DC Resale Points (Junk) Transfer Fee Hiked To $500 Per BI

[billymach4]

What does the future look like ?

It's a Westgate style move that will hurt owners down the road that want out.

All the more reason to stay far away from buying very many points. The more they sell the less value they have. The market will eventually be flooded with points that risk going unused.

At some point in the future the economic scale is going to tip. In other words the price of a full retail points package keeps escalating, however the owners of the full retail points will not be able to exit. Why do owners need to exit in the first place? People age out naturally due to death, disability, divorce, lifestyle changes, inability to pay the fees/or mortgage on the points.

Where does that leave the points marketplace? Does anyone think this whole house of cards may someday collapse? What do you think?

 

[dioxide45]

At some point in the future the economic scale is going to tip. In other words the price of a full retail points package keeps escalating, however the owners of the full retail points will not be able to exit. Why do owners need to exit in the first place? People age out naturally due to death, disability, divorce, lifestyle changes, inability to pay the fees/or mortgage on the points.

Where does that leave the points marketplace? Does anyone think this whole house of cards may someday collapse? What do you think?

It seems to be a sustainable model. While it certainly isn't consumer friendly, many TS companies utilize this model and make plenty of money doing so.

 

[mjm1]

Thanks for these posts. We are in the middle of a resale purchase, so I will share this with our broker and closing company.

Mike

 

[JIMinNC]

I played around with the numbers a little and while this would certainly be a huge percentage increase for the initiation fee, the net effect is it increases the cost of a resale points purchase by a little over $1 versus the status quo. Assuming a $4.50 resale price per point, the cost is about $5.30 with the current fees and that would rise to $6.50 under the rumored new fees. Given that Marriott sells points at $12.12 and always rising, the basic economic case doesn't seem to change all that much.

 

[FractionalTraveler]

Stepping back for a moment and just to keep things in perspective, the global resale (secondary) marketplace for timeshares has historically been infinitesimally small as compared to new contract sales.

So in the grand scheme of things, the magnitude of this resale issue is much smaller than what is projected by those buyers/sellers who may be directly affected by one particular transaction or another.

Regrettably, brokers and agents who are stuck in the middle will earn less commission on a smaller number of transactions as a result.

Its a race to the bottom on a commodity that has no value other than its yearly usage.

FT

 

[Fasttr]

I played around with the numbers a little and while this would certainly be a huge percentage increase for the initiation fee, the net effect is it increases the cost of a resale points purchase by a little over $1 versus the status quo. Assuming a $4.50 resale price per point, the cost is about $5.30 with the current fees and that would rise to $6.50 under the rumored new fees. Given that Marriott sells points at $12.12 and always rising, the basic economic case doesn't seem to change all that much.

And if you buy into the "buy a Base Interest of 1500 points and rent the rest" theory, it really is only costing you $0.67/point more than before because the minimum fee no longer screws you.

 

[billymach4]

It seems to be a sustainable model. While it certainly isn't consumer friendly, many TS companies utilize this model and make plenty of money doing so.

Dioxide can you please give me some examples of other TS model's that are analogous to this situation? In my small world view I think of Wyndham where retail owners buy in only to find out that their points are pennies to the dollar on the resale market. In this scenario it sounds like DC points are about .45 to the dollar (This is just my off the top of the head math). How about DVC they have ROFR and they do enforce it according to my limited knowledge. Please someone correct me and educate me if I am off the charts here?

 

[mjm1]

I just confirmed with the broker we are using, which the same as the OP. It is true, but transactions that are at closing will not incur the additional fee.

This will definitely have a negative impact on resale prices. Unfortunate, but I can understand Marriott trying to fight against the resale market. It will be interesting to see if a suit results. As noted by others, the documents show that they can make changes at their discretion.

Mike

 

[JIMinNC]

It is possible, but this is a pretty material change. There have been six versions to date of the Exchange Procedures. Some which I couldn't even tell what the change was. So in four years they change the document 5 times but for this they don't update it? That doesn't make sense. This is the governing document for the Exchange Company. The Initiation Fees allow resale trust points to play in the Exchange Company.

Note that the verbiage doesn't indicate that they can change it without warning or prior written notice. That type of verbiage is often seen in these types of scenarios but is not present here.

Though they could have an updated version, but just haven't published it.

I was browsing some other threads and came across a link in the Recorded Trust Documents thread that listed this filing. Note it says "Minor changes to the...trust reservation procedures..." I wonder if these could be the fee changes. The date matches up with the date quoted in the OP:


Amendment A00039 MARRIOTT OWNERSHIP RESORTS, INC. Approved 06/17/2014 2820 0
Comment: Minor changes to the public offering statement, trust reservation procedures, and component site charts. Added in state inventory and pending lawsuit information.
Examiner: Colvin, Sharri

 

[BocaBoy]

Valid point, although prior to the transition to Destination Club, Marriott ran their weeks resales operation in parallel with their "new" weeks sales operations for many years. Much the same argument could have been made then - who would buy a "new" developer week when they could buy a pre-owned week at somewhat less cost from MVCI Resales. I don't recall how the "New Marriott Week" prices compared to the "Pre-Owned Marriott Week" prices back then, but that relative differential might yield some insight into what level Marriott Points resales might be at if and when they ever do start doing that.

I think the reason they were successful running parallel "New" and "Pre-Owned" weeks operations is they promote and market the "New" operation but the resales operate somewhat in the shadows and it seems you have to know about them and seek them out. One delivery channel for educated buyers and one for everyone else.

Actually, the resale operations did not start for a resort until it was nearly sold out, and then the resale prices were exactly the same as the developer prices. I know because I bought one in 2001 and sold one in 2010 through Marriott resales. They never competed against themselves in prices. It was only after they stopped selling weeks that their resale prices for weeks were decreased from the developer price levels, and even that did not occur until a year or two later when the market was such than they couldn't sell anything resale at the higher levels.

