ROFR

[OldGuy]

A program offered by corporate-controlled timeshare operations that acknowledges the failure of the resale market by creating the illusion of value through artificial prices, so as to justify the inflated prices of current sales, the majority of which is marketing expense.

 

[davidvel]

A program offered by corporate-controlled timeshare operations that acknowledges the failure of the resale market by creating the illusion of value through artificial prices, so as to justify the inflated prices of current sales, the majority of which is marketing expense.

Ok, I'll bite. What do you mean artificial prices? How many (%) people that buy from developer have any concept of rofr in the context of timeshare?

And rofr is not a "program offered," but an option right conferred to the developer by the developer.

 

[OldGuy]

Take it away, and the prices people get when they sell, if they can, will not be artificial. But, use whatever term you prefer for "not real market".

But, agreed, it is for the developer's benefit.

Oh, I see you own in a developer-controlled operation.

 

[Panina]

A program offered by corporate-controlled timeshare operations that acknowledges the failure of the resale market by creating the illusion of value through artificial prices, so as to justify the inflated prices of current sales, the majority of which is marketing expense.

Retail prices are still way below developer prices even with their right to exercise ROFR. Owners still have the option to sell as low as they want, it’s the buyers who loses out because of ROFR because the developer knows they can resell a prime week for a hefty profit. For non prime weeks markets price prevails because ROFR isn’t taken as often.

I don’t feel ROFR has anything to do with artificial high developer prices. Now talk about the systems where you buy something and in resale the new owner loses many of the benefits you had, that changes the scenario.

 

[OldGuy]

In real estate, right of first refusal is a provision in a lease or other agreement. It gives a potentially interested party the right to buy a property before the seller negotiates any other offers. It's typically written up before a seller puts a property on the market.

This clause allows the seller to market the home at will, but before any offers can be accepted, the seller must notify the original interested buyer who has the right of first refusal. At that point, the person with the right of first refusal can decide whether or not to buy the property. If this person declines, the seller is free to negotiate with other people who are interested.

Typically, the "interested party" is a neighbor, or neighbors, who want the right to have first shot at nearby property. Sometimes in community boat docks, ROFR allows those already owning a slip to be able to have a say in who else can own a slip. I can't rule that out as far as neighborhoods go, either.

 

[OldGuy]

I don’t feel ROFR has anything to do with artificial high developer prices.

How ROFR can benefit the company
Let’s say you own a timeshare at a resort where the company still has an active sales department. Here’s an example of how the Right of First Refusal scenario plays out in their favor.

1. They’re selling timeshares at full retail prices. Let’s use $30,000 as an example.
2. You’re selling your timeshare as a resale, and resale prices are typically quite far below the original retail. Let’s say the going resale price for yours is $3,000.
3. When you find a buyer for your resale at $3,000, the company can step in and purchase it for that price.
4. They can then resell that $3,000 timeshare for the $30,000 retail price. Nice profit, right? In theory, they could do this over and over again as consumers buy and sell the same timeshare.

https://timesharegame.com/timeshare-right-of-first-refusal/

 

[TravelTime]

How ROFR can benefit the company
Let’s say you own a timeshare at a resort where the company still has an active sales department. Here’s an example of how the Right of First Refusal scenario plays out in their favor.

1. They’re selling timeshares at full retail prices. Let’s use $30,000 as an example.
2. You’re selling your timeshare as a resale, and resale prices are typically quite far below the original retail. Let’s say the going resale price for yours is $3,000.
3. When you find a buyer for your resale at $3,000, the company can step in and purchase it for that price.
4. They can then resell that $3,000 timeshare for the $30,000 retail price. Nice profit, right? In theory, they could do this over and over again as consumers buy and sell the same timeshare.

https://timesharegame.com/timeshare-right-of-first-refusal/

This is exactly what the TS developers do now, correct?

 

[OldGuy]

1. They can then resell that $3,000 timeshare for the $30,000 retail price. Nice profit, right? In theory, they could do this over and over again as consumers buy and sell the same timeshare.

https://timesharegame.com/timeshare-right-of-first-refusal/

That's not my example, but . . . I know I'm Captain Obvious, but it could not be more obvious that if what they are selling for $30,000 only goes for $3000 in the real market, of course they don't want folks to know that.

 

[WVBaker]

How ROFR can benefit the company
Let’s say you own a timeshare at a resort where the company still has an active sales department. Here’s an example of how the Right of First Refusal scenario plays out in their favor.

