# Supply is shrinking....look for higher prices in 2009



## joepreston (Dec 29, 2008)

I will admit that anyone purchasing a timeshare in the past month or so has recieved amazing deals. Do the math ...some 5 star resorts picked up at 20 cents on the dollar RESALE MARKET!! not DEVELOPER MARKET. This represents a few times when people will be able to get some great values at great resorts if they are patient. 

Historically, Marriott exercisses the ROFR in the early part of the year, get their quota on let many sales go through at the end of the year. Not sure if this will be the same this year, but I would think Marriott will start to buy some come Jan and Feb.

Additionally, if they ever change their point system Which has been speculated), all buyers today would be grandfathered in...

Of course the economy is in tough shape, but adversity creates opportunity.  I know I am abuyer trying to find deals...what are your thoughts? Besides EBAY is there another source that is equivalent for a representation of timeshares for sale?

THanks

-Joe


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## Zac495 (Dec 29, 2008)

Joe, I'd contact Seth Nock. He is a very respected resale broker here on TUG - works very hard to get the best price. He'll go after what price you want (within limits). I think others will agree he's very trustworthy. Not saying ebay isn't great - the deals are amazing - just answering your question of another resource. Happy timeshare hunting!


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## FlyerBobcat (Dec 29, 2008)

joepreston said:


> I will admit that anyone purchasing a timeshare in the past month or so has recieved amazing deals. Do the math ...some 5 star resorts picked up at 20 cents on the dollar RESALE MARKET!! not DEVELOPER MARKET. This represents a few times when people will be able to get some great values at great resorts if they are patient.
> 
> Historically, Marriott exercisses the ROFR in the early part of the year, get their quota on let many sales go through at the end of the year. Not sure if this will be the same this year, but I would think Marriott will start to buy some come Jan and Feb......
> -Joe



Joe,

Can you say a little more on why you state:
_*Supply is shrinking....look for higher prices in 2009*_  and *I would think Marriott will start to buy some come Jan and Feb......*  ???

What logic and/or set of facts went into coming to that conclusion?  Just wondering....  Thx


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## Big Matt (Dec 29, 2008)

Tom,
I'm with you.  All I see is excess supply.

I get the local Williamsburg paper mailed to me (I grew up there and like to stay in touch).  You should see all of the foreclosures.  There have been about 5 thousand in Williamsburg across all the timeshares this year.  Think about that on a larger scale.


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## timeos2 (Dec 29, 2008)

*Buy only to use and at a great deal. ROFR is (thankfully) dead*



joepreston said:


> Historically, Marriott exercisses the ROFR in the early part of the year, get their quota on let many sales go through at the end of the year. Not sure if this will be the same this year, but I would think Marriott will start to buy some come Jan and Feb.



Historically Marriott had cash on hand to exercise ROFR AND a ready retail market to sell that inventory to once obtained.  Both have dried up and are unlikely to return to "normal" anytime soon if ever.  There is no need for new inventory when you can't sell what you already have and the money to finance isn't available even if you find a buyer. 

Not only is the supply of resales rising not shrinking but that trend is likely to accelerate not shrink in 2009.  Bad time to recommend buying unless you have a specific resort/week you have wanted for personal use and you see it as a deal. Those can be great bargains in this current environment.


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## Lawlar (Dec 29, 2008)

*What Am I Missing?*

"Supply is shrinking....look for higher prices in 2009"

Are you kidding me?????


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## Andar (Dec 29, 2008)

It seems that last year this time, Ebay had over 1700 time shares listed.  
Last night there were only 60 and only 1 in California.


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## m61376 (Dec 29, 2008)

There will be plenty of supply and likely prices will remain low until the economy rebounds. My personal opinion is that Marriott will again exercise ROFR when the credit market loosens, but that is likely not to be for some time. I think now is a great time to buy if you are purchasing for use; it may not be the bottom (some feel it will go significantly lower, others disagree), but if you are buying for use and get a good buy, your usage will likely compensate for any price fluctuation. Some people here contend now is the time to buy, some say wait- only you can decide. Many of us here have opted to pick up another unit or two lately.


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## ondeadlin (Dec 29, 2008)

Supply may be shrinking, but that's hardly an indication prices will rise.

There were 28 home sales in my subdivision in 2007. I tracked them because I planned to appeal my tax assessment. The other night, I went to the township's website and looked up how many there were for 2008. There were 12.

Now, if you look at Realtor.com there is clearly less supply (i.e. fewer homes for sale), but the reason for that is the prices are so low that people are only selling if they have to. And this smaller supply has done nothing to stop the slide, as the last 3-4 sales have been the lowest yet.

IMO, the slip in timeshare prices will stop if Marriott resumes aggressively exercising ROFR. But I don't believe prices will go up. They almost never go up except for new resorts where the developer is aggressively raising prices phase-by-phase. That approach won't work now IMO. So I think even with ROFR back, prices will just stop sliding.

And I have no confidence ROFR is coming back at most resorts any time soon.


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## joepreston (Dec 29, 2008)

Sorry...kind of new to posting


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## joepreston (Dec 29, 2008)

Just to answer and respond to a few points others have made:

I have been watching the "liquid market" for timeshare resales over the past year (Ebay) and while some of these sales may have been bogus...many were true, legitimate comps for the timeshare industry. Although Dioxide has created a great resource for all of us....less than 5% of actual resales are reported on his site. 

The comps show that the timeshare values have ALREADY been reduced by 50%. Last year there were 200 Marriott resales reported every month on Ebay. Today that number has been reduced by 60% and half of those auctions do not receive any bids at all (either unscrupulous sellers and/or price/reserve too high). 

It is speculation, but as everyone knows, Marriott is a public company and reports quarterly to their shareholders. As the way every business operates, they need to "restock inventory" levels for the year. Will they start in January?... I don't know. BUT, when they do....prices will likely run again. 

The underlying value is what does it cost to vacation every year? Maintenance fees at Newport Coast are less than $900. Any hotel on the coast in So. Cal will run $250 per night...just doing the math.

I guess I am trying to justify my potential purchase but I vacation at least two weeks a year and spend a lot of money on hotels, food etc...just thinking that with prices where they are today it would be hard to get hurt buying a quality timeshare that I plan on using every year.

It's funny, I am a stockbroker, and like the stock market (and maybe timeshares too) it is one of the few industries that when there is a 50% off sale... people are even more afraid to buy. Any other business you would have a line out the door.


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## BocaBum99 (Dec 29, 2008)

ondeadlin said:


> Supply may be shrinking, but that's hardly an indication prices will rise.
> 
> There were 28 home sales in my subdivision in 2007. I tracked them because I planned to appeal my tax assessment. The other night, I went to the township's website and looked up how many there were for 2008. There were 12.
> 
> ...



Now you are saying that "they almost never go up."  That's better than what you've previously said which is that they never go up.

Prices will go up if Marriott is able to sell at a Retail price at a specific resort that is significantly higher than the current resale market will support and there isn't enough supply to meet their demand.  It can be at any resort where Marriott has a sales presence, like Ocean Pointe, where the resort has been sold out for a while, but Platinum weeks are highly desirable.

It all depends on how fast the economy comes back and rental rates at those resorts firm up to the point where buying directly from Marriott makes sense again.  

Also, let's take a look at Marriott Ko'Olina where I was just at last week.  There is a resort right next to the Marriott which are whole condos called the Beach Villas at Ko'Olina.  They are selling for over $1M for a 2 bedroom, 2 bath luxury condo.  At 50 intervals and the lower cost units, you have the underlying real estate value of $20,000 for a single week.  In checking various rental sites, I found rentals at this resort for between $2000-4000 per week depending on season.  Not sure what they plan for occupancy rate, so the average weekly rent needs to be reduced by a factor to account for vacancies.

So, the real estate value for a Mariott Ko'Olina is roughly $20k.  If you can buy one is this very bad market for between $5000-10000, you have to believe that Marriott is destroying more than $5000-15000 through its timeshare program to believe that is a bad value.  And further that that destroyed value will NEVER be recaptured.

If you can pick up an oceanview annual 2br, 2bath Ko'Olina unit for $7500, that's not a bad deal.  The whole condo equivalent would be less than $400k for an oceanview unit on the beach front in Ko'Olina at that price.  That's a great deal in any market.

In addition, I asked various employees at the Marriott Ko'Olina what there occupancy rate is.  They said it averages well over 90% and was closer to 96% for most of 2008.  Marriott rents the 2br villas in the winter months for $644 per night.  The Kama'aina rate for locals is $322 per night or $2250 per week for a mountain view unit.  The maintenance fees are about $1400 per week.

If I could get an annual Ko'Olina for $7500 and Marriott can sell these units for $20k in the future which is significantly less than what they are selling for today, they will likely exercise any deals under $12k to provide them with a nice 40%+ margin.

If, and I repeat, If this scenario plays out, anyone who purchases these units for $7500 or below could see a nice increase in their equity.

It is possible that Marriott goes out of business, but if that happens, then it is more likely that the real estate will be sold off as condos and if they sell off for $1M for whole condos, then that weekly interval owner gets $20k instead of $12k.

You would really have to believe that Hawaii Real Estate will tank and never come back to believe that a $7500 purchase of a one week interval will NEVER be worth more than that $7500 to believe this is a bad deal.  In fact, several on this message board have bought units in this price range for eoy and annual packages and they all believe they got a steal.

All I am doing is putting some math around the numbers so that people can understand the risks, downside and potential upside of such purchases.


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## ondeadlin (Dec 29, 2008)

joepreston said:


> I guess I am trying to justify my potential purchase but I vacation at least two weeks a year and spend a lot of money on hotels, food etc...just thinking that with prices where they are today it would be hard to get hurt buying a quality timeshare that I plan on using every year.



I commend you for your honesty and self-awareness with this comment.

Bottom line? If you're buying to use, you love the resort, and you think the MFs are fair, that's all that matters. No need to justify anything past that whether prices rise or fall.


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## ondeadlin (Dec 29, 2008)

BocaBum99 said:


> Now you are saying that "they almost never go up."  That's better than what you've previously said which is that they never go up.



Boca, you've become the Joker to my Batman on this subject (or maybe I'm the Joker to your Batman, not sure, lol).

