"First right of refusal" good ?

[getreal]

As a seller, If you know what the ROFR amount is ....

If the developer's true goal is to keep resale price high, it would help everybody if the developer openly states the amount at which they are willing to buy the TS. With the idea is that you _first_ offer it to the developer.

That way a seller can get a quick and easy sale from the developer, or if they want to get more, they can take the time and trouble to look for another buyer.

The way ROFR currently works is a needless frustration and waste of time for the seller.

But the ROFR issue gives us lots of material for the BBS.

 

[Gadabout]

If the developer's true goal is to keep resale price high, it would help everybody if the developer openly states the amount at which they are willing to buy the TS. With the idea is that you _first_ offer it to the developer.

That way a seller can get a quick and easy sale from the developer, or if they want to get more, they can take the time and trouble to look for another buyer.

The way ROFR currently works is a needless frustration and waste of time for the seller.

But the ROFR issue gives us lots of material for the BBS.

That is exactly how I thought it was supposed to work. That you notify the resort first, and if you don't like the price they're offering, then shop it elsewhere.

 

[T_R_Oglodyte]

That is exactly how I thought it was supposed to work. That you notify the resort first, and if you don't like the price they're offering, then shop it elsewhere.

Nope - that's not how it works. What you describe is a purchase option, and there's no problem with a purchase option. But a ROFR is different.

With ROFR, first you have to get a bona fide offer. Then you present that offer to the resort, and they have the option to purchase the unit instead for the same terms and conditions.

That's why ROFR drives away buyers. When there's a ROFR in place and the proposed price is below the level where the resort exercises it's ROFR, there's no point for the seller in going through the work to create a binding contrract, only to have the resort step in and void the contract.

And it doesn't make sense for the buyer to make a lower offer to compensate for the added risk that the sale won't go through, because that just increases the probability of the sale being blocked.

 

[grupp]

Only the resorts benefit form ROFR

The resorts are the only ones that benefit from the ROFR. It provides them with the opportunity to replenish their inventory by purchasing at price where they believe they can resell it for a profit. They are able to make money on the deal and I am sure we are all very happy for them.

The potential buyer is disadvantaged because they pay too much and do not have the chance to purchase a week at the actual market price. Also, as others have stated, if the prices are above the market they may be prices out of the purchase or have enough good sense to look elsewhere for their purchases.

The seller is also disadvantaged, or at best break even. This is true even if you buy the idea that the prices are higher when they sell due to the ROFR. You have to remember there are 2 sides to the equation, so before they were a seller they obviously were a buyer. Therefore, if the ROFR increases the price when they sell, it would also have increased the price when they bought and they paid to much for the original purchase. At best, they can hope to regain all or some of this overpayment when they sell, but if they bought from the developer there is not much chance of that happening.

In my opinion the consumers as a whole are better off without ROFR. The ROFR exists for the resort to make money, which is great if your are the resort, not to proctect the owners

Also, are the management companies required to pay the maint. fees for weeks that they own? If not, buying weeks to have in inventory will increase the amount paid buy the owners.

Gary

 

[Fisch]

I feel confused

If a seller lists their property at X. A buyer agrees to pay that amount.

The Resort with ROFR either buys it for that price or they refuse. If they refuse the seller and buyer complete the transaction.

In either situation the seller gets the price they were willing to sell.

The buyer might get burned and have to look for another week to purchase.

Anyways, that's the way I looked at ROFR.
But, I'm a rookie at this. EVR Poipu did not exercise their ROFR on our purchase last month. So in my case, it did not matter.

Al

 

[boyblue]

The resorts are the only ones that benefit from the ROFR.

Not exactly...

I know I benifited. Before CFI (Westgate Lakes) began exercising their ROFR I was atempting to sell a 3 br EOY for $1,500.00 on TUG, Bidshares & MRN for a year - nothing doing. I heard about the ROFR so I decided to try again.

The result - CFI ended up buying the week for $2,100.00 (could have been more- right now the exact amount excapes me).

 

[T_R_Oglodyte]

If a seller lists their property at X. A buyer agrees to pay that amount.

The Resort with ROFR either buys it for that price or they refuse. If they refuse the seller and buyer complete the transaction.

In either situation the seller gets the price they were willing to sell.

The buyer might get burned and have to look for another week to purchase.

Anyways, that's the way I looked at ROFR.
But, I'm a rookie at this. EVR Poipu did not exercise their ROFR on our purchase last month. So in my case, it did not matter.

Al

Nobody has said the ROFR cuts off all sales. What it does is strand some of the sellers.

As you mention, they buyer might get burned. If I'm willing to pay $8k for an EVR Po`ipu, and I get taken out by Embassy, am I going to go to the next person listing at $8k and go through the same thing all over again? Am I going to invest another three or four hours (or more) doing due dilgence on the next sasle, only to have the sale yanked again? Or am I more more likely to go to Lawai Beach and spend $6k for an Alii unit? Or check buy a Pahio instead?

It's good for those sellers who do manage to find a buyer. It's bad for those sellers who can't find a buyer - lowering the price probably doesn't even help them sell the unit. They just sit there with ads out and no offers.

 

[grupp]

Not exactly...

