High QualityTimeshare Resale Prices Plummeting

[timeos2]

Who going to post "I got shafted on selling?"

You said yourself that since Marriott has stopped exercising ROFR that resale prices have fallen. That means that when Marriott was exercising ROFR the SELLER was getting a higher price than they currently are with Marriott not exercising ROFR. Its very simple and you gave the example yourself. When exercised ROFR gives sellers higher prices. When it is stopped prices fall resulting in lower prices.

Think about it. A few months ago Marriott was exercising ROFR and a seller could get expect to get 10K for most annual two bedroom platinum units. Marriott stops exercising ROFR and some of these same units have gotten sellers thousands less. The economy is also to blame but obviously ROFR not being used is a big part of it as well.

With Marriott prices so low without ROFR being exercised you could just admit you were mistaken about ROFR and move on.

You keep saying that but the reports from SELLERS - not many of which hang around to report once they get burned - show a different result. IF they were lucky enough to find a sucker who believed the ROFR nonsense they may have gotten close to the "magic" ROFR number. But most didn't. They got the low price they had to ask to attract an interested buyer, then Marriott snatched it AT THE LOW PRICE and they slink away burned by the process. They don't bother posting a message saying "we got zip" for our unit that Marriott turned around and resold for their going rate.

You are hanging on to a false sense of value supported by a house of cards pitched by the very group (timeshare sales weasels) that got you to buy into a full price purchase to begin with! If/when your day comes to sell you will, unfortunately, find out that all you'll get is whatever the highest price a real market buyer will offer - ROFR or not - and then its too late to argue this anymore. I doubt you'll bother to post the low sale price either and I won't blame you if you don't. In the meantime it's fine if you want to think your price is protected by ROFR but anyone that looks at the system as an outsider with no stake in the outcome knows its not.

 

[BocaBum99]

ROFR or not, expecting timeshare prices to always stay high was a mistake and anyone who bought with that idea was foolish.

You just described the average Disney Vacation Club buyer.

As long as people like you post on these message boards that all ROFR does is artificially prop up prices and buyers should beware that when things go badly in timesharing that they should expect those price supports to stop therefore plummeting their values, then I would agree with you.

In other words, if anyone buys a timeshare that is being artificially being propped up by ROFR, they should be extra careful about buying such a timeshare. In fact, using your logic, I'd label them "foolish" if they were to buy such a product.

 

[BocaBum99]

There is no doubt that ROFR provides artificial price supports for the timeshares that exercise it.

It is also true that the primary beneficiary of ROFR is the resort developer since they can cherry pick which deals to take for themselves.

Further, some sellers benefit from these price supports as long as they are in place since buyers are over paying.

When the price supports stop under bad economic times, those who bought with artificially high prices will lose big time.

So, is ROFR good or bad? It depends if you are on the right side of the trade when various events occur. It's just important to know when the right time to buy vs. sell is.

 

[gmarine]

You keep saying that but the reports from SELLERS - not many of which hang around to report once they get burned - show a different result. IF they were lucky enough to find a sucker who believed the ROFR nonsense they may have gotten close to the "magic" ROFR number. But most didn't. They got the low price they had to ask to attract an interested buyer, then Marriott snatched it AT THE LOW PRICE and they slink away burned by the process. They don't bother posting a message saying "we got zip" for our unit that Marriott turned around and resold for their going rate.

You are hanging on to a false sense of value supported by a house of cards pitched by the very group (timeshare sales weasels) that got you to buy into a full price purchase to begin with! If/when your day comes to sell you will, unfortunately, find out that all you'll get is whatever the highest price a real market buyer will offer - ROFR or not - and then its too late to argue this anymore. I doubt you'll bother to post the low sale price either and I won't blame you if you don't. In the meantime it's fine if you want to think your price is protected by ROFR but anyone that looks at the system as an outsider with no stake in the outcome knows its not.

First of all, I have never purchased a Marriott or any other resort from the developer that has ROFR.

Sellers are getting less since Marriott stopped using ROFR. Thats it, very simple. You can attribute it to anything you want but it remains true.

 

[gmarine]

There is no doubt that ROFR provides artificial price supports for the timeshares that exercise it.

It is also true that the primary beneficiary of ROFR is the resort developer since they can cherry pick which deals to take for themselves.

Further, some sellers benefit from these price supports as long as they are in place since buyers are over paying.

