SVN Upgrade Ripoff

[bward]

Just got back from Vistana Resort, and we did the owner's meeting.

We own at Vistana Villages and I'd like to pick up more Star Options.

Basically, I want to go from our current 67,100 to 81,000 options.

I first knew something was wrong when our first salesman didn't know the difference between mandatory and voluntary units. Thank you Tug!

I was told it would cost us $10K to upgrade our unit. With a price tag like that, there was no danger of us buying the upgrade.

But here's what still bugs me about the whole thing.

Starwood was willing to "credit" us 15K or so for what we paid in 2003. But we would have to buy at the current price of 25K.

The salesman already told us that our unit now sells for 18K.

Here's the problem I have: Why aren't they offering what the the TS is currently worth, not what I paid for it? Isn't this how real estate works?
When I sell my house, I'm asking for today's prices, not what I paid for it. Why doesn't this apply in the timeshare business?

So, if I did this deal, to get this straight, Starwood would buy back my unit for my original price, with no allowance for an increase in value. They would then give me a unit in a voluntary section of Vistana Villages, not the mandatory section I bought. Not only that, Starwood would take my timeshare back at 15K, and turn around and sell it to someone else at 18K, thus making 3K in the process. Meantime, to pick up less than 20K Star Options, I'd have to pay more than half of my original sales price. Hello?

All of this occurred to me long after our meeting was over. But I have to admit it makes my head spin.

After we said no to salesman number one, we got a real hard sell to buy the Explorer Program from salesman number 2, which would lock in the 25K price for 3 years. Stood firm and said no again.

Next time I do the meeting, I will definately bring all this up. And I'll add, the simplest and most affordable thing for me to do, is buy an 81K SO on resale, and sell mine. Instead of making something, Starwood would get nothing, and I'd get my SO's.

Thanks Tug and Tuggers for opening my eyes to all of this.

The whole thing is just incredible. And the logic only works if you are Starwood and you want to make as much money as I can from my owners.

I have to say I really enjoy Starwood, really like SVN. Would like to buy more options. But I don't want to be gouged either.

Anyone else?

bward

 

[Fredm]

Well, you are certainly right that it works for Starwood. The part I am surprised about is their offer to credit you the 15k you originally paid. Although they will "make" 3k on the turnaround, they have sales and marketing costs to cover. Given their overhead structure, it is at best a break even proposition for them, I would think. Of course, they do get the full blown margin on the new sale. And you end up with a Voluntary resort to deal with if you wish to sell down the road.

The Starwood offer is essentially to wipe the original purchase away, and sell you a Voluntary resort for 25k. Net cost to you is 25k, for a Voluntary resort you will have to deal with if/when sold.

Looking at the alternatives:

You currently have 67.1k StarOptions. ( 2 bedroom Gold season).
81k Options can be had by purchasing a 2 bedroom lockout Gold, or 2 bedroom Platinum, at Villages.

Quick estimate:
Purchase either at ~9,500 (perhaps less).
Sell Gold 2 br at ~5k net cash after commissions and costs (loss of 10k).
Total swing of $19,500 or less, net.
You own a mandatory share.
This assumes you transact both with a broker.
You may save a few $ if transacted privately.

At the end of the day, you save a minimum of $5,500, (likely more) and own a Mandatory Resort.

or

Keep your Gold 2 br, and buy another. Keep your loss on paper, and be out of pocket less. But, then you have 2 maintenance fees and 134.2k Options.

 

[DavidnRobin]

A few comments -

SVN Mandatory and Voluntary resorts are TUG terms (you will not find these terms in the CCC&Rs) - therefore, it shouldn't be a surprise that the SVO salesperson doesn't know these terms. The overall concept should be known to the SVO salepersons (but most probably aren't aware) - they are in the business of TS sales and not in the business of telling customers the downsides of buying SVO VOIs (such as that SVN doesn't transfer upon resale with V resorts, or that your VOI will lose 50% of it's value if you decide to resale, or that buying at least 81K SOs will get you more exchange value).

Bottom-line - they are trying to sale you an Amelia section of VV because that is what they get paid to do. Overall, from their point-of-view, the deal is fair one.

However, you are being asked to pay $10K to go from 67.1K to 81K SOs (~14K SOs more), and end up with a V resort - that is alot of $ per SO, and you end up with a V resort that has less resale value (if you ever plan to sell).

Like most Tuggers - you have learned one of the many hard lessons (the big one being - if you choose SVO - buy resale) - and this one being - buy at least 81K SOs (whether from SVO or resale).

So what to do... well... you are kind of stuck - it really depends on your finances and you family vacation needs. You do not have many good options at this point.

Buying Amelia from SVO is not a good option whether or not they are offering you a buyback of your unit (which is a fair deal from them). Since they claim to be buying back VV (Mandatory) - you could ask them if they would be willing to sell you one of those mystery VOIs. Most likely, they do not have them - but why not ask?

Beyond this you are stuck with either selling your unit and buying one resale worth 81K SOs (and take your lumps - as most have...) - or just continue to enjoy what you have.

Another thing - the price they claim your unit to be worth is only an 'on paper' value. For example - our WKORV OF is 'on paper' according to SVO to be worth ~$86K. When I asked them if this were really the case, then why they don't use their ROFR to buy them up at $52K (~resale value) and then turn around and resale them for $86K? All I got was a blank stare...lol