I know I benefited. Before CFI (Westgate Lakes) began exercising their ROFR I was attempting to sell a 3br EOY for $1,500.00 on TUG, Bidshares & MRN for a year - nothing doing. I heard about the ROFR so I decided to try again.

The result - CFI ended up buying the week for $2,100.00 (could have been more- right now the exact amount escapes me).

You are right, I should have said the are usually the only ones who benefited, there are always exceptions.

Also, I am curious on your transaction if you were not able to find a buyer at $1500, how did you find a buyer at $2,100? Do you think the ROFR somehow increased the demand such that someone was willing to pay more after the ROFR? Or is it possible that it may have been simply chance that you found a buyer at that price and you would have been able to sell it for that price even if the ROFR had not been an issue?

Gary

 

[DavidnRobin]

Your are kidding aren't you?

Gary

Yes - I was (mostly). This certainly is a 'hot button' issue. I have no problem with the ROFR as long as it is not misrepresented. If it is the contact, then the buyer - like many things in life - needs to make a decision within the boundries of that contact.

The ROFR were put in there for a reason by the resort developers - who in turn have put up millions of dollars to build (acquire) and manage the resort. Ask yourself - why would they do this? Money - of course. And considering it is their multi-million dollar investment to protect (for their shareholders and customers), they have every right to do so. Enough said.

 

[boyblue]

You are right, I should have said the are usually the only ones who benefited, there are always exceptions.

Also, I am curious on your transaction if you were not able to find a buyer at $1500, how did you find a buyer at $2,100? Do you think the ROFR somehow increased the demand such that someone was willing to pay more after the ROFR? Or is it possible that it may have been simply chance that you found a buyer at that price and you would have been able to sell it for that price even if the ROFR had not been an issue?

Gary

It was probably more chance than anything but where I had no bids the first go round, The second auction had a good amount of bids.

 

[T_R_Oglodyte]

...
The ROFR were put in there for a reason by the resort developers - who in turn have put up millions of dollars to build (acquire) and manage the resort. Ask yourself - why would they do this? Money - of course. And considering it is their multi-million dollar investment to protect (for their shareholders and customers), they have every right to do so. Enough said.

They do it for two reasons:

1. There is a certain price point at which they can acquire the unit and resell it for a profit. That sets the price at which they can exercise the ROFR.
   
2. By hindering sales below that level, they can claim that their resort holds it value better than other resorts.

 

[boyblue]

One thing I think we can all agree on is that they don't do it for our benefit. That being the case; as an owner, even if I can't see the disadvantage I have to assume there is one.

 

[timeos2]

Developers are suposed to build, sell and move on

The ROFR were put in there for a reason by the resort developers - who in turn have put up millions of dollars to build (acquire) and manage the resort. Ask yourself - why would they do this? Money - of course. And considering it is their multi-million dollar investment to protect (for their shareholders and customers), they have every right to do so. Enough said.

That is a big problem. Most resorts are supposed to be sold out and turned over to the owners to manage. Having the developer hang around as manager is truly a case of the fox in the henhouse. ROFR, vacation clubs and certainly RTU contracts make it easy for the developer to hang around and never "let go". Paying your money and beoming an owner doesn't end the pressure to buy more and "upgrade" when the developer maintains total control. Look at Westgate for a terrible example. If you plan to buy a non-deeded property or RTU then you really are most likely better off renting as thats all you really are doing anyway. Just with a big up front expense a "regular renter" wouldn't have. That is the real threat to timesharing IMHO not points or RCI rentals.

 

[T_R_Oglodyte]

That is a big problem. Most resorts are supposed to be sold out and turned over to the owners to manage. Having the developer hang around as manager is truly a case of the fox in the henhouse. ROFR, vacation clubs and certainly RTU contracts make it easy for the developer to hang around and never "let go". Paying your money and beoming an owner doesn't end the pressure to buy more and "upgrade" when the developer maintains total control. Look at Westgate for a terrible example. If you plan to buy a non-deeded property or RTU then you really are most likely better off renting as thats all you really are doing anyway. Just with a big up front expense a "regular renter" wouldn't have. That is the real threat to timesharing IMHO not points or RCI rentals.

John - good point.

A ROFR program might guarantee that the developer might continually hold a one or two per cent of the inventory. Which is enough of a bloc to ensure continued control of the HOA.

 

[ripleysmom]

DVC owners can sell and list at any price they choose. Its only matter of who buys it. DVC or the private party.

Exactly!! List it at the price you want to receive for it. I am sure that you will find someone who is willing to try to buy it at that price.

 

[Tia]

Yep a developer sticking around is definately the fox in the henhouse problem, no doubt about it .
Thanks for all the input everyone.

... Most resorts are supposed to be sold out and turned over to the owners to manage. Having the developer hang around as manager is truly a case of the fox in the henhouse. .......

 

[VeeJay]

Yes, Westgate is probably a prime example. They just exercised the ROFR on my sale. I had it listed for over a year.. gradually dropping the price as the only people who called were scammers. Must have finally hit the trigger point. ($5000??) Very surprised as I had never heard of Westgate exercising the ROFR. My buyer was very disappointed as she had planned a re-union... time was getting tight to redo everything. I doubt that she would try to buy again ... probably afraid of getting bumped by the ROFR clause again. I like the idea of the resort posting their ROFR
value... this would keep the bottom line and prevent disappointments.
v