When the price supports stop under bad economic times, those who bought with artificially high prices will lose big time.

So, is ROFR good or bad? It depends if you are on the right side of the trade when various events occur. It's just important to know when the right time to buy vs. sell is.

Absolutely right. ROFR brings prices up when exercised and is good for owners who sell while its being used. But on the flip side prices can fall when it isnt exercised. Falling prices are a risk you take when you buy a timeshare with or without ROFR.

 

[AwayWeGo]

R. O. F. R. = R. O. F. L.

Sellers are getting less since Marriott stopped using ROFR. Thats it, very simple. You can attribute it to anything you want but it remains true.

Any chance it's the other way round -- that Marriott stopped using ROFR because prices are down & since nobody's buying the company would be stuck with all those cheap ROFR buybacks it bought back ?

By me the current situation does not refute but on the contrary confirms the real deal regarding ROFR -- that ROFR = ROFL.

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

 

[Talent312]

This is a recurring debate on TUG. My 2 cents...
I'm not sure that potential resale value should be a major factor in where one buys. Sure, a unit w/ROFR might have an artificially inflated price, but its not like we buy in counting on that. Should not other considerations, such as location, season, quality and program, be given greater weight in the selection process?

 

[timeos2]

Buy to use, reject ROFR. Happiness rules

This is a recurring debate on TUG. My 2 cents...
I'm not sure that potential resale value should be a major factor in where one buys. Sure, a unit w/ROFR might have an artificially inflated price, but its not like we buy in counting on that. Should not other considerations, such as location, season, quality and program, be given greater weight in the selection process?

Those should always be the criteria. And buying to USE not trade. (Note: I include systems such as Wyndham or Diamond and others in the use category even though they are not limited to one week or resort. That is buying to use within the system) The only factor ROFR should play is crossing any resort that has it off the "buy" list. Do that and your timeshare ownership is much more likely to be a very positive one.

 

[london]

Marriott ROFR and Buying Resales

Please read my post above. The market determines prices. Mariott is not using ROFR now because sales ( both retail and resale) are dismal. The prices would have dropped whether Marriott was still ROFR'ing or not. In fact prices were plummeting while Marriott was still ROFR'ing.

The fact that Marriott only wants to steal inventory when sales are good using ROFR makes sense. Of course they will steal a week from the rightful buyer for $10,000 if they feel they can sell it retail for $20,000. Now they don't want to ROFR the same week for $5000 because like the seller, they can't find buyers. What is really sad is that even as low as current Marriott resale prices are, they still haven't gotten low enough to make Mariott think they are worth buying themselves. I guess when weeks start selling for under $1000 Marriott might think the prices are low enough to start buying again using ROFR.

It may come to the point that Marriott may get out of buying back resales altogether.

They may eliminate the ROFR for all new sales.

 

[T_R_Oglodyte]

Absolutely right. ROFR brings prices up when exercised and is good for owners who sell while its being used.

That sentence is missing a qualifier - ROFR is good for owners who are able to generate a legitimate buy offer while it is being used.

One of the basic principles of economics is that pricing of an item adjusts so that supply and demand are balanced. Raise the price and demand falls. Lower the price and demand increases. Absent external aberrations price adjusts so that supply and demand match.

To the extent that ROFR raises sales prices above levels that would otherwise prevail, it must result in an excess of supply over demand. Meaning that there are owners out there who love to sell at that ROFR price, but they can't sell because there aren't enough buyers out there at that price.

So if ROFR does increase resale prices it's certainly better for those owners who are able to complete a sale. But it shafts those owners who would love to sell if they, too, could get one of those offers, but instead are stuck with a timeshare they can't get rid of because there aren't enough buyers out there.

 

[timeos2]

An advantage to the non-seasonal areas for certain

There already are timeshare resorts that are very active in renting excess inventory. One I own in Hawaii encourages owners to rent additional weeks to make their stay longer and they also encourage owners to refer their friends for rental weeks. Another we own in Tahoe puts good use to "Bonus Time".
Going over balance sheets, the income from these rentals is a significant source of income helping to keep the MF's lower. This benefits everyone. When we have used the rental and bonus time, we paid about half of the going rate of a hotel room in these areas.
But, I just described two areas where the "season" isn't as much as a factor. Maybe the problem of tourist season and demand might still present a problem in many areas.

