a lie.

I can't force folks to buy my units - they convinced themselves that a bid at 62% was safer than 60% and for 2% they stood a chance.  But I knew Marriott was exercising ROFR and at the 60% level as reported here back then.

P.S.

Back in 1999 when we bought our first MountainSide the salesrep stated that the ROFR was at 75% - don't know if that figure was accurate back then.  If it was it dropped to 60% and 0% right now.  Will it ever go up?


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## Clemson Fan (Feb 26, 2010)

Perry is right in saying there were tons of threads here on TUG just as little as a few years ago stating that the ROFR level for platinum weeks was somewhere around 60%.  People who were buying resale and were jittery about it who asked for advice were told by many people including DaveM to just put their offer in at a little over 60% and it should clear.

Now that ROFR is dead with Marriott that nervousness is gone.  However it's still present on the DVC boards where resale buyers are still raising their offer prices to make sure their perfect resale contract clears ROFR.

This is a great thread and I appreciate everybody's opinion.  My initial opinion that started this thread still hasn't changed.


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## Pit (Feb 26, 2010)

mstoyanov said:


> That would be true if Marriott was listing timeshares on EBay or other resales websites but that is not true. Marriott is selling resale bought timeshare only on the specific segmented market that gets potential buyers from the street lured by "free gifts". Just because Marriott obtained some VOI from the secondary market does not mean that they participate as a seller on that secondary market. The same is true in reverse - neither you nor any other owner can participate in the primary market where Marriott sells timeshares. And if you can not understand the difference between these 2 almost completely unrelated market places - one close to the "ideal market" with all participants having almost all market info and the second one being distorted market with only Marriott having relevant market info, I do not see the point to argue with you anymore.



Marriott does more marketing than simply trying to seduce prospects with the promise of free gifts. Aside from the accidental buyers who are unwittingly duped while on vacation, there are buyers actively shopping timeshares. Marriott has many repeat customers that buy with full knowledge of resales on ebay and elsewhere. There are numerous examples here on TUG of buyers who purchased from Marriott not just once, but multiple times. Marriott knows they are not alone in this market. You say Marriott doesn't participate as a seller in the resale market.  What do you make of this:

Marriott Authorized Ski Resales 



> ... we have been contracted as a service to Marriott's Timeshare Owners to provide on site resale services ... if you had considered purchasing a prime Ski Week at a 5 star Ski In/ Ski Out location either direct through a developer or on the resale market please contact me immediately.





mstoyanov said:


> If your dealer had ROFR not only on your neighbor car but on all the cars from the same brand I am sorry but the situation will be different - if you wanted to buy that brand of car you would either have to pay more and buy it from the dealer or you would be subject to the ROFR regardless of whether you buy it from a neighbor or a person from the street or EBay. In such case the dealer can easily decrease the supply of this brand of the car to the optimal profit point for him. And if you can not easily substitute the brand you want to buy with another brand (i.e. some rare "specialty car") you are at the mercy of your dealer to set the supply/demand curves.
> So your example shows how much different an "ideal market" is (the auto market is close to such market with a lot of substitutes and easily increased production numbers) versus a fractured and distorted market such as timeshare market. In a car terminology such "specialty item" can be a rare or celebrity car in which buyers do not have an option of finding a suitable substitute. For example even if you can buy a regular Ferrari for $250K a certain Ferrari owned by a celebrity may easily bring $10M because it is "specialty item" and market for it is extremely limited (despite not being so distorted as in timeshare market).



My point was that the exercise of rofr does not increase demand, when the dealer is just flipping cars. The would-be buyer is still in the market, and the car acquired via rofr is still for sale (just a different seller). This is true even if he holds rofr on every car in town. 

You point out that rofr can be used to manipulate supply, and I agree that's true if one has the necessary financial resources to purchase and withhold sufficient inventory from the market. In the case of Marriott, the available supply far exceeds Marriott's appetite for inventory. Hence, Marriott cannot control the supply of resales.

There are plenty of substitutes for a Marriott timeshare: Hyatt, Hilton, Starwood, Wyndham, and any number of high-quality, unbranded resorts. I'm not sure what the timeshare equivalent of a Ferrari would be, but I'm pretty sure I haven't seen it yet.



mstoyanov said:


> As for why the current paper has no relevance to the situation we discuss if you actually bother to read it you will see that authors presume that if the seller does not grand that ROFR to that special buyer, the same special buyer will be a participant of the market. I am sorry but that is definitely not true in the case of Marriott timeshare that already has ROFR. If it didn't had such ROFR I am pretty sure Marriott would still not participate directly in the secondary marketplace. Marriott has an option that you do not have - to build a new timeshare and sell it. So they don't need to buy anything from secondary market. See for example Wyndham or Starwood - they don't have ROFR (some Starwood have but it is never used) and they do not buy back timeshares at ANY price - even for $1. The same is true for almost all other TS Developers. Even Hilton that do exercise ROFR regularly does not go out and buy from secondary market VOI in the several resorts that do not have ROFR.



The assumption I think you're referring to (in section 4) is made in order to answer the question of whether the net benefit of rofr to the special buyer outweighs the economic loss to the seller. In order to compare these two outcomes, it is necessary to assume the same buyers participate in both cases, with and without rofr. This assumption has no bearing on the validity of earlier conclusions, specifically,

Granting a rofr to a special buyer ...
1. reduces the expected price obtained by the seller (with a probability of one)
2. increases the payoff to the special buyer
3. is inefficient


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## Clemson Fan (Feb 26, 2010)

Here's a good very recent thread about buying a DVC and how jittery buyers react to ROFR.

http://www.mouseowners.com/forums/showthread.php?t=34497

We used to see threads like this a lot on this board and the figure of 60% for platinum weeks was the one most often quoted.

I think this contrast between how DVC and Marriott are handling ROFR in this tough economic environment provides a really good real world illustration on the true effect of ROFR and how IMO it really props up resale prices.  What would these DVC HHI points sell for in this market if DVC had stopped supporting their product with ROFR like Marriott has?  Instead of $58/point, my guess would be mid 20's and that's only because of the active point rental market with DVC points.  BTW, DVC could probably wipe out that point rental market if they chose to by enforcing their rules already in place against some of the big commercial point rental operations that exist.


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## PerryM (Feb 26, 2010)

*Sellers; tell me you knew this didn't you????*



Clemson Fan said:


> Perry is right in saying there were tons of threads here on TUG just as little as a few years ago stating that the ROFR level for platinum weeks was somewhere around 60%.  People who were buying resale and were jittery about it who asked for advice were told by many people including DaveM to just put their offer in at a little over 60% and it should clear.
> 
> *Now that ROFR is dead with Marriott that nervousness is gone.*  However it's still present on the DVC boards where resale buyers are still raising their offer prices to make sure their perfect resale contract clears ROFR.
> 
> This is a great thread and I appreciate everybody's opinion.  My initial opinion that started this thread still hasn't changed.



That nervousness was easily remedied by the seller telling the buyer to simply pay 62% and the sale should go through just fine - just like I did.

The ROFR was a support price if the seller was aware of it and informed the buyer.  If enough folks did that prices held firm.

Q.E.D. the ROFR stabilizes and supports resale prices at the level the developer exercises the ROFR if and only if the seller is aware of it and can inform the buyer.

If not the ROFR has no impact beyond allowing the developer to snap up prices below their ROFR level.  

The ROFR no longer is executed by Marriott and prices fall - the seller can't tell the buyer that he had better increase his bid if he wants to save 40% from the developer's asking price.

Maybe I've just assumed that sellers knew this over the years - that you had to tell the buyer to pay more if they want your week.  Gee, perhaps this explains why all the confusion over the ROFR.


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## kjd (Feb 26, 2010)

*Another ROFR view*

Aside from all of the great comments and conflicting views of ROFR there is also the consideration of how Marriott specifically implemented it.  In addition to the 60% or whatever they used as a benchmark, Marriott did not implement ROFR across all resorts and all units equally.  Buyers at some resorts were ROFR'ed more than the buyers at other resorts.  When that word got around (Mostly on TUG where resale buyers hang out) it added to the instability of the Marriott resale market.  

As I recall there were some resorts where it was difficult or near impossible to be ROFR'ed.  There were some unit sizes that Marriott selectively wouldn't touch.  Resale prices were not anywhere near the 60% level at those resorts even though Marriott had ROFR rights.  Then there were a few resorts where Marriott had no ROFR rights at all.  ROFR might have helped sellers at selected times and places but whether ROFR ever set a floor of pricing in the Marriott resale market in general is doubtful.    

Given Marriott's past record on ROFR the sales staff is blowing smoke if they say it is an advantage for all owners.  It might be an advantage if the sales contract language contained a guaranteed buy-back provision.  Potential buyers ought to ask for that and watch for their reaction.


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## bw3 (Feb 26, 2010)

Clemson Fan said:


> Why is it that the one TS system (DVC) that still actively uses their ROFR still maintains good resale prices while other systems (Marriott, etc.) that stopped using ROFR have had their resale prices tank?
> 
> Before people say it, I agree that I think the economy is the major reason.  However, I think DVC is a shining example in this lousy economy of how ROFR does protect owner resale prices as long as it's being exercised.
> 
> That's my opinion, but let the ROFR battles begin!



ROFR is about as relevant as horse buggy whips!


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## AwayWeGo (Feb 26, 2010)

*You Typed A Mouthful.*




bw3 said:


> ROFR is about as relevant as horse buggy whips!


Exactly right. 

There is no good argument for ROFR. 

ROFR *=* ROFL. 

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


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## dioxide45 (Feb 26, 2010)

kjd said:


> Aside from all of the great comments and conflicting views of ROFR there is also the consideration of how Marriott specifically implemented it.  In addition to the 60% or whatever they used as a benchmark, Marriott did not implement ROFR across all resorts and all units equally.  Buyers at some resorts were ROFR'ed more than the buyers at other resorts.  When that word got around (Mostly on TUG where resale buyers hang out) it added to the instability of the Marriott resale market.
> 
> As I recall there were some resorts where it was difficult or near impossible to be ROFR'ed.  There were some unit sizes that Marriott selectively wouldn't touch.  Resale prices were not anywhere near the 60% level at those resorts even though Marriott had ROFR rights.  Then there were a few resorts where Marriott had no ROFR rights at all.  ROFR might have helped sellers at selected times and places but whether ROFR ever set a floor of pricing in the Marriott resale market in general is doubtful.
> 
> Given Marriott's past record on ROFR the sales staff is blowing smoke if they say it is an advantage for all owners.  It might be an advantage if the sales contract language contained a guaranteed buy-back provision.  Potential buyers ought to ask for that and watch for their reaction.



Very good points. Marriott exercised ROFR when it was best for them. There are examples where they exercised for at a high price to only pass a week or so later at a much lower price for the same resort. There were also many resorts they never even bothered to exercise at and other where they exercised at very high prices.

