What to say in an ROFR challenge letter?

[timeos2]

Just a quick word of caution- are you sure it's a good idea to try and squash the ROFR attempt by Wyndham? The ROFR process itself shouldn't really a bad thing from an owner's viewpoint- as it helps maintain a consistent level of pricing for a property.

The developers which have consistently applied ROFR decisions have properties with a strong resale value, and have maintained those values. Look at Disney- clients that bought five or six years ago on resale actually saw a slight increase in value if they sold recently- because of the ROFR process pushing up buyer offers. Marriott and Hyatt are other prime examples of this- the resorts with ROFR maintain value and those without drop like stones..

We all know the trouble facing Wyndham fixed week and Points owners whose resale values are on life support. Can't the same thing happen at Pahio if the ROFR attempt is discarded or inconsistent?

Everyone likes to get a great deal when they purchase- but don't forget there is always a seller out there who just got crushed! And buyers may one day be sellers..

Unfortunately, and without going through the whole song and dance for the umpteenth time, almost every statement above regarding ROFR and prices is incorrect. ROFR only exists for and only benefits the DEVELOPER. All others, if they know it or not - far too many are blinded by developer rhetoric and the human desire to think you got "a deal" to realize they are being played , are hurt by it. So doing anything to put an end to it, especially when it is trying to be invoked retroactively and thus illegally, should be a priority. And of course NEVER buy a resort that had ROFR unless you enjoy being taken on both the purchase and eventual resale end of the deal.

 

[Hekela]

I disagree. Its a form of price setting. Its economics look at the real estate market and prices we can't tell our neighbors what to sell their house for so our value stays high. This is what the market will bear and if people are desperate and need money timeshares and luxuries are the first to go

 

[richardm]

You are correct in that "retroactive and illegal" enforcement should not occur, and I apologize if my post gave that impression.....

I just have a different opinion on whether or not the process itself is good for the industry as a whole. I strongly support it- simply for the fact that the process does help maintain resale values and still allows a seller to accept a lower offer (believe me I present those offers on a daily basis!)..

It should be viewed as a frustration for buyers- not owners! Owners should LOVE it!

 

[rickandcindy23]

You are correct in that "retroactive and illegal" enforcement should not occur, and I apologize if my post gave that impression.....

I just have a different opinion on whether or not the process itself is good for the industry as a whole. I strongly support it- simply for the fact that the process does help maintain resale values and still allows a seller to accept a lower offer (believe me I present those offers on a daily basis!)..

It should be viewed as a frustration for buyers- not owners! Owners should LOVE it!

1. Owner no longer uses their timeshare, pays $3,500 to get rid of it.

2. Buyer pays postcard company's partner company $1,200 for a one-bedroom PAHIO at Bali Hai timeshare on eBay. \

3. Estoppel letter goes to PAHIO, claiming they sold the week for $2, 849, which is $1,000 more than the buyer was willing to pay for the week, plus they add closing costs of $399 and $250 (PAHIO transfer fee).

4. PAHIO exercises ROFR and pays full amount seller is claiming to have as an offer (total exaggeration).

5. Buyer is swindled out of a week. Postcard company's seller gets the money, not the owner who paid the $$$$$ for it in the first place.

6. PAHIO sells the week as brand new.

Rich, how is that okay? How is that holding up the resale value?

 

[T_R_Oglodyte]

What the ROFR does is drive away buyers. It may help elevate prices for those units that are sold; it reduces the number of offers that are made.

Resale timeshares are not bought on a whim; they are bought by people who know that timeshare resales exist and are at least somewhat knowledgeable about the market.

When those people know that a resort is subject to ROFR, they are less likely to put in an offer; why waste the time and energy to put in an offer on a sale that isn't likely to be completed?

++++++

This is basic microeconomics. Supply and demand are a function of demand; anything that raises the price reduces demand.

Let's say that absent ROFR, the average selling price for a one-bedroom annual unit at Pahio is $4000. That is the equlibrium pricing, where supply balances demand. Of course any individual sales will be likely be higher or lower, but that $4000 figure is the median price point.

Now let's say ROFR is successful in boosting that median to $6000. Pricing is now above the free market equilibrium point. What happens now? First there are going to be more sellers willing to sell at that higher price. Simultaneously, there will be fewer buyers willing to pay those prices. IOW - there will be more supply than demand, with owners who would gladly take that $6000 price, but not getting any takers.