Yes, areas that have seasons - the majority of the country - have a much bigger problem keeping paying owners OR renting the off season times for anything near the annual maintenance fee needed. It is one of the fallacy's of "all weeks are equal value" that the week for week trade model fostered in the early years. That worked when you could snag a great week for a dog off season deposit and the same fee that a prime red week paid. But when like for like exchanges and trade power got added in, fees inevitably rose and suddenly that off season week - for the same fee as a prime summer ownership - doesn't have much value anymore. Had it been sold with a lower fee (rather than subsidizing the value of the prime week owners) then there wouldn't be such a big problem. Keeping owners at a lower fee or renting at a lower price would be easier. Now one way or the other the owners of prime time are going to see fees go up to keep the resorts open. Either they pay for the weeks that are delinquent and/or abandoned and not rented OR they get creative and assign a true value / fee (usually using points) so the fees are spread equally to the use value. The days of blue time paying red time prices won't fly in this economy. It was happening anyway as fees rose but now it is likely to accelerate the pace of change.

 

[JudyS]

....Someone I know who holds a key position (cannot be more specific for obvious reasons) told me that droves of people are "walking away" from blue studio units, especially in Orlando, and it's virtually impossible to go after them. The resorts have little hope of re-selling the units, given the low prices that much larger, nicer units are going for on Ebay and through resale companies.

So what are they doing to cover the shortfall? They are converting the abandoned junk units to RCI Points and then selling the Points packages at very low prices. As these points flood the market, there will be far more people competing for the desirable exchanges. Someone who pays very little to acquire the Points initially, and generally pays less annual maintenance fees for the two junk weeks based Points than people pay for a bright red one bedroom underlying week.....

Most of this I understand, but I don't get the part in red. Generally, all weeks at a resort of the same size have the same MF, regardless of season. So, why would junk weeks have especially low MFs?

 

[Robert D]

It sure seems to me that the fact the Marriott is not currently exercising ROFR's has done nothing to help sellers who have made the decision to sell in this depressed market. They wouldn't have gotten anymore for their TS but would have sold it to Marriott instead of another buyer. I fail to see how this props up TS values. I guess if you're a seller who comes up with a bogus contract that you couldn't have gotten in the marketplace and send it to Marriott and they buy it back, then the ROFR would help sellers; short of that, it does nothing for sellers.

 

[london]

Resales

It sure seems to me that the fact the Marriott is not currently exercising ROFR's has done nothing to help sellers who have made the decision to sell in this depressed market. They wouldn't have gotten anymore for their TS but would have sold it to Marriott instead of another buyer. I fail to see how this props up TS values. I guess if you're a seller who comes up with a bogus contract that you couldn't have gotten in the marketplace and send it to Marriott and they buy it back, then the ROFR would help sellers; short of that, it does nothing for sellers.

Well said..........

 

[janapur]

Any chance it's the other way round -- that Marriott stopped using ROFR because prices are down & since nobody's buying the company would be stuck with all those cheap ROFR buybacks it bought back ?

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

BINGO!

Furthermore, one could argue that current resale prices are actually higher than they should be in this distressed market because Marriott has suspended ROFR. People, like me, that refuse to play the ROFR game may actually now consider buying.

Jana

 

[Marvelous100]

Marriott Timeshare value

If I'm reading all this correctly, we must reduce our asking price dramatially to move it.

 

[Jennie]

Generally, all weeks at a resort of the same size have the same MF, regardless of season. So, why would junk weeks have especially low MFs?

That's not the case at many resorts that have high and low seasons. For example, beach resorts in the northeast that are not in a ski area are miserably cold and snowy during the winter. Restaurants and entertainment venues are closed for the season. If anyone shows up at all, it is usually a local person who obtained the week for as low as $99. through SkyAuction.com or R.C.I. or I.I.. The resort's occupancy rate at that time can run as low as 10% of capacity.

These low demand blue season weeks sell for much less than a comparable unit in prime red season. The maintenance fees billed to the owners of the blue studios are considerably less than those of the red week owners. I own at this type of seasonal resort where the owners of identical size winter units pay approximately 40% less maintenance fees than the owners of comparable red week seasons. In an attempt to compensate for the disparity, the red season owners are given 3 free bonus nights during the winter months (mid November to mid March) when few people want to stay there . Although almost every date is readily available, most of these nights go unclaimed.

However, if the owners choose to convert their summer week into RCI Points, they receive a considerable amount of extra points because the three extra junk nights are part of the package and basically receive the same number of pro-rata points as if they were summer nights. They are in effect receiving points based upon 10 nights of ownership of a prime red week.