That said, there is no floor, magic number, or any other guaranty to the price they will exercise at. ROFR is doing nothing right now to protect prices. Just because it isn't being exercised doesn't mean it still doesn't exists. Marriott uses it to their advantage and only their advantage. They are not using it to protect the prices or prevent resale buyers from getting good prices as some sales people would like some to believe.


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## JimIg23 (Feb 27, 2010)

Having (as a buyer) had about 4 units taken by ROFR at two different Marriott resorts, it was a factor.  I did not pay 60%, but I paid I think between 40-50% for the units (Don't remember for sure).  Why did I pay that?  Those where the prices of the units when I shopped around (no, I did not wait for a bankrupt seller who needed to dump it, even though I still Marriott would have taken a big bargain at the time).  Do I think ROFR what a factor in sellers keeping their price higher, yes I do.  As a seller, if I believe Marriott may take it back at 50%, why take an offer for 20% on the dollar, I would wait it out.  Is ROFR the main prices driver, no.  But it factors into sellers' pricing.


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## PerryM (Feb 27, 2010)

*Sellers - help those buyers out there...*



JimIg23 said:


> Having (as a buyer) had about 4 units taken by ROFR at two different Marriott resorts, it was a factor.  I did not pay 60%, but I paid I think between 40-50% for the units (Don't remember for sure).  Why did I pay that?  Those where the prices of the units when I shopped around (no, I did not wait for a bankrupt seller who needed to dump it, even though I still Marriott would have taken a big bargain at the time).  Do I think ROFR what a factor in sellers keeping their price higher, yes I do.  As a seller, if I believe Marriott may take it back at 50%, why take an offer for 20% on the dollar, I would wait it out.  Is ROFR the main prices driver, no.  But it factors into sellers' pricing.



Sadly I did not have units up for sale or I would have gladly supplied you with a higher price point that would be safe from the evil Marriott ROFR.

Folks; those of you who believe that the ROFR had no impact or had the opposite impact just don't understand the role of the seller in these matters - we sellers provide helpful information on how to successfully buy our units; just pay more is the correct solution and thus proof of the ROFR helping owners who sell.  Folks who buy - well you got screwed many times by the ROFR.


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## bdh (Feb 28, 2010)

Pit said:


> Aside from the accidental buyers who are unwittingly duped while on vacation, there are buyers actively shopping timeshares. Marriott has many repeat customers that buy with full knowledge of resales on ebay and elsewhere. There are numerous examples here on TUG of buyers who purchased from Marriott not just once, but multiple times.



I will never understand why Marriott (or any developer) is viewed as the Evil Empire because they can sell their product for a retail price.  Any item or product is worth what a buyer is willing to pay.  Different people use a different rationale to determine what something is worth - the only real difference is how much information they have available to them when they make their decision to buy.  There is no reason to be critical of retail sellers and buyers - without those developers building and selling them and people out there buying those retail weeks, there would be no TS resale market for us bottom feeding Tuggers. 

The reality is that ROFR was set up by developers to provide them access to weeks that would be profitable for them to buy and resell for a profit.  Note that the "buy low, sell high" concept is not a dirty or negative one - been around since the thought of selling something popped into the caveman's head a while back.  If a TS owner is content with what they own, there is no real positive if their developer doesn't make money and goes under (while I'm sure there are some folks who despise their developer and wish they would cease to exist, this is not an invitation to highjack this thread) - so the developer being profitable is not a bad thing.   I don't look down upon a developer for being profitable via the ROFR process - they are buying a week/unit at the price the seller was willing to sell it at.  If a TS owner is not content with what they own, they can sell it for whatever it is that someone is willing to pay.  That sales amount has a multitude of variables ranging from the tangibles of quality of developer, resort, week, unit size and unit view to the intangibles of the overall economy, the level of confidence a particular buyer has in their own economic situation and their knowledge level of the TS market.  Due to the number of variables and the number of sales that occur, there are a multitude of specific sales circumstances that can be used to support either side of the "is ROFR good or bad" debate, so specific details of a particular sale to do not settle the ROFR debate. (While I could cite an actual set of sale specifics that due to ROFR, the buyer offered the seller more than what they were asking and the developer stepped in via ROFR and took the week, I wont as that specific deal is not the definitive answer to the general topic).    

While some here on Tug will rail on why ROFR is the Darth Vader of the Evil Empire, in the grand scheme of things, ROFR has not hurt prices - so in that aspect, ROFR can not be deemed a negative.  (I'm confident that someone will craft a specific detailed scenario to show how ROFR has hurt prices - but my comments are intended to be on the overall BIG picture of ROFR).


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## tombo (Feb 28, 2010)

PerryM said:


> Sadly I did not have units up for sale or I would have gladly supplied you with a higher price point that would be safe from the evil Marriott ROFR.
> 
> Folks; those of you who believe that the ROFR had no impact or had the opposite impact just don't understand the role of the seller in these matters - we sellers provide helpful information on how to successfully buy our units; just pay more is the correct solution and thus proof of the ROFR helping owners who sell.  Folks who buy - well you got screwed many times by the ROFR.



The Seller Not ROFR raised the Price! That is a true staement which means that ROFR didn't raise the sale price one penny!

A few people will pay more when a seller tells the potential buyer that it will take 60% of retail to buy it thanks to ROFR. The same seller could tell a potential buyer that weeks are going for 90% to 110% of retail on the resale market and convince the buyer to pay more. Neither actually raised the price because of ROFR or the facts, the price was raised because of marketing (or lies, salesmanship, scare tactics, whatever you want to call them) by the seller. You can also tell the potential buyer that you have turned down an offer of more that 60% of retail to get them to pay more, that you have the only week like yours for sale in the world, that your week comes with magic pixie dust, that your week will make them a 100% profit in a couple of years if they want to re-sell it, or any of the many lies I have been told by timeshare salesmen in sales presentations to try and get me to pay $30,000 for a timeshare I can buy resale for $3000. The fact that you can use ROFR as a sales tactic to demand more is not in any way to be construed as ROFR raising the resale price.

ROFR in and of itself doesn't raise the sales price one penny! If as a seller you market your timeshare yourself and finally find a buyer that will buy your timeshare for a price that you and the buyer agree on, that is what it sells for period. If you find a buyer and negotiate using ROFR, or claims of a rare hard to find week you are offering, free closing costs, free banked week, or whatever other technique you decide to employ to get the most money you can for your week, then that is selling, not relying on ROFR to raise a price for you. If the week would have sold for $1000 and you told the buyer that another buyer had offered  $1000 for a similar week and the resort stold it using ROFR (true or not), the sale price might jump to $1500, and not because of ROFR, it jumped because you threatened ROFR (something you know might or might not happen). If you finally agree on a sale price of $1500, that is what it will sell for period. You and the buyer negotiated and agreed on $1500. ROFR will not offer the seller $1501. Your week sells for $1500 and not a penny more. The only thing that ROFR might change is who the actual owner of the $1500 sale is.

Perry the fact that you used an ROFR of 60% of retail imaginary level (60% was never a  Marriott confirmed figure, simply a figure you chose to use to sell your weeks) to get more for your weeks was not ROFR in action, it was simply a scare tactic you used to convince buyers to pay you more. That is just like the timeshare salesman who tells buyers that they have to buy it today or they can never get it at that price again, it isn't necessarily true, but it can on occasion acheive the desired results. The reason that your weeks sold for more was because you used ROFR scare tactics to sell the week for more money. ROFR did nothing to raise the sale price, Perry did using threats of ROFR. If ROFR did not exist there are many other lines, lies, techniques that could be employed to scare the buyer into paying more for a week than they had to. Timeshare salesmen do it every day. Used car salesmen raise the sale price on hunks of junk using all sorts of scare tactics, lies, and marketing skills even though they don't have the threat of ROFR in their sales bag of tricks. 

ROFR would only raise sale prices if the developer actually set a minimum sale price below which all weeks would be ROFR'd, or if resorts had to pay more than the highest offer to ROFR the week from the current buyer. Absent those two scenarios you can threaten people with ROFR to get them to pay more just like you can use other threats and sales tactics to increase the sale price, but you are getting them to pay through your own efforts, not because of ROFR.


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## PerryM (Feb 28, 2010)

tombo said:


> The Seller Not ROFR raised the Price! That is a true staement which means that ROFR didn't raise the sale price one penny!
> 
> A few people will pay more when a seller tells the potential buyer that it will take 60% of retail to buy it thanks to ROFR. The same seller could tell a potential buyer that weeks are going for 90% to 110% of retail on the resale market and convince the buyer to pay more. Neither actually raised the price because of ROFR or the facts, the price was raised because of marketing (or lies, salesmanship, scare tactics, whatever you want to call them) by the seller. You can also tell the potential buyer that you have turned down an offer of more that 60% of retail to get them to pay more, that you have the only week like yours for sale in the world, that your week comes with magic pixie dust, that your week will make them a 100% profit in a couple of years if they want to re-sell it, or any of the many lies I have been told by timeshare salesmen in sales presentations to try and get me to pay $30,000 for a timeshare I can buy resale for $3000. The fact that you can use ROFR as a sales tactic to demand more is not in any way to be construed as ROFR raising the resale price.
> 
> ...



This is what's so fascinating about the ROFR - there is no way to prove it's impact with a scientific study.

I've had fun for the past 2 weeks debating the ROFR but our vacation has ended and time to make some bucks again.  Put me down as someone who used the ROFR to make a measly 2% more in 5 sales as to its existence.

I'll let you guys get back to debating this fascinating topic but I'm busy making money so I'm tied up until the next vacation.

Best to all....


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## tombo (Mar 1, 2010)

PerryM said:


> This is what's so fascinating about the ROFR - there is no way to prove it's impact with a scientific study.
> 
> I've had fun for the past 2 weeks debating the ROFR but our vacation has ended and time to make some bucks again.  Put me down as someone who used the ROFR to make a measly 2% more in 5 sales as to its existence.
> 
> ...



Have fun getting back to work.  I was absent for much of this debate but I am glad I got back before you left. Your convincing arguments on TUG show why you get more dollars for your weeks than most, and that is because your persuasive points make your sales and your posts appear as you like them to appear. The old quote that one can sell ice to an Eskimo appears to ring true with you. Please don't sell yourself short by giving ROFR the credit for what you do.

As you once again confirmed in this post, you USED ROFR as a SALES TOOL to make 2% more on your sales. Good for you, but don't credit ROFR with the increase in your sales income, credit your marketing skills. If ROFR raised the sales price of timeshares, it would work for everyone without having the knowledge or ability to use sales and marketing skills. If ROFR actually got 62% of retail price for weeks, then all sellers would get that price, not just the savvy sellers like yourself. The fact that many sellers sold  their weeks for 10% of retail when they finally found a buyer just to have Marriott ROFR the sale shows that ROFR had nothing to do with the sale price, the sale price was determined by marketing and the actual market. 