Your "underlying real estate value" theory has - IMHO - been debunked many times here on TUG, i.e. because there is no way of putting all your timeshare weeks back together to ever get that value out of the property, a timeshare is essentially a completely different product with little valuation correllation to the underlying real estate.

But it's a simplistic and appealing theory timeshare salesmen always love in my experience.

I find your comparisons of rental rates to MFs much more convincing.


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## thinze3 (Dec 29, 2008)

ondeadlin said:


> ... IMO, the slip in timeshare prices will stop if Marriott resumes aggressively exercising ROFR. But I don't believe prices will go up. They almost never go up except for new resorts where the developer is aggressively raising prices phase-by-phase. That approach won't work now IMO. So I think even with ROFR back, prices will just stop sliding.
> 
> And I have no confidence ROFR is coming back at most resorts any time soon.



When I bough my Waiohai several years ago of eBay, the eBay value went up $2-3K within 1-1/2 years of purchase. It is now down below what I paid, but not by much. Will Waiohai go back up in value? I don't know. But at least I know it can go up.

IMHO Marriott WILL begin exercising ROFR as soon as the market gets a bit better. I am not saying it won't get worse before it gets better, but it will get better. The reason Marriott will begin exercsisng ROFR is because Marriott cannot build timeshares cheaper than they can buy them at today's prices. Resale buyers will have to pay more than Marriott will match or those buyers will never own a Marriott.

Terry


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## BocaBum99 (Dec 29, 2008)

ondeadlin said:


> Boca, you've become the Joker to my Batman on this subject (or maybe I'm the Joker to your Batman, not sure, lol).
> 
> Your "underlying real estate value" theory has - IMHO - been debunked many times here on TUG, i.e. because there is no way of putting all your timeshare weeks back together to ever get that value out of the property, a timeshare is essentially a completely different product with little valuation correllation to the underlying real estate.
> 
> ...



Time will tell who is correct.  You could be correct and resale prices for prime timeshares will never come back.  It could be that Marriott resale timeshares at Ko'Olina will sell at $4000 or less from now on and never come back.   I just doubt it.  If I am right, it will most likely happen for the reasons I outline in this Marriott forum.

If we were talking about no name timeshares, I would be more inclined to agree with your conventional wisdom about timeshares.  Notice that I did not say that my assessment would work for ANY timeshare.  If we were talking about Orange Lake Country Club, for example, where 2br units are selling below $1000 and even below $500, I would agree with you completely.  I don't see those prices coming back under any circumstances.   Note that I am specifically limiting my assessment to prime resorts with high value brand names such as Marriott in prime locations.  Any past assessment does not really apply since we haven't seen such a set of circumstances as we see today.

At this point, we are merely speaking our own opinions.  Neither of us knows exactly what will happen.  You use what you have seen in the past in timeshares to predict the future.  The odds are in your favor because resort developers, including Marriott, take actions to devalue ownerships to enhance their own profit.

However, for certain Marriott's, I use input I have received directly from buyers, industry players and my own instincts about the market to make a prediction about the future.  And, my theories are only theories.  But, they are theories I am personally willing to bet on.

By the way, the argument about comparable condos will definitely work at the resort level for a Marriott such as Ko'Olina in a prime location.  Given my analytical background, I don't think I could ever make a sale working for a resort developer by selling the dream for 200-400% above the resale price of a timeshare interval.  I just can't sell something I don't believe in.  If I believe I am ripping you off, it will show in my lack of enthusiasm in the sales process.  I would hate my job.  However, if the condos down the street are selling at equivalent of $20k per interval, I think I can sell intervals at that price with total enthusiasm.  If Marriott is acquiring inventory at $12k or less, that may be a sustainable business model where everyone wins.  I could definitely sell them at $7500 without any guilt whasoever even with you telling the buyer everything you are posting on this message board.  I don't rely on deceit to make sales.  In fact the marriage made in heaven are matching up sellers who share your opinion with buyers who share mine.  Believe me, there are plenty in both camps.

Also, if this sales pitch works at the resort level, then it will create demand by Marriott at $20k.  If it creates enough demand, then Marriott will exercise ROFR.  If they do, then that will soak up the lowest price units therefore raising resale prices.  For certain timeshares, I truly believe there are counterbalancing forces to will tend to raise resale prices once we get beyond this very bad economic environment.


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## tombo (Dec 29, 2008)

Andar said:


> It seems that last year this time, Ebay had over 1700 time shares listed.
> Last night there were only 60 and only 1 in California.



There are currently 1230 timeshares listed of which 43 are California. There are also 48 Marriott.s listed for sale on e-bay currently. I am sure many timeshare wholesalers took a couple of weeks off for Christmas and New Years which is why there are fewer for sale than normal. By the second week in January i fully expect to see no less than 1500 for sale anytime you look and I also expect to see around 2000 e-bay timeshares for sale listed regularly through the spring. 

I feel sure that timeshare resaleprices will get even worse before they get better. No one can know for sure, but if I was to place a wager, I would bet that we haven't come close to hitting bottom yet. As more resorts get more foreclosures and deed backs, MF's will have to go up. When MF's go up, the resort will get more deed backs, it is a downward spiral. The only reason that fewer timeshare might be for sale in the short term is because those who paid the 2009 MF's might try to vacation at their resort one more time before putting it up for sale next fall before they have to pay 2010 MF's. If the economy doesn't mprove, there is no telling how cheap a timeshare (any timeshare) will sell for in the fall. I hope I am wrong as I have several weeks I need to sell.


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## BocaBum99 (Dec 29, 2008)

ondeadlin said:


> Boca, you've become the Joker to my Batman on this subject (or maybe I'm the Joker to your Batman, not sure, lol).
> 
> Your "underlying real estate value" theory has - IMHO - been debunked many times here on TUG, i.e. because there is no way of putting all your timeshare weeks back together to ever get that value out of the property, a timeshare is essentially a completely different product with little valuation correllation to the underlying real estate.
> 
> ...



One more thing.  One of the reforms in timesharing that I agree with PerryM on is that all timeshares should be ended after 30 years.  At the end of that 30 year period, the owners need to either vote to keep it as a timeshare with 75% of the vote or allow the property to be sold off with the proceeds split according to a pre-determined formula.  In this way, the value destruction that occurs when individual timeshare owners refuse to agree to a proposal to convert the timeshare to whole condos becomes moot.  And, a 30 year old timeshare needs to be redone anywya. The timeshare owners can always agree to sell the property to a timeshare developer who will build a new resort for the owners for a good price.


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## thinze3 (Dec 29, 2008)

Does anyone know if any of the Marriott resorts have such a stipulation? My Christie Lodge resort DOES have such a stipulation and is to be sold in 8 more years I believe.

Terry


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## timeos2 (Dec 29, 2008)

*Nice though t - isn't going to happen*



BocaBum99 said:


> One more thing.  One of the reforms in timesharing that I agree with PerryM on is that all timeshares should be ended after 30 years.  At the end of that 30 year period, the owners need to either vote to keep it as a timeshare with 75% of the vote or allow the property to be sold off with the proceeds split according to a pre-determined formula.  In this way, the value destruction that occurs when individual timeshare owners refuse to agree to a proposal to convert the timeshare to whole condos becomes moot.  And, a 30 year old timeshare needs to be redone anywya. The timeshare owners can always agree to sell the property to a timeshare developer who will build a new resort for the owners for a good price.



But that cannot be done retroactively without the same owners vote percentage neded that it would also take to disband the timeshare. Both are virtually impossible to do as it is nearly impossible to get the high percentage of owners to reply and to reach the super-majority "yes" vote required. 

A possible answer for newly formed timeshare associations IF the developers chose to form them with those rules but even that seems unlikely.


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## joepreston (Dec 29, 2008)

> *There are currently 1230 timeshares listed of which 43 are California. There are also 48 Marriott.s listed for sale on e-bay currently. *



I believe your numbers are incorrect. I just ran a search and got about half of what you indicate.


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## BocaBum99 (Dec 29, 2008)

timeos2 said:


> But that cannot be done retroactively without the same owners vote percentage neded that it would also take to disband the timeshare. Both are virtually impossible to do as it is nearly impossible to get the high percentage of owners to reply and to reach the super-majority "yes" vote required.
> 
> A possible answer for newly formed timeshare associations IF the developers chose to form them with those rules but even that seems unlikely.



If timeshare armagedon happens, I think it will be very possible.  If a resort goes bankrupt, shuts down operations and all title becomes unmarketable, I believe it is possible for such a termination of a timeshare plan with proceeds distributed to owners.

All the board has to do is to bankrupt the timeshare and shut it down completely.  The day is ceases operations, send out a proxy vote for the owners to either vote for 1) complete renovation and restoration of the resort for a special assessment of $20k each with MF at quadruple what it was the year before or 2) disband the timeshare plan, sell off the property, and distribute proceeds to current owners.

If that doesn't work because there are some owners who won't give up, try to get the local government to exercise eminent domain so that the rest of the owners can't be held hostage by a small number of obstinent owners.

I don't know if it would work, but it's an approach.


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## timeos2 (Dec 29, 2008)

*ROFR has been exposed as what it is*



thinze3 said:


> IMHO Marriott WILL begin exercising ROFR as soon as the market gets a bit better. I am not saying it won't get worse before it gets better, but it will get better. The reason Marriott will begin exercsisng ROFR is because Marriott cannot build timeshares cheaper than they can buy them at today's prices. Resale buyers will have to pay more than Marriott will match or those buyers will never own a Marriott.
> 
> Terry



Belaboring the beaten horse. ROFR does not raise the price sold or paid - it just changes who got the deal. Now that buyers know what the true value of the weeks are they aren't likely to be suckered a second time by the nonsense of ROFR and "needing to beat that price". They will just wait and bid low until the very small amount of inventory needed gets taken and then the bargains roll to them again. Meanwhile the sellers can't get the bite (real sales offer) required to trigger ROFR unless they price at the now low levels expected. And, if ROFR is back, that's what they will get. No more. The bogus "heyday" of ROFR is over and has been exposed as the sham it was always portrayed as by anyone that actually studied it.

Dave - As this thread IS discussing values as related to ROFR hopefully this input can stand.