Consequently, my 10 nights at this resort yields considerably more points than I recive for a converted larger 7 night unit I own during Presidents week at a prime southeast Florida resort. The maintenance fees for the northeast "week" (actually 10 nights) are $250. less than the fees for the Florida resort. The Florida resort rents for about $400. more than the northeast summer week. RCI is not likely to get many "takers" for the 3 dead of winter nights they take in exchange for giving me the points, but I will be able to use the points to obtain three nights worth far more than what I gave up.

There are unconfirmed rumors that RCI had to agree to this lopsided arrangement in order to get the resort to be willing to join the Points Program. The manager is said to be exploring the possibility of converting foreclosed or deeded back winter weeks to RCI Points, and then selling them to curent owners for a very low price, or on Ebay as an RCI Points package. These non performing weeks were previously purchased as fixed deeded winter weeks by people who bought before the 3 night bonus plan was hatched. If they are converted to RCI Points and sold, this will bring in maintenance fees for weeks that are currrently not being paid. But it will also bring in a lot more junk weeks to the RCI Points inventory. And the owners of these junk weeks will be able to pull the same good stuff as people who own Points based at a much better resort/time of year.

I shouldn't be complaining. I'm benefiting from the situation. But I can't help worrying about the future availability of equitable exchanges if this scenario is repeated too often around the country. IMHO, RCI has a history of doing what is best for its bottom line, at the expense of the rights of their owner base.

 

[JMAESD84]

Interesting Story

That's not the case at many resorts that have high and low seasons. For example, beach resorts in the northeast that are not in a ski area are miserably cold and snowy during the winter. Restaurants and entertainment venues are closed for the season. If anyone shows up at all, it is usually a local person who obtained the week for as low as $99. through SkyAuction.com or R.C.I. or I.I.. The resort's occupancy rate at that time can run as low as 10% of capacity.

These low demand blue season weeks sell for much less than a comparable unit in prime red season. The maintenance fees billed to the owners of the blue studios are considerably less than those of the red week owners. I own at this type of seasonal resort where the owners of identical size winter units pay approximately 40% less maintenance fees than the owners of comparable red week seasons. In an attempt to compensate for the disparity, the red season owners are given 3 free bonus nights during the winter months (mid November to mid March) when few people want to stay there . Although almost every date is readily available, most of these nights go unclaimed.

However, if the owners choose to convert their summer week into RCI Points, they receive a considerable amount of extra points because the three extra junk nights are part of the package and basically receive the same number of pro-rata points as if they were summer nights. They are in effect receiving points based upon 10 nights of ownership of a prime red week.

Consequently, my 10 nights at this resort yields considerably more points than I recive for a converted larger 7 night unit I own during Presidents week at a prime southeast Florida resort. The maintenance fees for the northeast "week" (actually 10 nights) are $250. less than the fees for the Florida resort. The Florida resort rents for about $400. more than the northeast summer week. RCI is not likely to get many "takers" for the 3 dead of winter nights they take in exchange for giving me the points, but I will be able to use the points to obtain three nights worth far more than what I gave up.

There are unconfirmed rumors that RCI had to agree to this lopsided arrangement in order to get the resort to be willing to join the Points Program. The manager is said to be exploring the possibility of converting foreclosed or deeded back winter weeks to RCI Points, and then selling them to curent owners for a very low price, or on Ebay as an RCI Points package. These non performing weeks were previously purchased as fixed deeded winter weeks by people who bought before the 3 night bonus plan was hatched. If they are converted to RCI Points and sold, this will bring in maintenance fees for weeks that are currrently not being paid. But it will also bring in a lot more junk weeks to the RCI Points inventory. And the owners of these junk weeks will be able to pull the same good stuff as people who own Points based at a much better resort/time of year.

I shouldn't be complaining. I'm benefiting from the situation. But I can't help worrying about the future availability of equitable exchanges if this scenario is repeated too often around the country. IMHO, RCI has a history of doing what is best for its bottom line, at the expense of the rights of their owner base.

This is an interesting story and perhaps deserves it's own thread. Obviously, the usage/maintenance fee structure has been effectively modified since the founding of the resort (perhaps not legally but effectively......this is something that most highly seasonal resorts need to do to survive).

The self interest for RCI is obvious. I'm curious what POINT TOTAL RCI requires to reserve the BRIGHT RED 7 days of summer.