In a real world sales situation (whether ROFR exists or not) when a seller actually finds a buyer, they agree upon a price, and money exchanges hands, then a sale is made. Let's see at what point the ROFR magical price raising enters the sales process raising the sale price. First the seller has to advertise their week for sale (ROFR doesn't advertise your weeks for you, so not here). The seller has to decide on what price they want to sell their week for (ROFR has no set minimum price, one might pass at $2000 and one gets ROFR'd at $5000 so not here either). If the advertising works then the seller finds a buyer on their own (ROFR won't find you a buyer, in fact the resort will steal your buyer from you if they can so no help from ROFR). Now that the seller has a buyer, the seller has to negotiate the sale price to come to an agreement with the buyer or a sale will not be made (ROFR will not help you negotiate but you can use the imaginary ROFR level as a sales technique just like you can use other sales techniques, but it is up to you not ROFR to negotiate your best price).  The seller and buyer AGREE on a price, and now for the FIRST time in the sales process ROFR appears. The sale has been made and the price agreed upon between the buyer and seller (just the same as happens at resorts with no ROFR), and now the only time ROFR makes a difference in the sales process is because the resort can decide if the sale price is cheap enough where they can make money reselling it and steal it from the rightful buyer if they want to. After the sale process is finished ROFR can change who is the owner of the week, nothing more. Once the advertising, negotiating, and agreement on sale price has occurred, the resort can buy it from the seller using ROFR for exactly the same price that was already agreed upon. ROFR doesn't enter into the process at all until the sale is done, so it doesn't raise the sale price one penny.

People want to say that resorts with ROFR like Marriott, Disney, etc bring more resale than other resorts thanks to ROFR. How about the fact that these resorts bring more because they are the nicest chains? If you install ROFR at a sub par resort, would it raise the sale price on the dog of a resort? Not a chance. Gold sells for more than lead with or without ROFR, but if they ROFR'd gold many would like to say that the fact that gold sells for more than lead is proof that ROFR works. Something that is worth more will sell for more, simple economics 101 supply and demand. More people want the nicer resorts which drives the prices higher, less people want the lower quality resorts driving those prices lower. 

Now that ROFR is not being exercised Marriott weeks are still selling for thousands while many resorts are selling for a dollar. Marriott's are quality resorts and will always demand higher resale values than most resorts (unless Marriott devalues resale ownership through points), and ROFR has nothing to do with it. The reason prices plummeted is because the market tanked. My brother owned a 3 bed whole ownership condo on the beach that 2 years ago sold for over $800,000 (and there was no ROFR in place to "prop up prices"). Now that condo is selling for under $300,000. If there had been ROFR in effect when the condo sold for over $800,000, and none being exercised now, many would say look at what happened to the prices when they stopped using ROFR. Simple fact is the market tanked and ROFR had nothing to do with the sale prices ever, the resale price was determined by the market. While Marriott was STILL ROFR'ing last fall, the prices dropped like a rock, and they continued to do so after ROFR was ceased, no difference. Marriott quit ROFR'ing because they had tons of inventory they couldn't sell or else they would still be stealing the bargain sales at rock bottom prices. The only reason ROFR exists is for the developer to get cheap inventory, not to help sale prices in any way.


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## Clemson Fan (Mar 1, 2010)

Folks, if ROFR has no effect and it's trully just the underlying product, then please explain why in this economy DVC retains a good portion of it's value while premium Marriott weeks (I'll certainly conceed that it's the more premium Marriott weeks we're talking about and not the lesser weeks which marriott never used ROFR on) have dropped significantly from about 60% of retail to now 40% or less?

IMO we've had a nice real world example in the past 1-2 years on just how ROFR did effect resale prices.  I personally feel it's around a 50% effect as going from 40% to 60% in price is a 50% increase.  Granted, it's more of an emotional effect then anything, but it's still an effect.  When a lot of buyers hear the sale is subject to ROFR they get an emotional response b/c they don't want to lose deals.  Resale buyers also tend to do a ton of research and many of them found TUG that way.  There were lots of threads here on this board several years ago when marriott was using ROFR just like the one I posted from mouseowners and many well respected posters would throw around the figure of around 60% for premium weeks when asked by a jittery buyer.

I find it interesting how any thread that Perry gets involved in nowadays turns into some form of Perry bashing.  I think Perry handles the abuse better then anybody I've seen.  To say that Perry was just acting like a sleazy TS salesman I really think is unfair.  He was just presenting the buyer with the facts as they were at that point in time regarding ROFR.  There were even ROFR databases here on TUG that were not maintained by Perry.


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## timeos2 (Mar 1, 2010)

Clemson Fan said:


> Folks, if ROFR has no effect and it's trully just the underlying product, then please explain why in this economy DVC retains a good portion of it's value while premium Marriott weeks (I'll certainly conceed that it's the more premium Marriott weeks we're talking about and not the lesser weeks which marriott never used ROFR on) have dropped significantly from about 60% of retail to now 40% or less?



That has been answered a number of times. It is not the ROFR that causes Disney values to hold up better (they are on a slow slide) than others  it is the basic demand for the product. Plus, as pointed out very well above, the very nature of ROFR does nothing to support prices but is a mechanism for the developer to grab weeks from the legitimate buyers only after the seller has come to agreement (so there is no possible effct on the price paid due to ROFR) - they still get the same price just from a different party. 

I know it's ever so tempting and self satisfying for owners to dream that somehow ROFR / the developer is making their rapidly depreciating (from retail cost) timeshare ownership a higher value but it isn't happening. All the tortured logic trying to justify it makes it clear they know deep down that when they go to sell finding a buyer at any price will be tough and ROFR isn't going to do a thing but add another roadblock to any potential sale. Yet they want so badly to think they will get more and ROFR is one crutch to hold on to for an illogical reason to believe.


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## JimC (Mar 1, 2010)

This is a topic that neither side is going to yield on.  Personally, I believe ROFR has affected resale prices and demand (where there is a non-ROFR substitute readily available).  That other believe otherwise is fine with me as well.


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## tombo (Mar 1, 2010)

Clemson Fan said:


> I find it interesting how any thread that Perry gets involved in nowadays turns into some form of Perry bashing.  I think Perry handles the abuse better then anybody I've seen.  To say that Perry was just acting like a sleazy TS salesman I really think is unfair.  He was just presenting the buyer with the facts as they were at that point in time regarding ROFR.  There were even ROFR databases here on TUG that were not maintained by Perry.



Please re-read my quote. I never said Perry was a sleazy timeshare salesman, I just pointed out what Perry himself has said, and that is that picking a selling price which was 62% of retail to convince buyers that it might take that to beat ROFR was something he did to maximize his profit on his resales. The 62% of retail was a figure he that he decided to use with no actual proof that these were correct figures (there are no correct ROFR figures).  He admits that Marriott might have ROFR'd at 62%, and that they might not have ROFR'd at 40% of retail, but throwing these numbers out to the buyer as though they were facts got him at least and additional 2%. Anyone who sold a week stating for fact that x dollars would not pass ROFR used the same tactics since Marriott never had a floor price that they would purchase weeks for. Some low price resales would have ROFR exercised, and some wouldn't. No owners knew which if any would be ROFR'd or at what price, and to state otherwise as fact was simply conjecture used to increase your sale price. The only true facts that one could state for sure from the days when Marriott did on occasion use ROFR is that Marriott simply stold weeks using ROFR if the price was cheap enough and their inventory was low enough. 

Making one feel that they must pay more than they might have to pay in order to beat ROFR and actually own the week can be considered salesmanship, manipulation, misreprensentation, or outright lies, you choose what you would like to classify it as. I said Perry used ROFR as a sales tactic to scare buyers into paying more, and this is a fact stated by Perry himself. Timeshare salesmen tell people all the time that they will never own a week resale because Marriott will ROFR the cheap sales in order to convince buyers to pay too much and buy retail. I am sure that some of Perry's customers would have passed ROFR if they had purchased for less than 62% or retail, just like resale owners actually buy and own weeks that Marriott doesn't ROFR. Both sales tactics can work with the right buyer, and both are sales points or scare tactics (depending on your point of view) used to convince a buyer to pay more than they have to in order to own a week. 

The threat of ROFR can raise sale prices when used on some buyers, however ROFR itself does nothing to raise the resale price because ROFR is only exrcised after the sale is complete and the sale price has been set. Some people will raise their offering price when threatened with ROFR, some will refuse to make an offer at all simply because there is ROFR (yes there are a lot of non buyers out there because of ROFR). Sometimes you win, sometimes you lose when you use the ROFR threat. 

You can condone the use of ROFR threats by owners or timeshare salesmen to increase sale prices, or you can condemn it, but you can't have it both ways. If Marriott used ROFR on every sale below a certain price, then you could use facts and truthfully tell the buyer what it would take to own the week and you would be able to raise the sales price using facts, and not using conjecture or scare tactics. As long as they use ROFR whenever they feel like it with no obligation to ever exercise ROFR, the threat of ROFR is all that actually exists.


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## SueDonJ (Mar 1, 2010)

tombo said:


> ... Making one feel that they must pay more than they might have to pay in order to beat ROFR and actually own the week can be considered salesmanship, manipulation, misreprensentation, or outright lies, you choose what you would like to classify it as. I said Perry used ROFR as a sales tactic to scare buyers into paying more, and this is a fact stated by Perry himself. Timeshare salesmen tell people all the time that they will never own a week resale because Marriott will ROFR the cheap sales in order to convince buyers to pay too much and buy retail. You can condone the use of ROFR threats by owners or timeshare salesmen to increase sale prices, or you can condemn it, but you can't have it both ways. If Marriott used ROFR on every sale below a certain price, then you could use facts and truthfully tell the buyer what it would take to own the week and you would be able to raise the sales price using facts, and not using conjecture or scare tactics. As long as they use ROFR whenever they feel like it with no obligation to ever exercise ROFR, the threat of ROFR is all that actually exists.



ClemsonFan substantiated that at the time Marriott was exercising ROFR, it was common for the timeshare-savvy folks here on TUG to reach a consensus and post whatever the ceiling was.  This is a quote from his post #85 from this thread:



> Perry is right in saying there were tons of threads here on TUG just as little as a few years ago stating that the ROFR level for platinum weeks was somewhere around 60%. People who were buying resale and were jittery about it who asked for advice were told by many people including DaveM to just put their offer in at a little over 60% and it should clear.



I remember those types of posts, too, in response to questions from both buyers and sellers about what the current market was supporting at different times.  I don't know why Perry is now being singled out for something that was quite common - it does appear that he's being piled on here as a "sleazy timeshare salesman."  If it was okay to tell sellers that they'd only be able to get +/-60% on the resale market because Marriott probably wouldn't ROFR above that ceiling, why are we now saying that it wasn't okay for Perry to tell his prospective buyers that Marriott probably would ROFR below that ceiling?

It's perfectly okay to tell a buyer at what approximate point ROFR is being exercised, if it is, and then it's up to the buyer to either go the safe route and offer above that or take a chance.  It's wrong, and frankly a bit insulting, to insinuate that a seller who advises potential buyers about known exercised ROFR numbers is in any way similar to the sales weasels who earn the "sleazy" reputation by misrepresentations and outright lying.  Perry didn't do that, certainly.