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## tombo (Dec 29, 2008)

joepreston said:


> I believe your numbers are incorrect. I just ran a search and got about half of what you indicate.



I just copied and pasted these results from my e-bay searches:


1,236 results found for timeshares[ Save this searchSaved toMy eBay. ]



48 results found for Marriott timeshares[ Save this searchSaved toMy eBay. ]


43 results found for timeshares, California[ Save this searchSaved toMy eBay. ]


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## BocaBum99 (Dec 29, 2008)

timeos2 said:


> Belaboring the beaten horse. ROFR does not raise the price sold or paid - it just changes who got the deal. *Now that buyers know what the true value of the weeks are they aren't likely to be suckered a second time by the nonsense of ROFR and "needing to beat that price*". They will just wait and bid low until the very small amount of inventory needed gets taken and then the bargains roll to them again. Meanwhile the sellers can't get the bite (real sales offer) required to trigger ROFR unless they price at the now low levels expected. And, if ROFR is back, that's what they will get. No more. The bogus "heyday" of ROFR is over and has been exposed as the sham it was always portrayed as by anyone that actually studied it.
> 
> Dave - As this thread IS discussing values as related to ROFR hopefully this input can stand.



Thie above is an incorrect assumption.  There are always new buyers coming into the market who have no knowledge about what the historic price changes have been for timeshares.  All they see are the prices they find via the internet or other method.  If the price is offered at a price that makes sense to them and fits their budget, they buy.  

I have studied ROFR in quite some detail.  Much more than most on this message board.  As a result of that study, I have changed my opinion on what ROFR does.  I used to believe in the free market theory about what it does.  That belief is that it just distorts the market with only negative consequences.  Now, I believe it has a more positive effect than negative effect.

What happens that I didn't expect is that it creates a much more orderly resale market.  That orderly market makes up for the lack of efficiency in the market.  In the past, I only considered the negative impacts.  Experience showed me the positives.

The artificial price supports are very much mirages as we see now.  But, as long as they are in effect and the resort developer can sell them at retail prices, ROFR continues to help smart buyers and hose unknowing sellers.


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## thinze3 (Dec 29, 2008)

If 90% of all Marriott sales are developer sales, it seems hard to believe that the "very small amount of inventory needed gets taken" will actually ever get taken. If Marriott decides to use their ROFR option in lieu of a portion of its new construction, a new pricing equilibrium will be reached - at a higher level than it would be without ROFR.

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

If this happens, simple supply and demand laws will come into effect, and the prices will go up. When the economy strengthens, as the OP states, soon there will be shrinking inventory. One reason - because Marriott will be buying.

Terry


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## BocaBum99 (Dec 29, 2008)

thinze3 said:


> If 90% of all Marriott sales are developer sales, it seems hard to believe that the "very small amount of inventory needed gets taken" will actually ever get taken. If Marriott decides to use their ROFR option in lieu of a portion of its new construction, a new pricing equilibrium will be reached - at a higher level than it would be without ROFR.
> 
> John, its a really simple concept that you cannot seem to grasp. Today there are five resale purchases and no Marriott purchases. Tomorrow there will be five resale purchases and possibly 5, 10 or 20 Marriott purchases.
> 
> ...



EXACTLY.  I completely agree.


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## timeos2 (Dec 29, 2008)

thinze3 said:


> John, its a really simple concept that you cannot seem to grasp. Today there are five resale purchases and no Marriott purchases. Tomorrow there will be five resale purchases and possibly 5, 10 or 20 Marriott purchases.
> 
> If this happens, simple supply and demand laws will come into effect, and the prices will go up. When the economy strengthens, as the OP states, soon there will be shrinking inventory. One reason - because Marriott will be buying.
> 
> Terry



But that overlooks that NO ROFR occurs until the seller (owner) has a verified private sale already agreed to. Why would those buyers offer more tomorrow than they know they can buy for today? That's not the way things work. Ask all the major retailers with inventory they cannot sell because people are looking for better deals, not to pay more than "black Friday". And it also ignores that to getting that offer to buy - now and presumably going forward - the seller will have to offer the week at a low price. You can ask more even now but you won't get any interest from buyers. You certainly won't get a signed purchase offer with earnest money or down payment. Once you offer the low price and get the buyer only then does ROFR kick in - at that LOW price. Marriott isn't stupid enough to pay more for what they can get cheap - why would other buyers offer more? The seller only gets what he offered to sell for and that has to be low enough to attract a buyer. The whole concept is flawed and if I say more about why it is sure to be excised so I'll stop there. Read the past posts and the University Professors' explanations if you need to know the details.


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## m61376 (Dec 29, 2008)

timeos2 said:


> But that overlooks that NO ROFR occurs until the seller (owner) has a verified private sale already agreed to. *Why would those buyers offer more tomorrow than they know they can buy for today? That's not the way things work.* Ask all the major retailers with inventory they cannot sell because people are looking for better deals, not to pay more than "black Friday". And it also ignores that to getting that offer to buy - now and presumably going forward - the seller will have to offer the week at a low price. You can ask more even now but you won't get any interest from buyers. You certainly won't get a signed purchase offer with earnest money or down payment. Once you offer the low price and get the buyer only then does ROFR kick in - at that LOW price. Marriott isn't stupid enough to pay more for what they can get cheap - why would other buyers offer more? The seller only gets what he offered to sell for and that has to be low enough to attract a buyer. The whole concept is flawed and if I say more about why it is sure to be excised so I'll stop there. Read the past posts and the University Professors' explanations if you need to know the details.



I think you are ignoring the difference between these types of purchases and some other retail purchases that do work the way you have outlined. Yes, today major retailers are stuck with inventory and people are just looking to pay lower prices, and they are holding out for better sales because they feel they can get it at the lower price point. They pay the asking price today if they really want the item.

Timeshare buyers frequently really want what they are buying. If they lose a unit to ROFR, they likely will up their offering price if they keep on losing units and really want to purchase it. So, Marriott lucks out by nabbing the bargain-priced units, but ultimately anxious buyers oftentimes increase their offers.


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## larue (Dec 29, 2008)

m61376 said:


> I think you are ignoring the difference between these types of purchases and some other retail purchases that do work the way you have outlined. Yes, today major retailers are stuck with inventory and people are just looking to pay lower prices, and they are holding out for better sales because they feel they can get it at the lower price point. They pay the asking price today if they really want the item.
> 
> Timeshare buyers frequently really want what they are buying. If they lose a unit to ROFR, they likely will up their offering price if they keep on losing units and really want to purchase it. So, Marriott lucks out by nabbing the bargain-priced units, but ultimately anxious buyers oftentimes increase their offers.



I agree.  And also, most resale buyers are not going to waste their time setting up an escrow, sending in a $1,000 deposit, just so that Marriott can sweep in and take their deal.  Speaking from personal experience, we lost a Ko Olina mountainview to ROFR about 2 years ago at $23,000, so we went back in and offered and purchased a separate unit at $24,000 to avoid wasting our time twice.


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## BocaBum99 (Dec 29, 2008)

timeos2 said:


> But that overlooks that NO ROFR occurs until the seller (owner) has a verified private sale already agreed to. Why would those buyers offer more tomorrow than they know they can buy for today? That's not the way things work. Ask all the major retailers with inventory they cannot sell because people are looking for better deals, not to pay more than "black Friday". And it also ignores that to getting that offer to buy - now and presumably going forward - the seller will have to offer the week at a low price. You can ask more even now but you won't get any interest from buyers. You certainly won't get a signed purchase offer with earnest money or down payment. Once you offer the low price and get the buyer only then does ROFR kick in - at that LOW price. Marriott isn't stupid enough to pay more for what they can get cheap - why would other buyers offer more? The seller only gets what he offered to sell for and that has to be low enough to attract a buyer. The whole concept is flawed and if I say more about why it is sure to be excised so I'll stop there. Read the past posts and the University Professors' explanations if you need to know the details.



This explains why your view on ROFR is so flawed.  It is based on a completely wrong assumption.  What Larue says above is the rule of thumb, not the outlier.  When someone decides they want to purchase a Marriott and they learn about ROFR, they look for the best deal they can find that will pass ROFR.  If the broker is educated on the rate at which ROFR has been exercised recently, then the broker helps the buyer offer a price in a good range.  Some buyers don't want to wait and offer a bit more than the ROFR rate.  Others don't mind waiting and offer something slightly below ROFR.  Then, they keep raising their offer until they get it.  So, one buyer can end up taking several units off the market thereby reducing supply while keeping the same number of buyers. Reduced supply and same demand =  increasing resale price.


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## tombo (Dec 29, 2008)

m61376 said:


> I think you are ignoring the difference between these types of purchases and some other retail purchases that do work the way you have outlined. Yes, today major retailers are stuck with inventory and people are just looking to pay lower prices, and they are holding out for better sales because they feel they can get it at the lower price point. They pay the asking price today if they really want the item.
> 
> Timeshare buyers frequently really want what they are buying. If they lose a unit to ROFR, they likely will up their offering price if they keep on losing units and really want to purchase it. So, Marriott lucks out by nabbing the bargain-priced units, but ultimately anxious buyers oftentimes increase their offers.



Major Timeshare developers (and resellers) are stuck with a lot of inventory. Why would a timeshare shopper not hold out for lower prices on timeshares just like they do on other things they buy? Timeshares are after all simply a purchase. Also whether the purchase is a timeshare, a car, or a computer, I would assume that people really WANT any high ticket item they purchase or they wouldn't spend their money. 

Many people (like myself) lose a week to ROFR after winning a bid, paying a deposit, and setting up escrow only to have the week they paid more than anyone else would stolen from them. No one knows the percentages for sure, but I feel sure that the majority get mad and never bid on a week from that developer again. In this case the developer got the week for a price they wouldn't have offered the seller. The buyer who made the seller the highest offer he received never bids on any week in the future because they feel like doing so would be a waste of time. The next seller is wishing someone would offer him any reasonable price, but offers aren't made because buyers feel that what they would pay won't pass ROFR. The seller is stuck with a week he can't sell even though there are buyers that would offer him enough to buy the week if there was no ROFR. Everyone loses but the developer.