 

[JIMinNC]

Actually, the resale operations did not start for a resort until it was nearly sold out, and then the resale prices were exactly the same as the developer prices. I know because I bought one in 2001 and sold one in 2010 through Marriott resales. They never competed against themselves in prices. It was only after they stopped selling weeks that their resale prices for weeks were decreased from the developer price levels, and even that did not occur until a year or two later when the market was such than they couldn't sell anything resale at the higher levels.

Thanks for clarifying that for me. I was always under the impression there was some differential back then in their weeks resales - still expensive but somewhat less than the "new" weeks.

 

[slum808]

Dioxide can you please give me some examples of other TS model's that are analogous to this situation? In my small world view I think of Wyndham where retail owners buy in only to find out that their points are pennies to the dollar on the resale market. In this scenario it sounds like DC points are about .45 to the dollar (This is just my off the top of the head math). How about DVC they have ROFR and they do enforce it according to my limited knowledge. Please someone correct me and educate me if I am off the charts here?

DVC does have a ROFR and they have been using it sporadically during the last year. During the down turn they had a lot of foreclosures to absorb so they stopped exercising rofr and prices dropped a bit. Now they're back up to about 65-75% of retail depending on the resort. DVC does not have any junk fees, just a small rofr waiver fee.

 

[GregT]

All,

I will be very curious to see if Marriott has in fact changed the transfer fees. I agree with others that this will simply put further pressure on the resale point pricing (getting closer to that ROFR price), and also narrow the gap between the all-in price per point that a Resale Buyer would pay (to clear ROFR) and what that Resale Buyer could pay in a decent hybrid package.

I called Owner Services and request a Transfer Request form that included the transfer fees. They sent me the attached, which still has the old pricing. So, if the change has been made (which would stink) then it is not yet well communicated.

But if they do make this change, this would be Skim II (I mean if we can have Puck Trick II......) and Marriott just devalued my Trust Points by $4,200, or 20%. ........

Best,

Greg

 

[GregT]

And if they did make this change, this would be Skim II (I mean if we can have Puck Trick II......) and Marriott just devalued my Trust Points by $4,200, or 20%. ........

How come there was no TUG crackpot out there in June 2010 warning about this possibility?

 

[GregT]

Wait, never mind.

If you are a potential purchaser of Marriott points, do your research. Marriott has just broken the covenant with its existing ownership and significantly impaired the value of what people own -- what’s to stop them from doing it to you?

 

[SueDonJ]

Wait, never mind.

Now that made me laugh.

 

[mjm1]

Just received an email from our broker. The closing company spoke with Marriott Owner Modification group this morning and confirmed that they have NOT increased the transfer fee yet, but there could be one in the future.

This is good news, at least for the time being. It will be interesting to see what they do or don't do going forward.

Mike

 

[SueDonJ]

Just received an email from our broker. The closing company spoke with Marriott Owner Modification group this morning and confirmed that they have NOT increased the transfer fee yet, but there could be one in the future.

This is good news, at least for the time being. It will be interesting to see what they do or don't do going forward.

Mike

So this is from the same broker who said yesterday that he confirmed with Marriott that the fee had been increased, and now today he's confirmed that it hasn't? And he's the only person we know of who sent out notices yesterday about it?

Still waiting on official communication from Marriott either way ...

 

[mjm1]

So this is from the same broker who said yesterday that he confirmed with Marriott that the fee had been increased, and now today he's confirmed that it hasn't? And he's the only person we know of who sent out notices yesterday about it?

Still waiting on official communication from Marriott either way ...

I believe he had spoken with someone in sales, although I don't know for sure. The closing company is who spoke with owner modifications and was told the most recent information. The closing company then shared that with the broker.

 

[chriskre]

All,
But if they do make this change, this would be Skim II (I mean if we can have Puck Trick II......) and Marriott just devalued my Trust Points by $4,200, or 20%. ........

Best,

Greg

How much is a BI? Beneficial Interest?

 

[Fasttr]

How much is a BI? Beneficial Interest?

250 points.

 

[billymach4]

So this may be speculation from an unconfirmed rumour. ? If found to be untrue it sure has started much analysis and bad emotions.

 

[puckmanfl]

good evening...

I am very skeptical that MVCD would do this... It is just so egregious... It would clearly leak out to the pool area where the prospective buyers are. All it would take is juyst one well healed Trust Owner to start spewing venom atthe hot tub...

I will watch and wait till info becomes available...

 

[Saintsfanfl]

good evening...

I am very skeptical that MVCD would do this... It is just so egregious... It would clearly leak out to the pool area where the prospective buyers are. All it would take is juyst one well healed Trust Owner to start spewing venom atthe hot tub...

I will watch and wait till info becomes available...

You might be right but wasn't the $200 per BI already egregious? I wouldn't put it past them but it does seem strange that if it went up on 6/17 this is the only report we are hearing about it.

 

[rahulgopi]

It all started when I had two calls with one Marriott Sales Rep and her Manager regarding a COMBO purchase. They were adamant that resale points are not worth it as the Junk fee will be $500 / BTI and this was recently increased from $200.
So I went back to the agent and closing company to get more clarification. Agent and LBRTA came back confirming it via [Deleted.] MVCI resales department, who mentioned fees got hiked from June 17.

Closing company came back with a different answer today, forwarded an email from <Owner.Modifications@vacationclub.com> stating that Junk fees are not updated yet but may in the future.

The whole episode left a bad taste for me in the process of buying a 6.5K premium account.

For me, I am going to wait a bit more before venturing into the points club. Hopefully in a year or two the whole points system at Marriott will mature like HGVC or Worldmark.