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## tombo (Mar 1, 2010)

SueDonJ said:


> It's wrong, and frankly a bit insulting, to insinuate that a seller who advises potential buyers about known exercised ROFR numbers is in any way similar to the sales weasels who earn the "sleazy" reputation by misrepresentations and outright lying.  Perry didn't do that, certainly.



I am not insulting Perry, I am simply responding to his assertations that ROFR increases prices. I simply showed that his use of the threat of ROFR increased his prices, not ROFR itself.

Please read this quote from Perry himself from response number 66 on this thread:

"When I sold my 5 Marriotts folks here reported the ROFR was being exercised at 60% of current sales. All 5 of my buyers were scared into paying more (Wonder how that happened) and paid about 62%'."

Another Perry quote from his post number 29:

"This is all that matters - the ROFR is/was a tool to help get higher resale prices if you use it to your advantage.

To argue that the ROFR hurts Marriott owners is ludicrous - I can just hear my sales pitch to my past prospective buyers "For heavens sake keep your bid below 60% of sales price since Marriott will screw you and take your place as the buyer".

Come one folks the argument is over and the ROFR was a fantastic tool to help you with your resales. I could care less about Marriott." 

And finally from Perry's post number 88:

"That nervousness was easily remedied by the seller telling the buyer to simply pay 62% and the sale should go through just fine - just like I did."



Please explain to me how I am disparaging Perry when he himself used the words "scared his buyers into paying more" and when he describes the fact that others here used a ROFR figure of 60%, but he used a higher figure of 62% to get an additional 2% out of his buyers. He brags about it. If you feel that his tactics are crooked, feel free to say so, but do not blame me for how you feel about his sales techniques. I simply discussed how his marketing using the threat of ROFR raised his sale prices, not the moral right or wrong of his tactics.

My original statement in still true. The threat of ROFR can increase a sale price if the seller uses it on the right buyer. ROFR itself simply determines who ends up owning the week for the price that the seller and buyer agreed upon.


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## SueDonJ (Mar 1, 2010)

tombo said:


> I am not insulting Perry, I am simply responding to his assertations that ROFR increases prices. I simply showed that his use of ROFR increased his prices, not ROFR itself.
> 
> Please read this quote from Perry himself from response number 66 on this thread:
> 
> ...



I guess I read him differently than you do, because I don't see where he was bragging.  When ROFR is being exercised there are always threads on TUG that verify the ROFR ceiling and/or selling prices which have passed ROFR.  There are also always posts from timeshare-savvy folks here who say that a buyer who bids slightly higher - 2% was routinely suggested - will probably not be undercut by Marriott exercising ROFR.  So, I don't see that Perry bragged about misleading his buyer into offering a couple percentage points more; I see that Perry followed the exact advice given on TUG by passing on the common ROFR wisdom and predictably, his buyer wasn't undercut.  Neither were all the other buyers who were given the exact same advice by plenty of sellers who looked to TUG for the safest way to make them and their buyers happy.



tombo said:


> My original statement in still true. The threat of ROFR can increase a sale price. ROFR itself simply determines who ends up owning the week for the price that the seller and buyer agreed upon.



I agree with you here.  Unless ROFR is exercised by the developer consistently and constantly, it's anybody's guess as to whether one particular offer will be undercut.  IMO, ROFR exists for the benefit of the developers so that they can pick up inventory on the cheap then immediately turn around and sell it for developer prices when they have a ready-and-waiting buyer.


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## Clemson Fan (Mar 2, 2010)

Here are some historical examples for people who thought Perry was just blowing smoke.

http://www.tugbbs.com/forums/showthread.php?t=55034&highlight=pass+rofr

http://www.tugbbs.com/forums/showthread.php?t=36897&highlight=pass+rofr

http://www.tugbbs.com/forums/showthread.php?t=33902&highlight=pass+rofr


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## tombo (Mar 2, 2010)

Clemson Fan said:


> Here are some historical examples for people who thought Perry was just blowing smoke.
> 
> http://www.tugbbs.com/forums/showthread.php?t=55034&highlight=pass+rofr
> 
> ...



Never said he was blowing smoke, simply stating what he said and that is that he USED ROFR to sell his weeks for more (ROFR in and of itself didn't get him one penny more, just his threat of possible ROFR at 60%). He CHOSE 62% OF RETAIL AS HIS TARGET SELLING PRICE, AND USED ROFR TO TRY AND GET IT. ROFR was a marketing tool used by Perry and many others (not saying anything is wrong with that).Some weeks passed 2 years ago at less than 60% as shown on dioxides report and from posts on TUG, and some were ROFR'd at over 60%. Dioxide had a very small percentage of the resale buyers posting on his post , so his chart is a view of a small percentage of the Marriott resales, not the definitive ROFR results from the majority of resales. 1000's of E-bay sales never made it to Dioxides chart (although we are all very thankful to Dioxide because he provided the most data available anywhere for buyers and sellers to get a clue as to what was being ROFR'd and at what prices). In spite of limited data many here used 60% as the amount needed to "beat Rofr"  even though 60% was an abritrary figure since Marriott itself NEVER ROFR'd in every case  at any set amount (I remember people in past TUG posts explaining why low prices were not being ROFR'd because of reasons like the person in charge of ROFR'ing was out of town, fired, it slipped through the cracks, etc. lol).  Perry bumped the "TUG concensus"  a little by his own words to make 2% more on his sales. Using the 60% random figure (or 62%) many here chose to use was part advice based on some limited sales data, and part marketing to increase buyers offers.

Yes many buyers asked the sellers what it would take to "beat ROFR" (many now wish that Marriott had ROFR'd their purchase with Marriott's possible devaluation). The reality we all know is that YOU CAN"T BEAT ROFR because no matter how much or how little you pay, Marriott has final choice on whether they want the week or not. If you got a good deal they often took it, if you paid too much, Marriott would usually let you own it (what buyer wants to buy under those conditions?). Some people raised their offers while other buyers refused to offer anything for any week because of the threat of ROFR. Some buyers simply offered what they considered a reasonable price or bid on e-bay, and bought as cheaply as possible. Some of those who didn't worry about ROFR ended up owners for far less than 60% of retail, and some ended up getting Marriott some cheap inventory to sell for retail prices. 


The car business offers a good analogy to how the threat of ROFR can make a buyer pay you more although many here will hate the comparison. If a buyer asks a car salesman how much it will take for the sales manager to let him buy the car, the same process is in force as a buyer asking how much it will take to beat ROFR. The salesman tells you that he will take any offer to the sales manager to see if he will accept it, but that he feels sure that it will take at least x $'s to buy the car thus trying to raise your purchase offer to x $'s. The car salesman doesn't know (or says he doesn't know) exactly how low an offer the manger will accept but uses the threat of rejection by the sales manager as a reason to get the buyer to pay more. Replace car sales manager with Marriott, and a Marriott seller with the car salesman. Mariott seller says I will accept an offer of $9500 but I doubt that Marriott will let you own it for that price, however if you raise your offer to $10,500 I feel sure Marriott will let you buy it (even though the Marriott seller can't say for sure that Marriott will not let the sale pass at $9500). This is using ROFR as a marketing tool to get more for your week. Perry and many others used this marketing technique to theur advantage, and as I said before I am not making moral judgements on the practice, just pointing it out.

 Marketing can increase your sale price, ROFR in and of itself does not.


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## AwayWeGo (Mar 2, 2010)

*Roffer, Shmawffer.*




tombo said:


> The car business offers a good analogy to how the threat of ROFR can make a buyer pay you more although many here will hate the comparison. If a buyer asks a car salesman how much it will take for the sales manager to let him buy the car, the same process is in force as a buyer asking how much it will take to beat ROFR. The salesman tells you that he will take any offer to the sales manager to see if he will accept it, but that he feels sure that it will take at least x $'s to buy the car thus trying to raise your purchase offer to x $'s. The car salesman doesn't know (or says he doesn't know) exactly how low an offer the manger will accept but uses the threat of rejection by the sales manager as a reason to get the buyer to pay more. Replace car sales manager with Marriott, and a Marriott seller with the car salesman. Mariott seller says I will accept an offer of $9500 but I doubt that Marriott will let you own it for that price, however if you raise your offer to $10,500 I feel sure Marriott will let you buy it (even though the Marriott seller can't say for sure that Marriott will not let the sale pass at $9500). This is using ROFR as a marketing tool to get more for your week. Perry and many others used this marketing technique to theur advantage, and as I said before I am not making moral judgements on the practice, just pointing it out.
> 
> Marketing can increase your sale price, ROFR in and of itself does not.


ROFR *=* ROFL -- plain & simple, no 2 ways about it, end of story, case closed. 

tombo's analyses & illustrations are about the best I've seen, & hats off to tombo for taking the trouble despite the futility of trying to get the reality of ROFR across to people permanently imprinted with the timeshare companies' version of it. 

Those who don't like the car sales manager illustration might also dislike the PriceLine example, which is another version of pretty much the same thing. 

We like to play the PriceLine game when going for non-timeshare accommodations out of town.  Sometimes we win big -- as when we got Staybridge Suites for $25 per night (plus tax & fees) in Jacksonville FL last year.  Sometimes, not so much -- as this year, when we're getting Best Western Jacksonville Airport for $29 (plus tax & fees) per night later this month. 

The ROFR & sales manager similarity is that sometimes when PriceLine turns us down, it will show a screen saying that if we will raise our offer by $7, then they will let us try again right now just this 1 time.  Otherwise, we have to change the dates or areas or star levels of our request, or wait 24 hours before we can up our offer for the same dates & areas & star levels. 

So do we increase our offer by $7 right now ? 

Of course not. 

When we got turned down at $28 per night (same as when we got turned down at $27 & $26 & $25 & $24 & $23 & $22 on previous days), we just waited another 24 hours & offered $29 for 2½ stars.  (We won't bid below 2 stars on PriceLine.)  Next day at $29, the screen said*:* _Congratulations, your price of $29 was accepted by Best Western Jacksonville-Airport. Your Priceline Hotel Request Number is xxx-xxx-xxx-xx._

See, they dangled that added $7 in front of us the same way various timeshare resellers wave 62% at their prospective buyers, simply as a plausible way of getting higher offers, same way some car sellers mention a price the sales manager will accept.  Sometimes the ploy works, sometimes not.  When it succeeds, the operative thing is the _ploy,_ not the mythical 1-time chance to jack up the PriceLine offer by $7, nor to meet the car sales manager's rock-bottom price, nor to clear timeshare ROFR by some small percentage. 

We did raise our PriceLine offer, but we did it our way & not PriceLine's ROFR-like way of $7 _right now_ just this 1 time.  Notably, the ROFR-like $7 (right now, just this 1 time) did not show up on the screen till we got turned down at $28. Their ploy tried to get us to offer $7 more per night per room -- i.e., $84 more for the block of 4 rooms for 3 nights that we were bidding on.  Our ignoring the ploy got us up just $12 on the block of 4 rooms for 3 nights, saving us $72.  (Sure, $72 isn't much -- but, shux, every little bit helps.)  