 I doubt that there are any people who will raise their e-bay bid higher than it takes to win the auction. If you win a bid for $3000 would you really offer the seller $5000 for a week you won for $3000 just in case it might be ROFR'd? If you are willing to pay more than it took to win the auction please bid on some of mine.

I think rather than raising offers, most buyers simply quit making offers. That is what I did. I sold a week that was ROFR'd from my buyer who offered me more money than anyone else (including the developer) offered me. I didn't want the developer to get the week, I wanted the buyer who made me the offer to get it, but he didn't.  I also had a week I purchased stolen from me by ROFR. I no longer make offers or submit bids for any week at any resort that has ROFR. I am an example of ROFR hurting sales.


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## AwayWeGo (Dec 29, 2008)

*Dare I Ask . . .*




tombo said:


> I am an example of ROFR hurting sales.


 *. . .* whether you are also an example of ROFR *=* ROFL ? 

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


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## timeos2 (Dec 29, 2008)

*Never let facts stand in the way of a good theory. It can hurt sales.*



BocaBum99 said:


> This explains why your view on ROFR is so flawed.  It is based on a completely wrong assumption.  What Larue says above is the rule of thumb, not the outlier.  When someone decides they want to purchase a Marriott and they learn about ROFR, they look for the best deal they can find that will pass ROFR.  If the broker is educated on the rate at which ROFR has been exercised recently, then the broker helps the buyer offer a price in a good range.  Some buyers don't want to wait and offer a bit more than the ROFR rate.  Others don't mind waiting and offer something slightly below ROFR.  Then, they keep raising their offer until they get it.  So, one buyer can end up taking several units off the market thereby reducing supply while keeping the same number of buyers. Reduced supply and same demand =  increasing resale price.



If that actually occurred on any regular basis (of course there are a few cases I'm sure - heck, some people pay list price for a car or rack rate for a room and then talk about the "deal" they got!) then the old saying, that by now everyone should be familiar with after all these years, "There's a sucker born every minute" (PT Barnum) apparently hasn't been understood. Perhaps that's why there were billions in sales of retail timeshares until recently? Anyone who would raise their bid after losing to ROFR really hasn't a clue. Anyone who paid attention as recently as the past 6 months and LOWERED their bid on any ROFR properties found out how well that works. And will always work if you stick to it. But it flies in the face of "must have it NOW" society we seem to have become. 

I hate those that prey on the uninformed, be it the high pressure Wastegate Weasel type or the resale agent that says ROFR "needs to be beaten" to get a week.  They shouldn't be able to sleep at night, but it most likely isn't a problem for either group.  That doesn't even account for the ruse that an owner "is better off if there's ROFR" as that usually goes hand in hand with the reasoning "to pay more now", never mentioning that you'll have a very limited audience of buyers and get less later when YOU want to sell.  It's unbelievable that people still fall for this stuff. We mock and marvel at Wyndham for selling points they know resell for pennies on the retail dollar days after the ink dries, yet some would promote ROFR as a benefit to buyers/owners which has the same end result.  See the PT quote above for the only plausible explanation. Folks will believe what they want but lets not support beliefs that have been proven false.  If they have the facts and still feel better thinking it doesn't (won't) apply to them and have the money to spend so be it. You cannot protect people from themselves. And no I told you so's later, as that just isn't nice. Snicker quietly to yourself please.


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## m61376 (Dec 29, 2008)

Tombo-
I guess it boils down to whether more people get turned off and don't want to try again or whether more people really want what they were trying to buy and will pay the price they need to to get it. In your case, you seemingly belong to the former camp, but I know personally that once I made a decision to buy, even though I lost out to ROFR I was determined to find another and was willing to accept that I would not be able to replicate my "bargain." There are many posts by others who persevered until they, too, got a unit past ROFR, generally paying more for the one they ultimately bought (although on occasion a lower price did, in fact, pass).

If everyone who lost a unit to ROFR vowed never to buy from Marriott again then your analysis would be correct. However, there are many, many instances of people taking the exact opposite approach.

And, while you are correct in saying that timeshare purchases are similar to other high ticket item purchases, I think for many people they are a bit different. Most people buy timeshares far less frequently than they buy other items and, oftentimes once they've made the purchase decision they really, really want it; they start to think about how great it would be to spend vacation time there, etc. This may not be true for the casual purchaser just looking to add another unit if he/she can get a good enough price, but for the buyer with none or minimal timeshare holdings I think once they have the impetus to buy they will likely go a little higher if they need to in order to buy what they want.


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## BocaBum99 (Dec 29, 2008)

tombo said:


> Major Timeshare developers (and resellers) are stuck with a lot of inventory. Why would a timeshare shopper not hold out for lower prices on timeshares just like they do on other things they buy? Timeshares are after all simply a purchase. Also whether the purchase is a timeshare, a car, or a computer, I would assume that people really WANT any high ticket item they purchase or they wouldn't spend their money.
> 
> Many people (like myself) lose a week to ROFR after winning a bid, paying a deposit, and setting up escrow only to have the week they paid more than anyone else would stolen from them. No one knows the percentages for sure, but I feel sure that the majority get mad and never bid on a week from that developer again. In this case the developer got the week for a price they wouldn't have offered the seller. The buyer who made the seller the highest offer he received never bids on any week in the future because they feel like doing so would be a waste of time. The next seller is wishing someone would offer him any reasonable price, but offers aren't made because buyers feel that what they would pay won't pass ROFR. The seller is stuck with a week he can't sell even though there are buyers that would offer him enough to buy the week if there was no ROFR. Everyone loses but the developer.
> 
> ...



What you are missing is that there is a difference between the price a person is willing to pay vs. the price they actually get.  When a person finds a unit for below the price they are willing to pay, they gladly accept it.  However, if they lose that unit to ROFR and they are willing to pay more, they would be willing to offer more to make sure they get it on the next deal.

If you drop out after losing one unit to ROFR, it doesn't change the demand curve.  The unit you would have bought was bought by Marriott.  However, if just ONE buyer decides to make another offer on another unit at any price, then the demand is increased by at least one unit more than if there was no ROFR.  The most I have ever heard is one buyer, 15 sales.  14 to Marriott.  1 to the buyer.


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## m61376 (Dec 29, 2008)

BocaBum99 said:


> The most I have ever heard is one buyer, 15 sales.  14 to Marriott.  1 to the buyer.


Wow- that's some record of perseverance. So- was the final price paid the highest or did they manage to get something through ROFR at a lower price than had been nabbed?


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## AwayWeGo (Dec 29, 2008)

*Why They Fall.*




timeos2 said:


> It's unbelievable that people still fall for this stuff.


I think folks drink the ROFR kool-aid in Emperor's New Clothes fashion.  They're told ROFR protects them because it keeps future resale prices of what they're buying for big bux from going "too low."

"Too low" for what ? 

Easy.  Too low for the riffraff to be able to buy in cheap, thereby giving the full-freight buyers the security of knowing they won't have to make eye contact at the resort with any bottom feeding bargain hunters.

It is semi-understandable that people who shell out big bux for an upscale high-end timeshare might not look favorably upon the prospect of having to rub shoulders in the pool or over at the workout room with the _el cheapo_ riffraff.  Better for the timeshare company to monopolize all the cheap buybacks than to let any just anybody become an upscale owner on the cheap. 

Of course, that doesn't mean resale timeshares aren't sold ever so cheap anyway now & then.  All it means is that the timeshare company exclusively gets to gobble'm up when they go cheap, which is perfectly OK with the full-freight buyers so long as it preserves the perceived rarefied air at their fancypants timeshares.  

For everybody else, ROFR *=* ROFL. 

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


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## tombo (Dec 29, 2008)

m61376 said:


> Tombo-
> I guess it boils down to whether more people get turned off and don't want to try again or whether more people really want what they were trying to buy and will pay the price they need to to get it.
> 
> If everyone who lost a unit to ROFR vowed never to buy from Marriott again then your analysis would be correct. However, there are many, many instances of people taking the exact opposite approach.



I know there are people from both camps. My feeling that most people will give up and quit offering is clouded by my personal feelings on the matter.
However, in addition to my feelings are the comments from my buyer who lost the week he bought from me to ROFR. He told me that he already owned a week at that resort I was selling and that he was trying to get 2 weeks so that he could stay 2 weeks in a row in Hawaii every year. However after having them steal my week from him he said that he would never buy another week at any of their resorts ever again at any price. Not a scientific study, but there are at least 2 of us who feel that way.

For some I am sure that losing their purchase to ROFR makes them more determined to get a week and they raise their price. I assume that the price raisers are the minority group. For others it is time to try again with the same maximum price they are willing to pay hoping to get one to pass ROFR for their price, not the developers. How many times they will try will vary, but I would think that most would give up after losing a couple of purchases to ROFR. For the last group, losing their purchase to ROFR makes the time and effort to try and buy again not worth it. For someone who doesn't have to have a particular brand, there are too many good timeshare choices available to play games with the developer using your money, time and effort.


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## tombo (Dec 29, 2008)

BocaBum99 said:


> If you drop out after losing one unit to ROFR, it doesn't change the demand curve.  The unit you would have bought was bought by Marriott.  However, if just ONE buyer decides to make another offer on another unit at any price, then the demand is increased by at least one unit more than if there was no ROFR.  The most I have ever heard is one buyer, 15 sales.  14 to Marriott.  1 to the buyer.




What you miss is the fact that I have purchased 15 different weeks since I lost my week I bought to ROFR and swore I would never make another ffer on a week that has ROFR. I have seen at least 5 Marriotts I would have purchased if there was no ROFR, and these 5 weeks all sold for less than I would have paid had I have bid or were listed for a asking price I would have paid. So by not getting the first purchase due to ROFR, I didn't buy a minmum of 5 (or more) weeks I would have bought in addition to the first week. Marriott got one from me, the next 5 sellers got a lot less or no offer at all since I didn't bid or make an offer thanks to ROFR.