Of course, many of these folks who can't get offers will become fodder for the postcard companies, as they become desperate to find anyone who will take the unit off of their hands.

++++

To the extent ROFR increases selling prices above the true equilibrium point, there will be a shortage of buyers, resulting in people who are motivated to sell but are unable to because they aren't sufficient buyers to soak up the supply. That is an inevitable consequence of the law of supply and demand.

 

[richardm]

No.. ROFR should always be done correctly- no inflation or exaggeration allowed on either the buyer or seller side of the sale.. Again- I'm not bashing this guy- he got a great deal and had the knowlege to get through the roadblocks! Congrats to the Tug family for another job well done!

As he sits at the pool and talks with other owners he'll have people swallowing their tongues when they found out what he paid (and mentally compare that with what they paid!).. Just the image alone is enough to have me whistling all the way home regardless of how traffic kills me!

I just think that ROFR is not a horrendous monster.. ROFR can be abused- and those who do so should be ashamed (didn't their momma teach 'em better!).. I'm just a fan! Maybe I'm more of a fan of the resorts that have it- but I do like it...

Of course, I was also a Tampa Bay Buc fan when the wore those gaudy orange uniforms!

 

[jacknsara]

I disagree. Its a form of price setting. Its economics look at the real estate market and prices we can't tell our neighbors what to sell their house for so our value stays high. This is what the market will bear and if people are desperate and need money timeshares and luxuries are the first to go

Aloha,
I disagree. If the developer wants to support a minimum price, the developer would be submitting ebay agent bids or sniping for the minimum, which might change as their inventory grows or shrinks. It can't be that much work since I often track all the Pahio resales - there aren't that many at any given moment. In our first encounter with Pahio ROFR a couple years ago which we documented here on tug in a thread that is now gone, I pointed out that our ebay agent bid was more than double what our winning bid turned out to be. It was an oceanfront unit as indicated by the ICN, but the seller did not know or advertise that feature. The loser in that transaction was the seller (maybe a PC company - but the actually owner had to sign the paperwork, so I am not sure). Had we lost to ROFR, we too would have been losers since we were willing to pay much more for the ocean front.
The current practice enables the developer to buy prime (ocean front or two bedroom) units at the lowest possible price.
ROFR, as practiced by Pahio (someone behind Wyndham), may be suppressing demand - and consequently diminishing prices.
Jack

 

[timeos2]

Aloha,
I disagree. If the developer wants to support a minimum price, the developer would be submitting ebay agent bids or sniping for the minimum, which might change as their inventory grows or shrinks. It can't be that much work since I often track all the Pahio resales - there aren't that many at any given moment. In our first encounter with Pahio ROFR a couple years ago which we documented here on tug in a thread that is now gone, I pointed out that our ebay agent bid was more than double what our winning bid turned out to be. It was an oceanfront unit as indicated by the ICN, but the seller did not know or advertise that feature. The loser in that transaction was the seller (maybe a PC company - but the actually owner had to sign the paperwork, so I am not sure). Had we lost to ROFR, we too would have been losers since we were willing to pay much more for the ocean front.
The current practice enables the developer to buy prime (ocean front or two bedroom) units at the lowest possible price.
ROFR, as practiced by Pahio (someone behind Wyndham), may be suppressing demand - and consequently diminishing prices.
Jack

Those who have had to deal with it in reality - not the theoretical dream land of "what if they buy it" and "the developer wants high prices" - know that ROFR is an owner negative process. It hurts buyers, sellers and any agents but sure can help the developer. And only the developer. As one who has seen it in action you have it right.

 

[AwayWeGo]

G. Z. P. Z.

Those who have had to deal with it in reality - not the theoretical dream land of "what if they buy it" and "the developer wants high prices" - know that ROFR is an owner negative process. It hurts buyers, sellers and any agents but sure can help the developer. And only the developer. As one who has seen it in action you have it right.

Whoa !

So the truth after all is, ROFR = ROFL.

Jeezy-Peazy -- who'd a-thunk ?

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

 

[richardm]

Very nicely put, jacknsara! Great points! Thanks for contributing to the discussion...