As more & more people eventually catch on to the reality of ROFR, there's going to be lots of forehead-smacking when the realization dawns. 

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


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## chalee94 (Mar 2, 2010)

Clemson Fan said:


> I think this contrast between how DVC and Marriott are handling ROFR in this tough economic environment provides a really good real world illustration on the true effect of ROFR and how IMO it really props up resale prices.  What would these DVC HHI points sell for in this market if DVC had stopped supporting their product with ROFR like Marriott has?  Instead of $58/point, my guess would be mid 20's and that's only because of the active point rental market with DVC points.



i will buy the argument that ROFR will encourage buyers who value DVC's HHI pts around $50-60 per pt to add a few bucks per point in order to pass and avoid having to start the process again.

but you really think that large numbers of people really only value HHI pts around $25 per pt but will pony up more than double what it's actually worth to them to avoid ROFR?

if most people valued HHI at $25-30, that is what they would offer...over and over...until DVC gave up and started letting contracts pass at that level.


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## SueDonJ (Mar 2, 2010)

tombo said:


> ... The car business offers a good analogy to how the threat of ROFR can make a buyer pay you more although many here will hate the comparison. If a buyer asks a car salesman how much it will take for the sales manager to let him buy the car, the same process is in force as a buyer asking how much it will take to beat ROFR. The salesman tells you that he will take any offer to the sales manager to see if he will accept it, but that he feels sure that it will take at least x $'s to buy the car thus trying to raise your purchase offer to x $'s. The car salesman doesn't know (or says he doesn't know) exactly how low an offer the manger will accept but uses the threat of rejection by the sales manager as a reason to get the buyer to pay more. Replace car sales manager with Marriott, and a Marriott seller with the car salesman. Mariott seller says I will accept an offer of $9500 but I doubt that Marriott will let you own it for that price, however if you raise your offer to $10,500 I feel sure Marriott will let you buy it (even though the Marriott seller can't say for sure that Marriott will not let the sale pass at $9500). This is using ROFR as a marketing tool to get more for your week. Perry and many others used this marketing technique to theur advantage, and as I said before I am not making moral judgements on the practice, just pointing it out. ...



Good analogy, except that when you're buying a car your first bid is not the only opportunity you may have to get your hands on the car that's sitting right in front of you on the lot.  If the car salesman tells you that he'll have to bring any offer to his manager but probably only $10K will be accepted, you can offer $2K and then $3K and then $4K and then $5K and on and on and on.  The salesman will be run ragged back and forth between you and the manager, but eventually you'll hit the price point that the manager is willing to accept and that particular car will be yours, or you'll decide that you've hit your ceiling and that particular car stays on the lot.

With a Marriott week, you as the buyer can ask the seller if s/he knows the current ROFR price point, and then adjust your bid higher or lower depending on how badly you want the particular week that the buyer is selling.  Unlike the car dealership manager, though, Marriott may scoop up the particular week no matter what your bid is, effectively removing that particular week from available inventory.  If your objective as the buyer is to get whatever inventory is available at the lowest possible price, then ROFR causes no harm/no foul.  If, however, your objective as the buyer is to own a particular resort/season/week, ROFR when exercised can absolutely remove that particular inventory from your grasp.


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## AwayWeGo (Mar 2, 2010)

*Plenty Of Fish In The Sea, Lots Of Cars On The Lot, Many Resale Timeshares Available.*




SueDonJ said:


> Unlike the car dealership manager, though, Marriott may scoop up the particular week no matter what your bid is, effectively removing that particular week from available inventory.  If your objective as the buyer is to get whatever inventory is available at the lowest possible price, then ROFR causes no harm/no foul.  If, however, your objective as the buyer is to own a particular resort/season/week, ROFR when exercised can absolutely remove that particular inventory from your grasp.


When the timeshare company buys a timeshare week out from under a willing buyer, it's not like that was a 1 of a kind product, nor the case that only that 1 particular interval owned by that individual seller can fill the bill for resort & season. 

Not only that, there is no way of knowing in advance whether the timeshare company will or will not jump in with ROFR on a particular transaction, although there may be some semi-savvy sellers who keep up with changing market conditions well enough to have a reasonably good idea from time to time.  Even that's not certain, however. 

Apparently under today's market conditions, DVC is the only timeshare company that's still pulling the trigger on ROFR. 

So much for the idea that ROFR will keep resale timeshare prices from going "too low." 

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


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## SueDonJ (Mar 2, 2010)

AwayWeGo said:


> When the timeshare company buys a timeshare week out from under a willing buyer, it's not like that was a 1 of a kind product, nor the case that only that 1 particular interval owned by that individual seller can fill the bill for resort & season.
> 
> Not only that, there is no way of knowing in advance whether the timeshare company will or will not jump in with ROFR on a particular transaction, although there may be some semi-savvy sellers who keep up with changing market conditions well enough to have a reasonably good idea from time to time.  Even that's not certain, however.
> 
> ...



It is possible, though, Alan, even if it's only a very few instances, where a particular inventory is scarce on the resale market (such as newer resorts still in developer inventory, high-demand resorts/season units such as Marriott Hawaii Gold, particular unit configurations such as SurfWatch only having 130 Platinum/3BR/Oceanvista intervals out of the thousands on property, etc...)

I'm not saying anything here about whether ROFR props up prices for the sellers, only that it can affect the availability of certain weeks which may influence how a buyer approaches bidding if s/he wants a particular interval.  In those few instances, the buyer has no idea if ROFR will be exercised or at what price point, so must weigh his/her desire against the ROFR odds.


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## gmarine (Mar 2, 2010)

DVC exercising ROFR has had no impact on the price that DVC points are selling for and if DVC didnt have ROFR the points would be selling for the same amount.

DVC is just about the only timeshare company that has not seen a drastic drop in resale prices.

If these two statements are true then DVC must be a much higher quality product with a much higher demand than any other timeshare companies resorts.


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## tombo (Mar 3, 2010)

SueDonJ said:


> Good analogy, except that when you're buying a car your first bid is not the only opportunity you may have to get your hands on the car that's sitting right in front of you on the lot.  If the car salesman tells you that he'll have to bring any offer to his manager but probably only $10K will be accepted, you can offer $2K and then $3K and then $4K and then $5K and on and on and on.  The salesman will be run ragged back and forth between you and the manager, but eventually you'll hit the price point that the manager is willing to accept and that particular car will be yours, or you'll decide that you've hit your ceiling and that particular car stays on the lot.
> 
> .



This is why I would rather deal with a used car salesman than buy a week from any resort activelly using ROFR. On the used car lot I can negotiate my price, and when the salesman, sales manager, and myself agree on a purchase price, I actually own it. They don't come back after all of the negotiations are finished and tell me that the original owner of the car had the option written into his sales contract saying that he could buy the car back for whatever price any potential buyer in the future had agreed to pay! Would you buy a used car under those conditions? Would you buy a house or a condo under those conditions? Of course not, nobody would. So why buy a timeshare using the same constraints?

Many here like to talk about how they got more for their weeks using the threat of ROFR, but many don't get a single offer from willing buyers because of ROFR. I have been a seller where ROFR prevented me from making a sale to a willing buyer in the past. I had a week for sale and a buyer contacted me and said that they would give me x $'s for my week, and I agreed that I would accept that for the week. The buyer told me that he had a week he bought ROFR'd a month earlier for about the same price and he said  that he almost didn't contact me because he couldn't decide if he wanted to go through that whole ROFR waiting process again only to not own the week. I contacted the closing company about the sale and the closing company wanted me or the buyer to pay a percentage of the closing costs up front in case the resort ROFR'd the week. I said why would I do that before the closing is finished and I was told that on several occassions they had done the majority of the closing work only to have the resort ROFR the week negating the sale, and then neither the buyer, seller, or resort wanted to pay the closing company for the work they had done. They said they weren't going to do all that work for nothing (understandable). I contacted the buyer and he said he was going to buy a week at another resort that didn't have ROFR because what he offered me was all he was going to pay and it didn't pass ROFR the last time and he didn't expect it to pass this time. I said try again you never know and he declined. Here was a buyer I FINALLY FOUND willing to pay a price I would accept, but he WOULDN"T BUY BECAUSE of ROFR. 

When you tout the people who pay more for weeks thanks to the threat of ROFR, the harder number to quantify is those who will not make any offer on your week because of the threat of ROFR. If you are a seller you don't want anything preventing potential buyers from making you an offer on your week you have advertised for sale at your own expense and effort. ROFR limits your market because there are many buyers who will not offer you a price that you would take because they figure it might not pass ROFR. When weeks go for sale with no offers for months, do you really feel that the sellers who were stuck with no buyers making an offer love ROFR? In the past I saw many weeks at Marriott resorts and others that were for sale on Redweek, e-bay, here on TUG, and other places at prices I would have paid, but I didn't make an offer because of the threat of ROFR. Here I was a buyer willing to pay a price that the seller would accept, yet thanks to ROFR they didn't make the sale because I refused to play the ROFR game.

 Another reason that I dislike ROFR is because I always felt like the expert as to what a week is worth resale should be the ROFR resort. If I bought a week and it was ROFR'd, I would be mad that they stold my good purchase from me. If it passed ROFR I would feel that they said keep the week because you paid way too much for it and we don't want it at that price. Lose-lose for me either way it ends up. In addition I refuse to make an offer to a buyer that the resort won't make and sit there and wait to see if they steal it at the price I set. Once the seller and myself agree on the price, the sale is done, not now let's see if the resort likes your price and wants to buy it out from under you with no second chance offers by the buyer allowed. 

I am not alone, there are many others who will not buy from any resort that is activelly using ROFR. Granted sometimes you win and get a little more for your week using the threat of ROFR, but for many sellers who desperatelly need to sell their weeks, ROFR is the primary reason that their weeks remain for sale for months or years with no offers made by willing buyers. If you don't have to sell you might can wait it out until someone who is not scared off by ROFR comes along. If you must sell ASAP because you are unemployed and have MF's due, then having active ROFR at your resort can be the biggest barrier you have to finding a buyer.


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## AwayWeGo (Mar 3, 2010)

*I Resemble That Remark.*




tombo said:


> I am not alone, there are many others who will not buy from any resort that is activelly using ROFR.


You typed a mouthful. 

PriceLine game, yes.  

ROFR game, no way. 

ROFR *=* ROFL. 

ROFR deserves to have a wooden stake driven through its heart.  Otherwise it will inevitably rise again & again.  

That will never happen, of course, but tombo's well informed & well expressed & well reasoned & well illustrated TUG-BBS entries on the subject have come the closest yet to doing the job that needs doing. 

Keep'm coming. 

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


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## AwayWeGo (Mar 3, 2010)

*1 Positive Aspect Of Timeshare ROFR.*

When you take a timeshare tour for freebies at some timeshare being flogged by a timeshare company that retains ROFR (Marriott, WestGate, etc.), you pay careful attention to the words emerging from the timeshare sellers' moving lips.  