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## BocaBum99 (Dec 29, 2008)

tombo said:


> What you miss is the fact that I have purchased 15 different weeks since I lost my week I bought to ROFR and swore I would never make another ffer on a week that has ROFR. I have seen at least 5 Marriotts I would have purchased if there was no ROFR, and these 5 weeks all sold for less than I would have paid had I have bid or were listed for a asking price I would have paid. So by not getting the first purchase due to ROFR, I didn't buy a minmum of 5 (or more) weeks I would have bought in addition to the first week. Marriott got one from me, the next 5 sellers got a lot less or no offer at all since I didn't bid or make an offer. All thanks to being robbed on my original purchase thanks to ROFR.



I agree that there is a population of potential purchasers that are turned off by ROFR and won't buy because of it.  I am actually in that same category.  I would have bought 100 of them by now if I could get them at the price I wanted and I had access to sellers at those prices.  I was absolutely convinced when I first started in timesharing that I was in the majority.  However, after spending 4 years studying it in more detail than most on this message board, I changed my opinion based on the facts that manifested themselves to me.  The bottom line is that ROFR has had a positive effect on resale prices when the developer exercises like Marriott and HGVC have done it.  When they start again, prices will rise.

I have been against buying Platinum Marriott's due to ROFR.  Same with Disney.  Now that ROFR has been temporarily put on hold, I think it is now time to buy so people on the lower end of the demand curve can find sellers at the price they are willing to pay.

If I didn't see with my own eyes what ROFR did for certain timeshare resorts, I would have never predicted or believed it.


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## tombo (Dec 30, 2008)

BocaBum99 said:


> I agree that there is a population of potential purchasers that are turned off by ROFR and won't buy because of it.  I am actually in that same category.  I would have bought 100 of them by now if I could get them at the price I wanted and I had access to sellers at those prices.  I was absolutely convinced when I first started in timesharing that I was in the majority.  However, after spending 4 years studying it in more detail than most on this message board, I changed my opinion based on the facts that manifested themselves to me.  The bottom line is that ROFR has had a positive effect on resale prices when the developer exercises like Marriott and HGVC have done it.  When they start again, prices will rise.
> 
> I have been against buying Platinum Marriott's due to ROFR.  Same with Disney.  Now that ROFR has been temporarily put on hold, I think it is now time to buy so people on the lower end of the demand curve can find sellers at the price they are willing to pay.
> 
> If I didn't see with my own eyes what ROFR did for certain timeshare resorts, I would have never predicted or believed it.




 If ROFR kept prices high they would only have fallen in the last couple of months when Mariott quit ROFR'ing. The reality is that prices kept falling all spring and summer while they were still ROFR'ing. The simple fact is that the week sells for what it sold for ,ROFR or not, all that changes is who finally owns it. The resort buys the weeks for current market value (the price it already sold for) when they can use the inventory, nothing else matters. The week sells for what a buyer is willing to pay with or without ROFR. 

The fact that the ROFR resorts consistently sell for the highest prices is because those are the best resorts, not because of ROFR. This is why the developer wants ROFR, to buy back a hot item they can resell for a profit. These resorts will sell for more money (ROFR or not) as is evident in the higher than average resale prices on Marriott currently even though ROFR hasn't been exercised in months. If there was ROFR on gold, and no ROFR on Silver and lead, the gold would consistently sell for more. Many gold owners would claim gold is worth more due to ROFR. The simple fact is that Gold is worth more, so it will sell for more whether there is ROFR or not. Another fact is that sellers would want ROFR on gold to make a profit because the high resale gives them a profit margin. The developers wouldn't try to put ROFR on lead because it wouldn't be profitable to them. There is ROFR on the best resorts only because the developers know that they can make money reselling those top resorts.The best resorts will always sell for the most money, and ROFR or the lack of ROFR won't change that.


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## BocaBum99 (Dec 30, 2008)

tombo said:


> If ROFR kept prices high they would only have fallen in the last couple of months when Mariott quit ROFR'ing. The reality is that prices kept falling all spring and summer while they were still ROFR'ing. The simple fact is that the week sells for what it sold for ,ROFR or not, all that changes is who finally owns it. The resort buys the weeks for current market value (the price it already sold for) when they can use the inventory, nothing else matters. The week sells for what a buyer is willing to pay with or without ROFR.
> 
> The fact that the ROFR resorts consistently sell for the highest prices is because those are the best resorts, not because of ROFR. This is why the developer wants ROFR, to buy back a hot item they can resell for a profit. These resorts will sell for more money (ROFR or not) as is evident in the higher than average resale prices on Marriott currently even though ROFR hasn't been exercised in months. If there was ROFR on gold, and no ROFR on Silver and lead, the gold would consistently sell for more. Many gold owners would claim gold is worth more due to ROFR. The simple fact is that Gold is worth more, so it will sell for more whether there is ROFR or not. Another fact is that sellers would want ROFR on gold to make a profit because the high resale gives them a profit margin. The developers wouldn't try to put ROFR on lead because it wouldn't be profitable to them. There is ROFR on the best resorts only because the developers know that they can make money reselling those top resorts.The best resorts will always sell for the most money, and ROFR or the lack of ROFR won't change that.



I don't agree.  First of all, nobody says that ROFR keeps prices high.  I am saying that ROFR provides temporary price supports and creates artificially higher prices points than would exist otherwise.

I believe the business model is such that if any resort developer exercised ROFR that it would provide temporary price supports for their resorts.  In other words, the price would be higher than the nominal resale market.  I am not claiming it will stay "high."  I am claiming it would be higher than if they stopped exercising. The reason for it is that it evens out an other wise chaotic marketplace by establishing more consistent price points in the open market.  In addition, it's because the resort developer can command a significant premium over the resale price.  As long as the developer has strong demand for a product at $X and the nominal resale value is less than .25X,  then ROFR will prop up resale prices when it exercises at .6X or lower.  That is the necessary pre-condition for propping up resale prices.  

The reason why prices dropped for Marriott and all other timeshares is that the over supply exceeded the demand from Marriott to sell at developer prices.  Once that balance shifts back, Marriott will start exercising ROFR again and prices will firm.  The math doesn't lie.  There are definitely scenarios that can be created where ROFR raises resale prices.


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## dioxide45 (Dec 30, 2008)

This really should be picked up here:

http://www.tugbbs.com/forums/showthread.php?t=79996&page=2&highlight=ROFR


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## dioxide45 (Dec 30, 2008)

----deleted-----


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## tombo (Dec 30, 2008)

BocaBum99 said:


> I don't agree.  First of all, nobody says that ROFR keeps prices high.  I am saying that ROFR provides temporary price supports and creates artificially higher prices points than would exist otherwise.
> 
> The reason why prices dropped for Marriott and all other timeshares is that the over supply exceeded the demand from Marriott to sell at developer prices.  Once that balance shifts back, Marriott will start exercising ROFR again and prices will firm.  The math doesn't lie.  There are definitely scenarios that can be created where ROFR raises resale prices.



Prices dropped because of free market principles, supply versus demand. The prices were dropping as Marriott continued to exercise ROFR, and prices would still be dropping if Marriott was still using ROFR for the same reasons, lots of supply with little demand. What possible help does Marriott give by buying a week from the original buyer for the same price it already sold for? If it sold for $5000, it sold for $5000. No price support here, just the simple theft of the sale from the only person who would offer the poor seller anything to buy his week. Marriott won't offer $5 or $5000 to buy the week (which would actually stabilize prices by setting a floor price below which no weeks could sell). You have to market your week, find a buyer, agree on a price, get a contract all on your own at any price the market will bear. After all of this is done a sale has occured. Marriott stepping in and stealing it if they can make a profit on it has helped no one but Marriott because the sale is over and the price has been finalized before Marriott even enters the picture. 


Once the demand increases and supply decreases Marriott will step back in and firm up prices? You have got to be kidding. First of all prices firm themselves up when supply decreases and demand increases, not an ROFR effect, simple economics. Prices will also increase when supply decreases and demand increases, once again not the result of ROFR, it is simple economics. When the market improves Marriott will start ROFR'ing again because it will be profitable for them since they will have buyers for their weeks. Since demand will increase they will be able to sell weeks they steal from the rightful owners for a profit. It will have nothing to do with firming up prices, it will have everything to do with simple economics. If the market is better resale, it will be a better market for developers too. 

To believe that ROFR works for sellers after watching the prices plunge this year while Marriott ROFR'd ,and then believing that when prices start to increase and Marriott starts ROFR'ing that the reason they are increasing is because of ROFR is poking one's head into the sand after drinking all of the Kool-aid. For any rational person 2008 should forever answer the question about whether ROFR helps stabilize prices or not. ROFR does not help prices, it only helps the developer. While we are dispelling myths, there is no tooth fairy or Santa Clause either.


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## AwayWeGo (Dec 30, 2008)

*It Works The Other Way Round.*




tombo said:


> Once the demand increases and supply decreases Marriott will step back in and firm up prices? You have got to be kidding.


Once the prices firm up, _then_ the timeshare company might (if it chooses) jump in & snap up the occasional lowball resales, just to keep'm out of the hands of the bottom-feeding bargain hunters. 

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


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## thinze3 (Dec 30, 2008)

Hypothetical in 2009:

Marriott developers sales begin to increase at Resort 'A'. Marriott expects to sell 10,000 timeshare weeks at Resort 'A' in 2009, and Marriott knows it can build those timeshares at $10K per week.

Resales have also increased, and in 2009 there is expected to be 2000 resales at Resort 'A'. Prices had fallen so far that the resale week, which was at $3K in 2008, has rebounded and is now at $5K per week. I am suggesting total equilibrium here (2000 sellers and 2000 buyers).

Suppose, a potential resale buyer tries twice to purchase a Marriott week at Resort 'A' for $5K, and he loses both sales to Marriott. At this point three things can happen.

One, the buyer decides he no longer wants a Marriott and walks (some may do this).
Two, the buyer decides to buy direct from Marriott for $30K (the same unit he lost through ROFR).
Three, the buyer trys again at $6 or 7K and becomes a new Marriott owner (most likely scenario).

If this scenario holds true, Marriott may actually buy TWO weeks through ROFR for every ONE that gets through, and may actually buy more weeks back than the 2000 suggested above.

Marriott has the option to construct 10,000 new timeshare weeks at Resort 'A' for $10K per week cost, or to buy through ROFR virtually every attempted resale at $5K and build the remaining 8,000 units at $10K. Most likely Marriott will choose the latter with a savings of over $10 million.