1. They’re selling timeshares at full retail prices. Let’s use $30,000 as an example.
2. You’re selling your timeshare as a resale, and resale prices are typically quite far below the original retail. Let’s say the going resale price for yours is $3,000.
3. When you find a buyer for your resale at $3,000, the company can step in and purchase it for that price.
4. They can then resell that $3,000 timeshare for the $30,000 retail price. Nice profit, right? In theory, they could do this over and over again as consumers buy and sell the same timeshare.

https://timesharegame.com/timeshare-right-of-first-refusal/

Captain, both statements are true however, what are the chances of a any developer exercising their ROFR in the current market? Pretty slim, I think we could all agree. Given the rising default rate on timeshare contracts, developers are simply happy to have an owner who is willing to pay the maintenance fees without a drawn out court case. I would imagine in this day and age the largest portion of their budget comes from maintenance fees paid in timely manner. Profit from developer sales still exist, but not as they once did. People continue to get smarter and know to buy from the private resale market.

It would be interesting to know when this article was written. Not published, but written.

 

[OldGuy]

Given the rising default rate on timeshare contracts, developers are simply happy to have an owner who is willing to pay the maintenance fees without a drawn out court case.

Am I hearing deedback? Getting it back for free (plus maybe an extra year's maintenance fee) would be better than paying $3000 for it, or paying for collections and litigation.

I'm telling you folks, if I just keep saying it, one night in the middle of your sleep, it will come to you, and you will think, deedback, yeah.

Pay to get in, pay to get out, and everyone's happy.

 

[WVBaker]

I suppose, what ever works best for that person.

 

[TheHolleys87]

DVC has ROFR on all resales of DVC contracts. How much that has contributed to DVC's historically high resale values is a matter of debate. If the buyer truly wants a DVC resale contract and DVC takes the first one back at $3,000 (per the example above), the potential buyer will offer $3,100 on the next contract, right? And will keep increasing the offered price until DVC waives ROFR - or the potential buyer decides the price is too high and stops making offers. OTOH, DVC is unique in being closely associated with Disney's theme parks, which also contributes to high desirability (as long as the economy means people can travel to the parks), so ROFR isn't the only reason for high resale values.

 

[OldGuy]

If the buyer truly wants a DVC resale contract and DVC takes the first one back at $3,000 (per the example above), the potential buyer will offer $3,100 on the next contract, right?

I'm not sure what you mean by next contract, but if you mean what I think you mean, NO.

Once the party with the ROFR accepts, it's over, the seller cannot renegotiate with anyone else.

It is not a tool for the benefit of the owner/seller; it is a tool for the benefit of the timeshare company.

 

[TheHolleys87]

I'm not sure what you mean by next contract, but if you mean what I think you mean, NO.

Once the party with the ROFR accepts, it's over, the seller cannot renegotiate with anyone else.

It is not a tool for the benefit of the owner/seller; it is a tool for the benefit of the timeshare company.

Sorry, I wasn’t clear. I meant if DVC takes a contract at $3,000, the buyer will offer more the next time he finds a contract he wants to buy, and assuming he’s determined to buy DVC but DVC keeps exercising its ROFR, he’ll keep offering more on each successive attempt to buy, until DVC waives its ROFR.

Unfortunately, price isn’t the only criterion DVC uses when it decides to exercise ROFR (I don’t track that but others do), but it does seem to matter and does keep resale prices up. During the recession DVC rarely exercised ROFR and resale prices dropped very low; recently they’ve reportedly been exercising ROFR more often than in the last few years, and prices have stayed high despite the new restrictions and loss of non-contractual owner perks on resale contracts.

 

[OldGuy]

That was the other meaning I thought you might have, that the buyer would keep looking for another purchase.

 

[davidvel]

I'm not sure what you mean by next contract, but if you mean what I think you mean, NO.

Once the party with the ROFR accepts, it's over, the seller cannot renegotiate with anyone else.

It is not a tool for the benefit of the owner/seller; it is a tool for the benefit of the timeshare company.

In these scenarios, how does rofr hurt the seller?

 

[OldGuy]

It is not a tool for the benefit of the owner/seller does not mean it hurts the Seller. It means what it says, that it is a tool by the company for the company, so that they can get inventory back at a rock-bottom price, and re-sell it at their full price.

It benefits the Seller in that they have someone making some attempt to minimize how much less than what they paid when they bought they will get when they sell, and that there is some exit strategy, be it as it is. Getting very little for something is better than getting sued.

But, it says all that needs to be said about timeshares that getting a whole lot less than you paid is a good thing, because it means you can at least get a whole lot less.

When people ask me what we got for ours, I say, "About $4000 a year, from now on."

 

[OldGuy]

what are the chances of a any developer exercising their ROFR in the current market?

dunno

What's it say in the very-lengthy thread where they are being tracked?