When they get to the part about retaining ROFR to keep resale prices of their timeshares from going "too low," you abruptly stand bolt upright & declare, "OK, that's it.  You all maybe had me going there for a while.  But not with any ROFR.  That is an absolute deal killer.  I will not buy any timeshare with ROFR involved.  No way, José.  I'm out of here.  Which way to the freebies?" 

I don't expect they've come up with any snappy come-back for that. 

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


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## bdh (Mar 3, 2010)

*Now I'm*

:rofl: 





> ROFR deserves to have a wooden stake driven through its heart.  Otherwise it will inevitably rise again & again.
> 
> That will never happen, of course, but tombo's well informed & well expressed & well reasoned & well illustrated TUG-BBS entries on the subject have come the closest yet to doing the job that needs doing.
> 
> Keep'm coming.



Since ROFR was created by developers for their use, it doesn't matter how many times you and tombo type about your disdain for it, ROFR is not going going to die.  It's been temporarily suspended due to the economy - it will slowly come back as the economy comes back.  

While your refusal to participate in a sale that has ROFR due to your convictions is admirable, but that is not going to turn the tide either - the only people that can spell the word "ROFR" are the 50 to 75 that have chimed in on this thread and the other 500 or so lurkers - there just aren't enough people on TUG to read this to make a difference (not that they could since its the developer that holds the cards on this).  The VAST majority of people buying TS (retail or resale) don't have a clue what ROFR is, let alone understand how it works.

I've reached the limit on the number of keys I that I can spend on the topic - so I'll let others carry on the noble battle.


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## Clemson Fan (Mar 4, 2010)

chalee94 said:


> i will buy the argument that ROFR will encourage buyers who value DVC's HHI pts around $50-60 per pt to add a few bucks per point in order to pass and avoid having to start the process again.
> 
> but you really think that large numbers of people really only value HHI pts around $25 per pt but will pony up more than double what it's actually worth to them to avoid ROFR?
> 
> if most people valued HHI at $25-30, that is what they would offer...over and over...until DVC gave up and started letting contracts pass at that level.



I believe people value the points at whatever the ROFR charts tell them to value them at.  Those ROFR charts are extensively used by all the DVC resale brokers and resellers who listen to their resale brokers.  If somebody offered $25/point they would get laughed at b/c the resale broker would say something like DVC's ROFR is at least $55/point and they won't even seriously entertain that offer.

I absolutely believe that if DVC stopped using their ROFR, like Marriott, that the underlying value of the points would start to slide downward and eventually reach probably 50% of their current "ROFR value".  It wouldn't be immediate and would take 6-12 months, but I really believe it would happen.  I agree with people that DVC points do have an underlying intrinsic value due to several factors like the very active points rental market, but that intrinsic value probably only accounts for half of what they're actually selling for.  I believe the other half is b/c DVC actively supports their product through ROFR.

BTW, there are several major commercial DVC point rental businesses that exist which make it very easy for DVC members to rent their points.  They can just turn their points for a certain year if they can't use them over to these outfits for quick cash.  These outfits are technically not allowed by DVC rules which do not allow renting points for commercial purposes.  DVC just turns a blind eye to them.  However, if DVC decided one day to actively shut them down then I think that would also really negatively impact the intrinsic value of the points.  Sure people could still rent them on their own, but a lot of people really don't like that hassle. 

Again, I now firmly believe that ROFR, if actively used by the developer, does in fact significantly prop up resale prices.  I think DVC vs. Marriott and how they used ROFR in this bad economy gave us all a great real world example of this.

Tombo and Away We Go and others have bought up a lot of analogies like car sales and the like which I appreciate, but I just don't agree with their conclusions.  I think it's a little funny that when I bring up DVC they just tell me it's a different product that you can't compare based on multiple reasons others have come up with and posted here.  However, they think car sales are a more applicable analogy then another timeshare?  Go figure.

I did have my "smack the forehead" moment that Away We Go said I would have once I became smart enough to understand the "truth".  However, that "smack the forehead" moment came when I saw what happened to DVC and Marriott (I own both) resale prices in this economy and how each company dealt with their ROFR.


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## Transit (Mar 4, 2010)

Clemson Fan said:


> I believe people value the points at whatever the ROFR charts tell them to value them at.  Those ROFR charts are extensively used by all the DVC resale brokers and resellers who listen to their resale brokers.  If somebody offered $25/point they would get laughed at b/c the resale broker would say something like DVC's ROFR is at least $55/point and they won't even seriously entertain that offer.
> 
> I absolutely believe that if DVC stopped using their ROFR, like Marriott, that the underlying value of the points would start to slide downward and eventually reach probably 50% of their current "ROFR value".  It wouldn't be immediate and would take 6-12 months, but I really believe it would happen.  I agree with people that DVC points do have an underlying intrinsic value due to several factors like the very active points rental market, but that intrinsic value probably only accounts for half of what they're actually selling for.  I believe the other half is b/c DVC actively supports their product through ROFR.
> 
> ...



I'm in the it worked for DVC so it works camp.


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## AwayWeGo (Mar 4, 2010)

*Horse In Front Of Cart?  Or Cart In Front Of Horse?*




Transit said:


> I'm in the it worked for DVC so it works camp.


What if it's the other way round -- that so long as DVC prices hold, DVC will keep on doing ROFR, but they'll quit doing ROFR when (if) values plummet (i.e, that the values are supporting ROFR rather than ROFR supporting values)?

Do you leave any room for that possibility ? 

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


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## gmarine (Mar 4, 2010)

AwayWeGo said:


> What if it's the other way round -- that so long as DVC prices hold, DVC will keep on doing ROFR, but they'll quit doing ROFR when (if) values plummet (i.e, that the values are supporting ROFR rather than ROFR supporting values)?
> 
> Do you leave any room for that possibility ?
> 
> -- Alan Cole, McLean (Fairfax County), Virginia, USA.​



DVC is just about the only company still exercising ROFR and DVC is the only timeshare company in which prices have not plummeted. Is it a coincidence? Certainly possible. 

DVC must be by far the best timeshare there is for it to be the only company to not see prices falling dramatically. Either that or ROFR has helped support resale prices.

Marriott stops exercising ROFR and prices plummet.
DVC keeps exercising ROFR and prices remain steady.

Makes for an interesting comparison.


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## SueDonJ (Mar 4, 2010)

I think what some DVC owners who are TUG regulars say makes a difference here, that Disney is sort of caught because they're forced to exercise ROFR.  If DVC doesn't exercise ROFR, they're effectively undercutting the Disney hotel brands - the parent company is juggling one against the other.  DVC owners, especially the ones whose home resort is in the Disney World-area, don't necessarily compare their timeshare costs to other Orlando timeshares but rather to the Disney hotel prices on property.  If Disney didn't offer DVC many of those folks would never consider buying any timeshares.  So based on what those smart DVC TUG folks have said, although DVC has relaxed its ROFR ceilings I don't think you'll see them relaxed much further unless the hotels are even more deeply discounted.  However, DVC's off-property resorts are seeing much lower ROFR ceilings and those points have predictably fallen much lower in price to reflect that.

In the overall picture, I think there definitely is a correlation between ROFR being exercised and prices being supported.  We seem to all be saying the same thing here, don't we, that ROFR simply by existing is meaningless, that at least the threat of it being exercised must be in place for it to be effective?  As well, some of us look at it from the viewpoint of the seller, some as the buyer, and some as the developer.  Regardless of how you look at it though, it's hard to argue with the logic that if ROFR is not exercised, prices will fall to whatever low levels a seller will accept.  That has nothing to do with how much value anybody thinks a timeshare has, and everything to do with how badly a seller needs to get rid of it.  In a depressed market where sellers may be desperate to unload because their personal finances can no longer afford what they own, those levels can be rock-bottom as we're seeing today.  Even with DVC, where current resale prices are at lower percentages of direct pricing than they've ever been.


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## AwayWeGo (Mar 4, 2010)

*It Depends On What The Meaning Of "The Best" Is.*




gmarine said:


> DVC must be by far the best timeshare there is for it to be the only company to not see prices falling dramatically. Either that or ROFR has helped support resale prices.


Savvier timeshare people than I am have pointed out right here on TUG-BBS that DVC, while not necessarily "the best" timeshare in terms of size, amenities, luxury, features, etc., nevertheless occupies a valuable & unique niche position by being the only timeshare offering a total immersion 24-7-365 wall-to-wall Disney "experience" right down to the shape of the timeshare soap & the theme of the lobby decor & the TV channel line-up -- maybe not everybody's cup of tea, but an in-demand vacation product nevertheless that's not available from any other timeshare company, & that's therefore arguably more resistant to the vagaries of the wider timeshare market than the plain-vanilla name-brand & high-end timeshares.

I'll take their word for it, because I have no DVC timeshare experience of my own.  (Shux upon me, eh?)



gmarine said:


> Marriott stops exercising ROFR and prices plummet.
> DVC keeps exercising ROFR and prices remain steady.


The chain of cause & effect is more likely that resale Marriott timeshare prices drop & so Marriott stops exercising ROFR (because it's no longer to the company's advantage to snap'm up cheap), while DVC prices hold for the time being & so DVC keeps on exercising ROFR a while longer. 

When (if) DVC prices fall, you can let us know then whether DVC keeps on exercising ROFR. 

Meanwhile, it's a free country so people can keep on looking at ROFR any way they want. 

And as long as the timeshare companies claim that the purpose of ROFR is to keep resale timeshare prices from going "too low," I will keep on calling baloney on it & pointing out that ROFR *=* ROFL. 

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


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## chalee94 (Mar 4, 2010)

gmarine said:


> DVC is just about the only company still exercising ROFR and DVC is the only timeshare company in which prices have not plummeted.



DVC is the only timeshare company in which prices have not plummeted and DVC is just about the only company still exercising ROFR...still makes sense to me.  the horse and buggy are both moving together...but is the horse pulling the buggy or being pushed by it?



gmarine said:


> DVC must be by far the best timeshare there is for it to be the only company to not see prices falling dramatically. Either that or ROFR has helped support resale prices.



they don't have to be the "best", just high quality while offering a unique, immersive experience that you can't get elsewhere.  



gmarine said:


> Marriott stops exercising ROFR and prices plummet.
> DVC keeps exercising ROFR and prices remain steady.



i'm still curious which happened first.  did marriott really arbitrarily stop exercising ROFR and THEN demand fell off a cliff and prices plummeted?  are you sure?

if DVC is still selling DVC contracts at developer prices at a roughly comparable clip to what they were selling before the recession, why would resales not remain steady?  if DVC were having a lot of trouble selling current inventory, do you really think that they would continue their ROFR policy and build their difficult-to-sell inventory?  (contrary to mstoyanov's posts, i consider developer prices a valid point on the supply and demand curve - and if you want to throw out valid data points, you'd be better off as a climatologist than an economist.   )  if demand is still such that DVC can unload the HHI contracts they ROFR at a predictable rate, they will keep ROFRing...but if demand for HHI collapses, DVC will change their ROFR policy accordingly.

prior to the real estate crash, marriott stock was selling for $45-50.  now it's about $27.

prior to the real estate crash, disney stock was selling for $35ish.  now it's about $32-33.  (admittedly disney is more diversified, but abc/espn have been more of a drag than a help lately.)

tourism in hawaii and mexico has been hammered due to the recession and swine flu.  attendance at the wdw parks in 2008 was about the same as it was in 2007.  2009 hasn't been announced that i've seen - but want to bet that it didn't drop by much?  disney has had to offer discounts on their packages but still, they've raised ticket prices the last few years and demand to go to wdw (and stay onsite to escape the "real world") has not taken nearly the hit that other travel destinations have seen.  do you think that might have something to do with demand for DVC - and thus prices for DVC - being more stable than other timeshares?  i still kinda do.