Remember there are only 2000 people willing to sell for $5K and Marriott buys them ALL. There are another X number of people willing to sell for $6K and even more at over $7K. Any potential buyer will simply have to pay a higher price to own a Marriott. Most of them will not walk away from Marriott and buy a Westgate or Wyndham. Even if a several of them do walk away the others will have buy at a higher price. As a result, the resale prices WILL increase.

Terry


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## tombo (Dec 30, 2008)

thinze3 said:


> Hypothetical in 2009:
> 
> Suppose, a potential resale buyer tries twice to purchase a Marriott week at Resort 'A' for $5K, and he loses both sales to Marriott. At this point three things can happen.
> 
> ...



First you assume every buyer will offer to buy 2 times. Once was all I tried and all I ever will.

I agree with part of option one. I walked away permanently as several others here have done too. I am not a buyer anymore even though I would have purchased at least 6 weeks if there was no ROFR. Marriott got one week from me for the price I was willing to pay, the seller didn't get a dollar more. The current sellers will never get a bid or offer from me (and others like me) reducing the price they sell for (if they can sell at all) and reducing the number of sellers who have a potential buyer. When I am selling something I want as many buyers as I can get competing for my product. Remember that increased demand increases prices.

Option 2 takes a rare breed. If you know about the resale market and know that you can buy weeks for $5000 or $6000, who would really say what the heck I am going to pay $30,000 so I don't get ROFR'd. If they do the old adage of a fool and his money are soon parted rings true.

Some will do option 3 and raise their prices. A few sellers will get a little more if they do raise their prices. Most people who are fiscally responsible set a maximum price they will pay for anything and stick to it or stay at least close.

Option 4 you don't mention is that they might keep offering $5000 or less hoping to get past ROFR which doesn't raise the price for the seller one cent, and could lower the price the sellers receive, or at least not raise the price one cent. If they keep doing that they will help move inventory although the prices won't go up.

 For all the buyers who would buy 2 or more Marriott weeks but get turned off by losing the week they bought to ROFR, there is no sale so Marriott has nothing to ROFR.

Any way it happens the week sells for what it sold for. Marriott could only raise the price if they offered more.

If Marriott would bid against me or make owners offers to buy their weeks, I wouldn't care how many weeks they bought. I personally will not do what it takes to buy a week that Marriott won't compete with me on just to lose it because they have a legal clause allowing them to steal it from me at the price I negotiated.

All of our theories are great, but the fact is that the sale prices kept plummeting in 2008 while Marriott was ROFR'ing. Finally Marriott ROFR'd so many that they don't want any more of their weeks even at these unheard of low prices. Now sale prices keep dropping and ROFR didn't stop it when they exercised it, and nothing has changed that trend since they stopped ROFR'ing. 

Prices will increase when demand increases and supply decreases (if that ever occurs), and that is fact not hypothetical scenarios.When that happens Marriott will start ROFR'ing again and some here will say thank goodness they are ROFR'ing again and raising the prices. Please remember what really happened in 2008 when ROFR did nothing to stop the downward slide or stabilize prices. Also please remember that when Marriott prices were at historical lows that Marriott did not ROFR even though according to them it is designed to help keep prices stable and high. Has there ever been a time ROFR was more needed? If it Is true that ROFR helps resale prices, where is Marriott and their ROFR when they are needed most and why aren't they ROFR'ing during timeshares darkest hours? 

Don't drink the Kool Aid. Marriott will ROFR again when it is good for them and they don't give a damn about the prices owners receive for their weeks. Well actually they do care when they are activelly exercising ROFR. If resale prices get too high Marriott won't ROFR them because they only want to steal cheap weeks they can resell for a good profit margin. Cheap resale prices are actually good for Marriott, but bad for owners who need to sell.


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## BocaBum99 (Dec 30, 2008)

tombo said:


> Prices dropped because of free market principles, supply versus demand. The prices were dropping as Marriott continued to exercise ROFR, and prices would still be dropping if Marriott was still using ROFR for the same reasons, lots of supply with little demand. What possible help does Marriott give by buying a week from the original buyer for the same price it already sold for? If it sold for $5000, it sold for $5000. No price support here, just the simple theft of the sale from the only person who would offer the poor seller anything to buy his week. Marriott won't offer $5 or $5000 to buy the week (which would actually stabilize prices by setting a floor price below which no weeks could sell). You have to market your week, find a buyer, agree on a price, get a contract all on your own at any price the market will bear. After all of this is done a sale has occured. Marriott stepping in and stealing it if they can make a profit on it has helped no one but Marriott because the sale is over and the price has been finalized before Marriott even enters the picture.
> 
> 
> Once the demand increases and supply decreases Marriott will step back in and firm up prices? You have got to be kidding. First of all prices firm themselves up when supply decreases and demand increases, not an ROFR effect, simple economics. Prices will also increase when supply decreases and demand increases, once again not the result of ROFR, it is simple economics. When the market improves Marriott will start ROFR'ing again because it will be profitable for them since they will have buyers for their weeks. Since demand will increase they will be able to sell weeks they steal from the rightful owners for a profit. It will have nothing to do with firming up prices, it will have everything to do with simple economics. If the market is better resale, it will be a better market for developers too.
> ...



You couldn't be more wrong.  First of all, when Marriott buys back a unit, that unit gets sold and there is still one unit of demand left over to buy another unit.  Do you seriously not understand that is a net increase of at least one unit of demand and that that demand isn't satisfied when the developer buys it back?  Even if only 1/2 of these buyers try a second time, that is a NET INCREASE in demand.  Do you believe that 100% of all buyers stop buying after ONE ROFR exercise?  For every example you come up with where a buyer dropped out, I have 100 examples of where they tried not only 2 times, but up to 15 times.  That is a serious increase of demand.

Also, do you believe a) that the developer market for resales will never return?  b) It will return, but their increased buying will NOT material impact resale prices.  I believe the developer market for resales will return and the amount of buying will positive impact resale prices.  Resale prices will increase when Marriott's ability to sell resales at developer prices creates enough demand that they start exercising ROFR in enough volume to be material the resale market.  It can happen, it has happened and I believe it will likely happen again.   Are you saying it has never happened and never will happen?  Or, it has happened, but will never happen again.  Or, it has happened, is not likely to happen again, but could happen?

You are entitled to your opinion.  We will see over time who is right.  It will be very obvious to everyone.  If resale prices firm up when the market comes back and Marriott exercises ROFR, I will be right.  If resale prices continue to fall and never return, you will be right.  Please bookmark this thread.  We will revisit it in a few years.


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## BocaBum99 (Dec 30, 2008)

tombo said:


> First you assume every buyer will offer to buy 2 times. Once was all I tried and all I ever will.



That's YOU.  One person does NOT make a market.  I've personally seen PRICES rise directly due to ROFR.  That is a DIRECT market observation, NOT my personal opinion.  Do you seriously believe it has NO effect?

I've laid out the pre-conditions for ROFR to raise prices.  I also lay out the conditions where it won't be true.  It is possible for ROFR to be exercised and resales to drop.

The bottom line is that if Marriott is buying back any units via ROFR, that is increasing demand for cheap units.  I STRONGLY believe that the demand created by that process is FAR greater than the reduction is demand caused by buyers droppping out after losing a unit to ROFR. 

Could I be wrong that resale prices will firm up when Marriott exercises ROFR?  Absolutely, because not all of the pre-conditions could come back into existence.  But, I could also be RIGHT.

The one thing I am ABSOLUTELY Positive about is that when Marriott is exercising ROFR that resale prices increase over the nominal resale prices that would exist if there is no ROFR.  The only question is whether or not there is enough buying back to raise resale prices.  It DOES happen and is likely to happen again.


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## joepreston (Dec 30, 2008)

I agree with Boca Bum completely. Why wouldn't anyone continue to to try to repurchase another unit if their original planned purchase was ROFR'd?  Do you actually feel that Marriott stole it from you? 

I am planning on buying and if by chance (slim) Marriott exercises ROFR...I'll continue until I get my week at my desired price. In the end I may have to pay more but that's the market....supply and demand. It will be significantly lower than developer cost.


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## thinze3 (Dec 30, 2008)

BocaBum99 said:


> ... The bottom line is that if Marriott is buying back any units via ROFR, that is increasing demand for cheap units.  I STRONGLY believe that the demand created by that process is FAR greater than the reduction in demand caused by buyers droppping out after losing a unit to ROFR ...



Why is it that this simple statement so difficult to understand?  

Terry


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## larue (Dec 30, 2008)

timeos2 said:


> "There's a sucker born every minute" (PT Barnum) . . . . Anyone who would raise their bid after losing to ROFR really hasn't a clue . . . . Flies in the face of "must have it NOW" society we seem to have become.



I guess this is my christening as a lowly guest, huh?  Someone who makes ad hominem arguments to make their point identifies the underlying weakness of his or her position.

In any case, my scenario was that I had been taking annual vacations to Oahu for three years since my daughter was born, paying a minimum of $3,000 a week for accomodations that were not close to those at Ko Olina.  Both my wife and I have stressful jobs (two attorneys) and came to the conclusion that we needed to force ourselves to take time away from work with our daughter in order to ensure that we wouldn't find an excuse to cancel each year.  As such, a timeshare purchase at a high end development was exactly what we felt (and which we have since confirmed) we needed.

I had a trip booked with the prospect of hotel reservations that were going to cost me $3,500for the week that I had purchased, reserved, and which was ROFR'd by Marriott.  As such, if I did not buy pretty much immediately when I did, I was goinng to be out another year's worth of hotel charges.

So, raising my offer by $1,000 (still $16,000 below what Marriott was selling for at developer prices) meant that I got to stay in my 1 bedroom villa for nothing (my offer included the seller paying the year's maintenance fees) and I traded in the hotel efficiency unit for a 2 bedroom at Newport Coast Villas the following April that allowed me to cancel my $325 per night room reservation at the Huntingon Beach Hyatt.  All told, raising my offer by $1,000so that I could close the deal saved me around $6,000 in room rates for vacations I had already booked, which netted out to $5,000 after raising my offer.

Not a clue? Hardly.


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## AwayWeGo (Dec 30, 2008)

*Ad Hominem, Shmad Hominem.*




larue said:


> I guess this is my christening as a lowly guest, huh?


Not at all. 

Guests get _ad hominemmed_ around here just the same as veteran members. 

TUG-BBS features equal opportunity _ad hominemming_ -- no special treatment for guests. 

If you're signed up here, you're 1 of us. 

Welcome. 

And Happy New Year. 

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


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## tombo (Dec 30, 2008)

BocaBum99 said:


> That's YOU.  One person does NOT make a market.
> 
> Could I be wrong that resale prices will firm up when Marriott exercises ROFR?  Absolutely, because not all of the pre-conditions could come back into existence.  But, I could also be RIGHT.
> 
> ...


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## gmarine (Dec 30, 2008)

thinze3 said:


> Why is it that this simple statement so difficult to understand?
> 
> Terry



They will never get it. No matter how much you explain it or how much evidence you show, they will never get it. I gave up trying to explain it.

Remember the the movie City Slickers. " The cows could program a VCR by now".


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## m61376 (Dec 30, 2008)

tombo said:


> BocaBum99 said:
> 
> 
> > That's YOU.  One person does NOT make a market.
> ...


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## Latravel (Dec 30, 2008)

Larue, you make perfect sense.  It is so easy to understand.  If someone wants a unit, they will offer more to get it if they know a lowball price will make them lose the deal.  


_"Please explain how the prices could have fallen so low while the wonderful ROFR was being exercised in all of it's price propping glory."_

Only until recently has Marriott seemingly completely stopped exercising ROFR.  Before then, Marriott was buying some, leaving others so some lesser priced units may have passed. The decrease was gradual and now that ROFR has stopped, prices have dropped significantly and people who were not willing to pay for a Marriott have suddenly become owners.


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## BocaBum99 (Dec 30, 2008)

tombo said:


> Why is this so hard to understand? Does anyone here want to say that the resale prices in August of 2008 were anywhere close to the resale prices of August 2007? The fact is that the prices were much lower this year than they were at the same time last year, and we all know that Marriott was ROFR'ing the whole time.* Please explain how the prices could have fallen so low while the wonderful ROFR was being exercised in all of it's price propping glory*.



Yes, I can explain it.  It's actually quite simple.  For any given market and any given set of market conditions, there are a set of forces acting on that market that either increases or decreases demand or increases or decreases supply.  ALL of those forces change the nature of the equilibrium point where the supply and demand curves for the market meet.  That equilibrium point is the price point at which the number of buyers equals the number of sellers.

If you change any of the variables in the market, aggregrate supply or demand can change.  When it does, it changes the equilibrium point of the market.

For instance, the advent of PCCs shifted the supply curve by making it easier for timeshares to be put onto the market where some sellers could never figure it out.  In addition, since they were paid upfront, the sales prices that they would be willing to accept in a sale tended to lower the average resale price.  This is a macro economic force impacting the supply curve shifting it toward lower prices given a fixed demand curve.

Another item that effects resale demand are number of tours provided by resort developers.  Most resale brokers with experience will tell you that a certain percentage (some use as much as 10%) of tour no buy clients end up buying a resale.  So, if the number of tours provided by resort developers increases significantly, so will overall demand for resale product.

ROFR is also a driver of demand.  There is debate on this message board whether or not the amount of ROFR buy backs is enough to change the demand curve.  Some on this board believe it does.  Others don't.

So, just because you have seen prices decrease over the period you have been watching just means that those other forces are more powerful in changing either the supply or the demand curve such that average resale prices decrease during that time period.  It doesn't mean that ROFR isn't lifting prices.  It is just saying that it isn't lifting it enough to overcome other forces which are much more powerful at that time.

In order to believe that ROFR will at certain resorts lift resale prices, you just have to believe that the amount of buying is large enough to soak up the available supply to a point that prices rise.  It can happen.  It has happened.  And, it is likely to happen again.  Time will tell.


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## tombo (Dec 31, 2008)

BocaBum99 said:


> So, just because you have seen prices decrease over the period you have been watching just means that those other forces are more powerful in changing either the supply or the demand curve such that average resale prices decrease during that time period.  It doesn't mean that ROFR isn't lifting prices.  It is just saying that it isn't lifting it enough to overcome other forces which are much more powerful at that time.
> QUOTE]
> 
> Reversing your theory works the same way. You claim ROFR was raising prices as the market fell, but just not enough to overcome the bad economy.You also feel that when the market goes up, ROFR will help reverse the downard spiral. I feel that ROFR lowers prices, but not enough to notice in the face of the more powerful forces of supply, demand, and the overall economic conditions.
> ...


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## ondeadlin (Dec 31, 2008)

tombo said:


> Prices dropped all spring and summer while Marriott was exercising ROFR. Why would they suddenly rise if they started ROFR'ing again? Prices will firm up and rise when the economy improves and demand increases. When demand increases Marriott will want to steal more inventory because they will have buyers. The prices will increase without ROFR just as they fell while Marriott was using ROFR.
> 
> Why is this so hard to understand? Does anyone here want to say that the resale prices in August of 2008 were anywhere close to the resale prices of August 2007? The fact is that the prices were much lower this year than they were at the same time last year, and we all know that Marriott was ROFR'ing the whole time. Please explain how the prices could have fallen so low while the wonderful ROFR was being exercised in all of it's price propping glory.



Winner winner, chicken dinner.

Even when Marriott was exercising ROFR, prices were dropping, and dropping fast.

ROFR has become some folks almost mystical hope of recovering thousands lost on timeshares, but for the vast majority of those folks, it ain't going to happen, even if - and it's a big if right now - ROFR ever comes back.


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## AwayWeGo (Dec 31, 2008)

*Theories, Shmeeories.*

_Whoa !_ 

You guys are overthinking & overcomplicating this whole ROFR deal. 

It doesn't take that much brainpower to figure it out. 

The claim is that ROFR keeps resale prices from going "too low."

It doesn't do that.  No way José. 

Resale prices can & sometimes do go way low -- bargain-basement, fire sale, panic sale, distress sale, call it what you will. 

When that happens & the best price some seller can get for some timeshare that's offered for sale is "too low," the excessively low price is all that the seller receives.  There's no price support there.  The minimal price is still "too low" any way you shake it.  All ROFR does is prevent anybody except the timeshare company from buying those "too low" resales. 

ROFR does nothing to prevent resale prices from going "too low."

ROFR says nothing about prices 1 way or another -- too low, too high, or just right. 

All ROFR says is that nobody but the timeshare company gets to buy the lowball resales -- _if_ the timeshare company chooses at its own whim, with the timeshare company & only the timeshare company deciding what is or isn't lowball.  

ROFR is not a price floor. 

ROFR is not guaranteed buyback. 

ROFR *=* ROFL. 

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


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## BocaBum99 (Dec 31, 2008)

tombo said:


> BocaBum99 said:
> 
> 
> > So, just because you have seen prices decrease over the period you have been watching just means that those other forces are more powerful in changing either the supply or the demand curve such that average resale prices decrease during that time period.  It doesn't mean that ROFR isn't lifting prices.  It is just saying that it isn't lifting it enough to overcome other forces which are much more powerful at that time.
> ...


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## BocaBum99 (Dec 31, 2008)

ondeadlin said:


> Winner winner, chicken dinner.
> 
> Even when Marriott was exercising ROFR, prices were dropping, and dropping fast.
> 
> ROFR has become some folks almost mystical hope of recovering thousands lost on timeshares, but for the vast majority of those folks, it ain't going to happen, even if - and it's a big if right now - ROFR ever comes back.



Just to make it clear.  I am not in the camp that believes those who bought at a high price will be saved by ROFR.  I never argued that point and I did not recommend purchasing Marriotts when ROFR was being executed since I could never get a below market deal.

The bottom line is that when the prices were falling, supply overwhelmed resale demand and no matter how much buying Marriott did, prices dropped.

There will be a time when supply and demand conditions change where Marriott buying back via ROFR WILL impact the price.  Not all resorts and not across the board, but it will happen.  I'm sure of it.

By the way, I am NOT recommending this as an investment strategy.  I am recommending this as a buy to use/exchange strategy.  You can't make a lot of money doing this buy and hold.  You'll run out of capital before you make enough to earn a living.  The general principle in timesharing is that prices decrease over time.  The best this strategy does is reduce the overall cost of your vacations over time.  My goal is zero cost vacations.  And, I've done that for years. 

If you want to make money in timesharing, you have to buy and flip quickly or broker transactions.  Then, it doesn't matter if the prices are declining or rising.  It only matters that you can find inventory and you have access to buyers.  This is very easy to do in virtually any market for timeshares since the standard deviation of purchsae price is so high.  If a timeshare has a $5000 market price, you can always buy them for $2000 and sell them for $4000 to leverage the inefficiency of the resale market.


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## tombo (Dec 31, 2008)

BocaBum99 said:


> tombo said:
> 
> 
> > All I am saying is that ROFR adds another buyer into the market that can be big enough to influence the demand curve for one or many resorts.  You either believe this premise or you don't.  I believe it.  You and many others don't.
> ...


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## BocaBum99 (Dec 31, 2008)

tombo said:


> BocaBum99 said:
> 
> 
> > tombo said:
> ...


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## tombo (Dec 31, 2008)

You totally ignore where I show that YOU, not an imaginary buyer, became a potential buyer only after ROFR was stopped. This is from your own posts. Then you ignore the fact that we both know that most TUGGERS (if not all) will no longer be in the market as a buyer once Marriott starts using ROFR again.

ROFR reduces the number of buyers (like yourself), lowering demand, which lowers prices.

Removing ROFR increases the number of buyers, increasing demand ,increasing prices. Simple eco 101 stuff here, and you are a perfect example of one who wants to buy only after ROFR is removed.


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## BocaBum99 (Dec 31, 2008)

tombo said:


> You totally ignore where I show that YOU, not an imaginary buyer, became a potential buyer only after ROFR was stopped. This is from your own posts. Then you ignore the fact that we both know that most TUGGERS (if not all) will no longer be in the market as a buyer once Marriott starts using ROFR again.
> 
> ROFR reduces the number of buyers (like yourself), lowering demand, which lowers prices.
> 
> Removing ROFR increases the number of buyers, increasing demand ,increasing prices. Simple eco 101 stuff here, and you are a perfect example of one who wants to buy only after ROFR is removed.