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## tombo (Mar 4, 2010)

gmarine said:


> Marriott stops exercising ROFR and prices plummet.
> DVC keeps exercising ROFR and prices remain steady.
> 
> Makes for an interesting comparison.



Read Dioxides charts (http://dioxide45.tripod.com/cgi-bin/rofr.cgi ) and you will see the fallacy of this statement. The fact is that while Marriott was activelly exercising ROFR prices kept falling and falling and falling. Marriott finally stopped using ROFR when they couldn't sell the inventory they owned, but the major drop in prices had already occurred WHILE Marriott WAS ROFR'ing. The last time Marriott exercised ROFR on Dioxides report was on a platinum Williamsburg week sale dated 11-16-2008 on a $6000 price. A platinum Williamsburg was ROFR'd for $8500 on 07-02-2008,  Platinum Williamsburg was ROFR'd for $9750 on 06-25-2008, a platinum Wiiliamsurg war ROFR'd for $9000 on 12-28-2007,  and a Platinum Williamsburg failed ROFR for $9600 on 03-15-2007. The last Platinum Williamsburg week that sold on Dioxide's report was sold on 08-10-2009 for $5400 (after Marriott had stopped using ROFR). Let's see what this shows about price propping during the use of ROFR and what happens when it ceases.  The prices fell from $9750 to $6000 in less than 5 months while Marriott was activelly using ROFR (almost a 40% drop). Once Marriott stopped exercising ROFR the sale price dropped $600 from $6000 to $5400 (a 10% drop) in about a year. The price appears to drop more while Mariott is using ROFR than after it stops. Perhaps if they had stopped ROFR'ing earlier they could have stopped the drop in prices at $7000 lol. The facts shown in black and white on Dioxide's report simply prove that prices dropped thanks to the economy and the laws of supply and demand without regard to whether ROFR was being exercised or not.  In fact upon closer examination the resale prices at Williamsburg fell faster and more drastically while Marriott was exercising ROFR than after they ceased to use ROFR. Facts is facts!

DVC will also quit using ROFR if they get overloaded with inventory, but so far DVC is the only chain that has retained higher demand than supply in this economy (ROFR has nothing to do with high demand). You can believe that as the DVC contracts get nearer to the end the DVC prices will fall whether ther is ROFR being activelly used or not. Nobody in their right mind would pay as much resale for a DVC contract with 3 years remaining as they would for a contract with 20 years left.  However  DVC will probably never have to stop ROFR'ing because the cheaper the DVC points sell for, the more money they will make. Disney is unique because sellers have a product to sell that is worth less and less each year as the time left on the contracts leaves fewer and fewer years of use left. However Disney can buy out contracts for pennies on the dollar that only have a few years left and sell them as brand new 30 year contracts. Brilliant marketing strategy. What the buyer has diminishes in value each year as the contracts grow shorter and shorter, but even if a contract sells during it's last year for the last years MF's, Disney gets to ROFR it for one year's MF's and sell it as a whole new 30 year contract. Even better for Disney, at the end of the contract they don't have to pay a penny, the week reverts to Disney, and Disney gets to resell it to the former owner or a new one for full retail. 

 By the way Westgate has been using ROFR at their resorts up until recently too, but the prices haven't held at all.The demand for the resort versus the supply available determines price, not ROFR.  If ROFR was the price support system many here claim it is, then Westgate would be selling for prices similar to what they sold for 2 years ago rather than $1. Marriott, HGVC, Starwood, and Hyatt all ROFR'd as prices plumetted in 2007-2008. Many here refused to acknowledge the precipitous drops in resale prices until ROFR ceased because admitting that prices were in free fall while the resorts were activelly using ROFR would mean that they would have to admit that ROFR couldn't stop the value of their weeks from collapsing.


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## gmarine (Mar 4, 2010)

Question:

Marriott starts exercising ROFR often. Do resale prices remain the same, move higher or move lower ?


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## tombo (Mar 4, 2010)

gmarine said:


> Question:
> 
> Marriott starts exercising ROFR often. Do resale prices remain the same, move higher or move lower ?



The overall prices would remain the same as it would be if there was no ROFR, active ROFR, or occasional ROFR. The market is determined by supply and demand. A seller finds a buyer willing to pay a price he will accept, and that is the sale price. Then the resort gets a chance to buy the week for the price that has already been agreed upon, not one penny more. So the price remains the same whether ROFR is in force or not because the sales price will always be the price agreed upon by the seller and buyer. 

That is why as I showed you from Dioxide's report that prices dropped for months while Marriott was using ROFR. The prices weeks sold for dropped because of less demand, and ROFR doesn't do anything to increase demand or prices.


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## tombo (Mar 5, 2010)

chalee94 said:


> i'm still curious which happened first.  did marriott really arbitrarily stop exercising ROFR and THEN demand fell off a cliff and prices plummeted?  are you sure?



As I showed using Dioxide's chart, prices fell more drastically while Marriott was activelly using ROFR than it did after they stopped using ROFR. The prices didn't fall farther because ROFR was being exercised any more than the reverse false statement could be made stating that the market collapsed because there was no ROFR. The market collapsed because the economy collapsed. When the economy was good Marriott weeks (and other timeshares) would bring high prices resale because of high demand. When the economy tanked Marriott's resale prices (and prices at most resorts) plummeted thanks to low demand for a luxury item like timeshares and increased supply thanks to many owners needing to sell their weeks. ROFR had nothing to do with the good sale prices or the bad other than deciding who actually ended up owning the week, the actual buyer, or the resort.



tombo said:


> Read Dioxides charts (http://dioxide45.tripod.com/cgi-bin/rofr.cgi ) The last time Marriott exercised ROFR on Dioxides report was on a platinum Williamsburg week sale dated 11-16-2008 on a $6000 price. A platinum Williamsburg was ROFR'd for $8500 on 07-02-2008,  Platinum Williamsburg was ROFR'd for $9750 on 06-25-2008, a platinum Wiiliamsurg war ROFR'd for $9000 on 12-28-2007,  and a Platinum Williamsburg failed ROFR for $9600 on 03-15-2007. The last Platinum Williamsburg week that sold on Dioxide's report was sold on 08-10-2009 for $5400 (after Marriott had stopped using ROFR). Let's see what this shows about price propping during the use of ROFR and what happens when it ceases.  The prices fell from $9750 to $6000 in less than 5 months while Marriott was activelly using ROFR (almost a 40% drop). Once Marriott stopped exercising ROFR the sale price dropped $600 from $6000 to $5400 (a 10% drop) in about a year.




Many here quoted Dioxide's chart when touting the joys of ROFR. Everyone loved to say look we are getting 60% of retail thanks to ROFR and Dioxide's chart is proof. Well Dioxide's chart was evidence of what weeks were selling for on the resale market, and the chart also detailed at what prices Marriott was stealing resale weeks at different resorts using ROFR (using the limited data submitted to Dioxide),but it never proved that the resale prices wouldn't have been equally as high if there was no ROFR. What it does show now without a doubt is that when the supply exceeded demand for Marriott weeks due to the bad economy, that the price of Marriott weeks fell as Marriott continued to exercise ROFR. In fact I have shown that at Williamsburg (the last resort Marriott stold using ROFR on Dioxides chart) the prices fell faster and farther while Marriott was using ROFR than after they quit.  Hopefully even the most ardent ROFR fans can peruse Dioxide's chart and realize that the market determines the resale price, not ROFR. Facts is facts!


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## m61376 (Mar 5, 2010)

This is going to be an argument forever, because price is dependent on so many variables. First and foremost, as indicated above, price depends on the market- the law of supply and demand. If demand falls or supply increases, prices will reflect those trends.

However, when a developer exercises ROFR, especially in a stable economy, the occasional desperate seller does not set a new low price for sales as far as public consumption is concerned. When the developer nabs the aberrant low priced unit, the seller, as you so aptly point out, doesn't gain anything, the buyer loses out on a steal, and the developer wins. But, overall, the market isn't impacted by the price. So those occasional price aberrations don't lower the market price, because buyers don't have the expectation of getting that same great deal. I think that's where ROFR helps- and I know- so there is no need to repost it- that there are those who contend it also chases buyers away. I don't happen to agree there, but respect your opinion.

So I do think ROFR helps, but it certainly isn't the cure all unless the developer consistently exercises it. Random exercising at random price points just adds to the complexity, and the more random the less helpful the process is.


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## tombo (Mar 5, 2010)

m61376 said:


> I think that's where ROFR helps- and I know- so there is no need to repost it- that there are those who contend it also chases buyers away. I don't happen to agree there, but respect your opinion.
> 
> .



I appreciate your opinion too, but you can't ignore the cases where ROFR lowers prices while only acknowledging that in some cases it can increase a price. There are many who will not make an offer because of the threat of ROFR( like myself) which lowers prices by decreasing demand.

If you want to talk about ROFR and individual sales situations, there are 3 scenarios that can occur once an offer is made to a seller to buy his week for x $'s and the threat of ROFR rears it's ugly head:
1. The Buyer wants the week badly and offers more to "beat" some imaginary ROFR price point (raising the sale price)
2. The buyer says that is all I will pay and submits his original offer it hoping it will pass (not changing the sale price at all).
3. The buyer says since you don't think it will pass ROFR, forget it I am not buying because it isn't worth the trouble and no sale is made. (lowering the resale prices by reducing demand and increasing supply).

To assume that the majority of buyers would fall into any one of these 3 categories in the majority of cases is pure conjecture. I would assume that numbers 1 and 2 would dominate in a great economy because of less supply, and that number 2 and 3 would happen most often in a bad economy since the demand is low and supply high, however these are guesses, not facts. All we know for sure is that all 3 do occur, just not with what frequency. 

So we are back to what we can show factually with regard to the resale prices during active ROFR and after it stops. As the economy faltered the resale prices fell drastically while Marriott was activelly using ROFR, and it didn't fall much farther after they stopped using ROFR. That shows that the resale prices didn't depend on whether ROFR was being exercised or not, it was determined by supply and demand. To ignore facts while wishfully thinking that prices would suddenly rise if Marriott started using ROFR again is living in an ROFR dream world.  ROFR does not "prop up" prices, it simply determines who the final owner of a week is.


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## m61376 (Mar 5, 2010)

There is the 4th buyer- and I think that's where it may help sustain the market- the one who finds that "steal," knowing it is below the market value and less than they should be paying; Marirott nabs it. True, the buyer loses out, but cannot help set the market price lower by telling others what a low price he/she paid.

IF the buyer agrees to another deal at a fair market price then I think ROFR has helped sustain the market. While many have fit into category 1, I'd agree that simply offering more to beat an imaginary ROFR price may not be in the buyer's best interests. But if the developer exercises ROFR consistently, then that price may actually reflect the market value.

Personally, I know when I bought my first unit I lost what I knew to be a ridiculously low price at the time to ROFR. If I could have gotten anyone else to offer it at that price I would have tried again, but it was an unrealistic price and I knew it. Marriott prevented that aberration from setting the new pricing bar, and the market continued as it was without the negative impact of a single seller. Of course, when there are a lot of desperate sellers, like today, unless the developer is willing to buy back a lot of units, the natural market forces will come into play. But in normal times, when selling substantially below market price is an occasional aberration, I think ROFR helps prevent that fluke sale from affecting the norm.


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## tombo (Mar 5, 2010)

m61376 said:


> There is the 4th buyer- and I think that's where it may help sustain the market- the one who finds that "steal," knowing it is below the market value and less than they should be paying; Marirott nabs it. True, the buyer loses out, but cannot help set the market price lower by telling others what a low price he/she paid. .




You did not buy a week for less than you should be paying! You found a week you wanted to own at a price you would pay, and the seller accepted your offer. That is how sales are made!  As a buyer I want to find the cheapest week I can find to buy. If you did not obtain the week by threatening the owner with a gun or take the week without the owner's knowledge, you did not steal the week. However Marriott did steal the week from the rightful owner (you), and they didn't use a gun, they used ROFR! Once the "steal" is sold and nabbed by Marriott, the "low" price can now be factored into the other (assumedly higher) sale prices to determine an average sale price (which will be lower thanks to this sale in spite of ROFR). All that ROFR did was change who owns the week, not the price it sold for.



m61376 said:


> IF the buyer agrees to another deal at a fair market price then I think ROFR has helped sustain the market. While many have fit into category 1, I'd agree that simply offering more to beat an imaginary ROFR price may not be in the buyer's best interests. But if the developer exercises ROFR consistently, then that price may actually reflect the market value. .



The buyer might also never make an offer on another Marriott week ever again since they are mad that Marriott stold the week from them. You can't focus on the buyers that try again and ignore the buyers that ROFR drives away. As I said some might offer more, some might offer less thanks to the threat of ROFR, and some will stick with their original offer in spite of the threat of ROFR. If you as a seller threaten a buyer saying that you have received a higher offer, and that the other buyer is trying to come up with the money but that it hasn't sold yet (instead of saying Marriott will steal the week out from under them), you might get the buyer to offer more too, but neither threat sustains the market or increases/decreases prices in every instance. When you use any threat to attempt to increase your sale price, the threats could increase your selling price or make your buyer back out of buying from you completelly. The old saying one in the hand beats two in the bush often rings true.



m61376 said:


> Personally, I know when I bought my first unit I lost what I knew to be a ridiculously low price at the time to ROFR. If I could have gotten anyone else to offer it at that price I would have tried again, but it was an unrealistic price and I knew it. Marriott prevented that aberration from setting the new pricing bar, and the market continued as it was without the negative impact of a single seller. Of course, when there are a lot of desperate sellers, like today, unless the developer is willing to buy back a lot of units, the natural market forces will come into play. But in normal times, when selling substantially below market price is an occasional aberration, I think ROFR helps prevent that fluke sale from affecting the norm.



When you bought your week for a "ridiculously low price" and Marriott nabbed it, that is what it sold for. ROFR didn't raise the sale price one cent, and the seller didn't get a penny more than the "ridiculously low price" you and him agreed upon. How was it a fluke sale? The seller would have sold it for more than you offered if he had a buyer offering more. It is the law of supply and demand, not the law of ROFR. Would Marriott or ROFR send the seller a buyer willing to pay more than you offered? Nope. Do you think that there are sellers out there who turn down ROFR passing offers to accept a ridiculously low offer that won't pass ROFR? Nope. Your ridiculously low offer was the best offer the seller had from any buyer and Marriott stold it, nothing more.

If you could have purchased 100 more weeks at that "ridiculously low price" and Marriott ROFR'd all 100 of them, the "ridiculously low price" is what the 100 weeks would have sold for. If 1000 people like you bought weeks for ridiculously low prices and Marriott stold them all, then the 1100 weeks would all have sold for ridiculously low prices, not a penny more thanks to ROFR.

After offering a week for sale for months with no offers, your advertised price and the amount you will accept for your week changes. An offer that might sound ridiculous now might be the only offer you receive. I had a week for sale that I was convinced would bring a minimum price last year and turned down 2 buyers who offered less. Boy if either one of them would offer me half of their previous offers they would be proud owners of the week which I still have for sale. Sellers know that they can take the current "ridiculously low offer" or wait for months or longer for another offer, and the next offer could be even lower. I love it when Marriott owners get mad at a seller for selling cheap. They act like this idiot could have held out for more and thanks to ROFR he would have gotten it. When you are watching sales it is easy to think they are selling too cheaply. When it is your week for sale and you are getting little if any interest from buyers, any offer is a good offer, and ROFR does nothing to change that. You always have the option to hold out for a higher offer whether ROFR is being exercised or not. Just remember that ROFR does not get you a buyer who will pay top dollar for your week, and they can't stop you from selling your week for $1 if that is your best offer. The final determinate of what a week sells for is the price a buyer will pay being accepted by a seller, and ROFR doesn't enter that process.


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## chalee94 (Mar 5, 2010)

gmarine said:


> Question:
> 
> Marriott starts exercising ROFR often. Do resale prices remain the same, move higher or move lower ?



i'd basically agree with tombo but still think you are asking the question backwards.

when the economy picks up, demand will pick up.  when demand picks up, there will be more buyers willing to pay marriott's prices...and there will also be more buyers looking to pick up resales.  more buyers means marriott is moving their inventory and resale sellers will be able to ask higher prices and still find buyers.

so when you see prices picking up, that is when i would expect to see marriott start exercising ROFR on a regular basis again...in order to 1) pick up inventory for resale since they will be moving their inventory more consistently and 2) annoy resale buyers in an effort to drive some of them to the developer.

why - logically speaking - do you think marriott would suddenly choose to start exercising ROFR often?  would it just be arbitrary?  for no reason?

i could be wrong but it makes sense that projected changes in demand (and therefore pricing) logically might lead to changes in marriott strategy.  i just don't understand your starting point which seems to turn ROFR strategy into more of a whim than a business decision.


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## AwayWeGo (Mar 5, 2010)

*There Is No Such Thing As A Free Timeshare.*




chalee94 said:


> why - logically speaking - do you think marriott would suddenly choose to start exercising ROFR often?  would it just be arbitrary?  for no reason?


Whoever owns a timeshare _mox nix_ -- you, me, tombo, e*.*bram, PerryM, Carolinian, SueDonJ, timeos2, a timeshare company, anyone -- whoever owns it has to pay the annual fees on it. 

Any time a timeshare company snaps up a unit for peanuts or even accepts an _el freebo_ deedback, once the timeshare company owns it, the company is responsible for paying the fees on it until it's re-deeded to somebody else.  

The timeshare company doesn't get a pass on fees even if it's still calling the shots at the HOA-BOD.

So unless the timeshare company has solid reason to believe it can flip the deeds it picks up cheap or that it takes back free, it's not going to be acquiring any deeds. 

Thus a timeshare company that holds ROFR on the units it sells isn't apt to start buying resale units out from under willing purchasers again via ROFR unless (until) it has reason to believe (a) that it can re-sell'm at or close to full freight _and_ (b) that it can turn'm over before the bill for annual fees comes due -- not a likely prospect under today's market conditions. 

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


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## tombo (Mar 5, 2010)

chalee94 said:


> so when you see prices picking up, that is when i would expect to see marriott start exercising ROFR on a regular basis again...in order to 1) pick up inventory for resale since they will be moving their inventory more consistently and 2) annoy resale buyers in an effort to drive some of them to the developer.




I agree that Marriott will start exercising ROFR again when demand increases (meaning more people are buying both retail and resale) and supply decreases (because of the increased demand) which will of course increase resale prices without the ROFR trigger being pulled by Marriott. Once the market conditions get better Marriott will start ROFR'ing again to get cheap inventory to sell because they will once again be making profits on retail sales. But we know what we will hear once Marriott exercises ROFR on the first week. The ROFR lovers will be saying that "Marriott started ROFR'ing again and look, the prices have gone up". "Thank goodness they are ROFR'ing again so that they can prop up prices." "Like I always said , ROFR preserves the value of our weeks and this proves it". " If they hadn't stopped using ROFR the prices wouldn't have bottomed out like they did.", etc, etc, etc. 

The increase in resale prices before Marriott resumes ROFR'ing will be ignored just like they ignored the precipitous drops in resale prices a couple of years ago when Marriott was still activelly using ROFR.  To the true believers anything good that happens to Marriot resale prices is thanks to ROFR,  anything bad that happens to resale prices is due to lack of ROFR, and anything that happens to resale prices that they can't attribute directly to ROFR (or lack of) is an anomaly. Marriott sure did get a lot of owners to drink the Kool-aid.


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## dioxide45 (Mar 5, 2010)

Looks like the argument is over. Might as well have the thread closed now.


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## AwayWeGo (Mar 5, 2010)

*Over, Shmoaver.*




dioxide45 said:


> Might as well have the thread closed now.


No use doing that.  

Before long the whole kerfuffle will just start up all over again, same as before, & then when that happens tombo will just have to bring us all laboriously to our senses once more. 

The man not only has a mind like a steel trap, but also the patience of a saint. 

Hats off to tombo. 

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


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## dioxide45 (Mar 5, 2010)

Do we only have these arguments in the Marriott forum? I have never seen them in other forums even though other developers have ROFR.


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## AwayWeGo (Mar 6, 2010)

*Is This A Great Web Site Or What ?*




dioxide45 said:


> Do we only have these arguments in the Marriott forum? I have never seen them in other forums even though other developers have ROFR.


Fortunately for the rest of us, it's not necessary to have a Marriott timeshare _or_ to have ROFR in order to participate in the TUG-BBS give & take on either subject or both. 

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


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## deedman (Apr 25, 2010)

belgian ROFLs taste good


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## ldanna (Apr 25, 2010)

deedman said:


> belgian ROFLs taste good




I like them, too. :hysterical:


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## Clemson Fan (Apr 25, 2010)

AwayWeGo said:


> No use doing that.
> 
> Before long the whole kerfuffle will just start up all over again, same as before, & then when that happens tombo will just have to bring us all laboriously to our senses once more.
> 
> ...



It's too bad then that tombo is wrong IMO.  He certainly has more patience then me in writing his highly detailed and intricate posts.  However, IMO his underlying assumptions are incorrect.  If your underlying assumptions are faulty, then so is the conclusion.

There are others that disagree and think he's right on the money which is fine.  That's what makes debates fun.


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