I am NOT ignoring it.  There is a percentage of buyers whose willingness to pay is less than the ROFR rate.  Those buyers drop out of the market.  But, their demand is NOT removed from the market because Marriott replaces it by purchasing the unit and selling it to the developer market.  If anything, the Marriott buyback is reducing supply to the resale market.

In addition, some buyers, who lost their unit to ROFR, end up making additional offers for a higher price.  Their total demand is equal to the number of units that Marriott bought from sellers plus the one they ultimately buy.

So aggregate demand for the resale market = total demand without ROFR + excess units bought back by Marriott.  That is a net INCREASE in demand.

Given stable total demand without ROFR and constant supply, Resale prices INCREASE when net increase in demand is a high percentage of total demand.

When there isn't stable total demand due to economic conditions.  Or, if supply is dramatically increased due to new market entrants such as PCCs, then those factors dominate.  In other wise stable conditions and Marriott is making sales at a very high multiple over resales, then ROFR increases prices.

I am directly addressing your issues.  You are not acknowledging that my logic can be true.  I believe it is.  Why don't you set up a thought experiment and tell me what would have to be true for my logic to become reality.  It's not sufficient to say it can never happen. Prove it logically.

I set up the experiment that can prove it one way or another.  You just make claims that it isn't true.  Let's see your proof.


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## thinze3 (Dec 31, 2008)

tombo said:


> You totally ignore where I show that YOU, not an imaginary buyer, became a potential buyer only after ROFR was stopped. This is from your own posts. Then you ignore the fact that we both know that most TUGGERS (if not all) will no longer be in the market as a buyer once Marriott starts using ROFR again.



The reason Boca and I and many others here on Tug are now in the market is because prices are extremely cheap, not because Marriott is not exercising its ROFR. It is probably more accurately stated that prices are cheap partly because of the fact that Marriott has stopped executing ROFR.

Truth is, if Marriott were still executing ROFR and prices had fallen to where they are now, I would have still gone into contract on two more Marriotts just the same. My decision was based soley on cost, not ROFR.

I do hear yours and John's points but don't agree with most of them.
Funny how people see things so differently.  

Terry


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## BocaBum99 (Dec 31, 2008)

thinze3 said:


> The reason Boca and I and many others here on Tug are now in the market is because prices are extremely cheap, not because Marriott is not exercising its ROFR. It is probably more accurately stated that prices are cheap partly because of the fact that Marriott has stopped executing ROFR.
> 
> Truth is, if Marriott were still executing ROFR and prices had fallen to where they are now, I would have still gone into contract on two more Marriotts just the same. My decision was based soley on cost, not ROFR.
> 
> ...



People have the right to their opinions.  If the goal is merely expressing a strongly held view on a message board, then that's one purpose for posting them.  And, it can be very entertaining. Others make real life decisions based on that logic which is when it becomes much more important to get it right and to minimize the risk of any decision.  It is important for each person to know which category they fit in.  And, if you are making life decisions that you understand what you are getting involved in and why.  When it makes sense and when it doesn't.

In every business I have been in, I have made a living based on my ability to predict the future.  So, I spend an extraordinary amount of time setting up models for what is likely to happen under various circumstances. Then, I place huge bets on them and do my best to protect the downside risk.

This whole debate has actually helped me to refine my thinking about ROFR.  I understand why those who believe ROFR has no impact on prices believe what they do.  And, that has helped me to clarify in my mind when it actually will vs. when it won't.  I found that to be very helpful.

I find it to be very naive for either side to say that something is true in all cases.  The reality is that ROFR sometimes has an impact and sometimes doesn't. Hopefully everyone reading these threads are more clear under what circumstances that is true in a way tha helps them make their own decisions whether it to buy, sell, not buy, not sell or simply avoid problems.


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## thinze3 (Dec 31, 2008)

These discussions have made me think about it as well. _"Maybe I shouldn't have pulled the trigger on the second unit (DSV)."_ But, knowing the market, I thought that the price was just too good to pass.

I plan on using the BeachPlace I just purchased much more often than the DSV unit. I actually bid over $10K last year for a BeachPlace alone and wasn't even the winner. Now I just bought TWO platinum 2BR units for less than $10K.

Because DSV offers AC's and rents well, I have figured that it will work out well for me.  I, like you would probably do, wrote it all out on a spreadsheet and realized that if all goes as planned (big if), I can actually have one free vacation, an AC for a second, and 100K MR points each odd year for free by simply splitting and renting a few units. On even years I could get the same without the MR points. That includes all MF's, taxes, trading fees, AC fees, and advertising fees.
NOT BAD  


Terry


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## tombo (Dec 31, 2008)

BocaBum99 said:


> People have the right to their opinions.
> 
> I find it to be very naive for either side to say that something is true in all cases.  The reality is that ROFR sometimes has an impact and sometimes doesn't. Hopefully everyone reading these threads are more clear under what circumstances that is true in a way tha helps them make their own decisions whether it to buy, sell, not buy, not sell or simply avoid problems.



 I agree. I never said that prices are never raised thanks to ROFR, sometimes they are. I also never said that more weeks are never sold thanks to ROFR, because that happens too. My main point is that OVERALL I feel like ROFR reduces prices by reducing the number of buyers. 

I decided to not buy based on ROFR because of the week stolen from me, and because of a week I sold that the rightful buyer never got. I really wanted the guy that offered me a fair price to be the owner because if it were not for his offer I might still own it, but the developer stold it. By the way he also has sworn to never buy another week at a resort that has ROFR even though he owns another week at this resort. 

I advise others against buying a resort with ROFR just like I would advise them against buying a car, a home, or anything of value if the seller put a clause in there prohibiting the owner from selling it to who they want for any price they want. If you lease you don't own, so no control, no problem. However if I am going to buy anything with my money, I am going to own it, and I can sell it to a friend or family member for $1 if I want to because I own it. I also don't advise people to buy ROFR resorts because I think ROFR reduces not only the price but the number of offers or bids you will receive if you ever need to sell it. These are my feelings, I don't expect everyone to agree.

As far as proving the point, would someone please re-post the link to the article detailing how ROFR hurts prices which was authored to the best of my recollection by several Ivy League professors. After that is posted please feel free to disprove all of the facts in the article. 

I don't have any more time right now to look for that link as I am packing for a  long weekend in New Orleans and getting ready for the Sugar Bowl where I will cheer loud and hard for the Crimson Tide. Will debate again after vacation. Hope it doesn't get too boring in the forums with me not here to stir the pot.

John I leave the stirring to you.....

Roll Tide Roll


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## BocaBum99 (Dec 31, 2008)

Over the past 4 years, my opinion of ROFR has evolved.  And, it has evolved just in the past 2 weeks given these threads.

At first, I believed that ROFR was the worst thing ever created and that all it ever did was hurt sellers and distort the market.  I claimed that it should be illegal and I made arguments for how it could be viewed as restraint of trade.

Then, after I saw what happened to HGVC points when they started their ROFR program.  I had to concede that ROFR indeed had an impact on prices.

Then, when I met several resale brokers and companies who represent thousands and thousands of sales per year and how they were actually selling, I concluded that there was absolutely a way to make significant money when ROFR is and isn't being exercised.  And, that ROFR was impacting the resale prices and there was a way to navigate ROFR in a way that educated buyers and brokers could work together to outsmart the resort developers with their own ROFR program.

Then, we had this debate, where I had to think through all of the experiences I had and synthesize all of the data and arguments into a coherent industry view.

My grand unified theory of ROFR is now this:

1) The laws of supply and demand rule over everything else.  In general, ROFR and standard macroeconomic theory prevails when it comes to predicting what will happen when ROFR is vs. isn't exercised in any given market.  All predictions for what will happen must start here with puts and takes based on the market specifics of the timeshare industry and the single resort economics.

2) The timeshare industry is unique in 2 ways which provide outlier cases in which ROFR actually can and does help resale prices more so than would be predicted by general macroeconomic theory.  Those two attributes are:
    a) There are distinct markets that are mostly independent for developer vs. resales of timeshare units.  The developer exercises ROFR under certain market conditions in a way that removes supply from the resale market and offers it to the developer market instead.  That action moves the demand curve.  It's possible where that demand can be a significant portion of total resale demand.
    b) The timeshare industry is one of the most inefficient markets known to human kind.  After 40 years of existence, there is still a tremendously high standard deviation from mean of sales prices on any given day of the week.
This lack of an organized market is positively impacted by ROFR because it reduces the standard deviation of prices in an articial way.  That market making function can be helpful to smart owners.

3) ROFR absolutely hurts uneducated sellers because it does remove buyers from the market increasing their likelihood of dumping their units at firesale prices.  However, it helps educated sellers and brokers who know how to leverage the ROFR game against the developer so that their program turns more into a buy back program.  Just like buying back stock, it offers some price support to these smart buyers.

4) Although demand is increased by ROFR, it isn't always large enough to impact the demand curve.  To determine which markets are likely to be impacted, the overall market for developer units vs. the resale market needs to be analyzed to see when the buyback program can be large enough to actually impact demand.  Sometimes it is.  Sometimes it isn't.

5) It's a good time to buy if and when the price point an individual is willing to pay results in a potential deal.  This could be above or below the ROFR rate.   If your price point is below the ROFR rate, you will be removed from the market until ROFR is eliminated.  The only time a person can buy below ROFR is when exercising stops.  So, latent demand can is will be satisfied in these periods.  It could be the best time to buy for many market participants.

6) Buyers who purchased when ROFR is being exercised will see their resale prices take a greater than average hit when ROFR stops being exercised.  So, if you want to buy at that level, just make sure you use a greater than average depreciation factor to cost justify the purchase.  Those who buy below the exercise rate can use a lower depreciation factor.  I don't recommend planning for appreciation, but there is some upside potential in certain circumstances.

7) When evaluating the likelihood of whether or not resale prices will firm, it is very important to evaluate the overall circumstances of a given resort.  It is possible to make a low risk purchase by buying to use.  Any upside reduces the cost of using.


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