I've become aware of some properties where RCI issues fewer points to the owner depositing the week than they charge any points member to reserve that same week (except owners from that same resort).

 

[bizaro86]

Think about it. A few months ago Marriott was exercising ROFR and a seller could get expect to get 10K for most annual two bedroom platinum units. Marriott stops exercising ROFR and some of these same units have gotten sellers thousands less

You are confusing correlation with causality. Just because those two things happened at the same time, doesn't necesarily mean that one caused the other.

And even if one did cause the other, doesn't it seem more likely that the units have become worth less money so Marriott stopped using ROFR, as opposed to Marriott stopped using ROFR so the units became worth less money?

Michael

 

[BocaBum99]

You are confusing correlation with causality. Just because those two things happened at the same time, doesn't necesarily mean that one caused the other.

And even if one did cause the other, doesn't it seem more likely that the units have become worth less money so Marriott stopped using ROFR, as opposed to Marriott stopped using ROFR so the units became worth less money?

Michael

I think Marriott stopped exercising ROFR because they had more inventory than they could sell and they ran out of budget to buy back units. I don't think it has anything to do with the sales price of the contracts.

 

[AwayWeGo]

What Oft Was Thought But Ne'er So Well Expressed.

You are confusing correlation with causality. Just because those two things happened at the same time, doesn't necesarily mean that one caused the other.

And even if one did cause the other, doesn't it seem more likely that the units have become worth less money so Marriott stopped using ROFR, as opposed to Marriott stopped using ROFR so the units became worth less money?

That's what I was trying to say, only you said it lots better.

In any case, ROFR still = ROFL.

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

 

[gmarine]

A question for those who think ROFR does not keep sales prices high.

What would happen to the resale price of DVC points if Disney stopped exercising ROFR ?

 

[AwayWeGo]

Mickey & Minnie & Donald & Daisy & Goofy & Pluto & Huey & Dewey & Louie.

What would happen to the resale price of DVC points if Disney stopped exercising ROFR ?

ROFR isn't what props up the value of Disney timeshares.

It's Mickey Mouse & the gang -- with generous sprinklings of Pixie Dust -- that prop up the value of Disney timeshares.

However, not even Tinker Bell & The Little Mermaid & Buzz Lightyear have enough power to prop up the values as the remaining years on those Disney timeshare RTUs start dwindling down to a precious few.

At some point -- hard to predict exactly when -- the phenomenon of Disney RTU timeshare owners trying to shuck off their points for big bux while there's still time will resemble a jynormous game of Reverse Musical Chairs.

Anybody expecting ROFR to have any price-propping effect at that point will be in for a big surprise.

ROFR = ROFL.

BTW -- Do you know why the Little Mermaid wears sea shells ?

Simple. The "B" shells are too small.

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

 

[Transit]

A question for those who think ROFR does not keep sales prices high.

What would happen to the resale price of DVC points if Disney stopped exercising ROFR ?

I believe it does keep resale prices high but also becomes troublesome in some cases for buyers and sellers.ROFR weather you like it or not has kept the prices of some TS artificially high for a long while.We will now see the true demand units remain high and all else plunge

 

[AwayWeGo]

Not Sure It Wasn't The Other Way Round.

ROFR weather you like it or not has kept the prices of some TS artificially high for a long while.

I'm wondering now whether that's true, or if instead what really happened is that as long as the upscale timeshares were selling high on the secondary (i.e., "used") market, the timeshare companies saw an opening so that, via ROFR, the timeshare companies & only the timeshare companies could snap up for peanuts any resales that otherwise would have gone through at low prices to some of the unspeakable bottom-feeding bargain hunters walking around out there.

Certainly, people who had paid big bux for an upscale high-end timeshare, "new" or "used" mox nix, would not look with favor at the prospect of having to rub shoulders in the pool or over at the workout room with the el cheapo riffraff. Better for the timeshare company to monopolize all the cheap buybacks than to let any just anybody become an owner on the cheap. That didn't mean resales units weren't sold ever so cheap now & then -- just that only the timeshare company got to gobble'm up cheap.

Thus, it wasn't ROFR that was keeping prices up on high-end timeshare resales. It was the perceived quality, desirability, value, etc., of the timeshares themselves that kept the prices up & the riffraff out -- kept'm up & out, that is, until the bubble popped.

The timeshare companies knew they looked bad if the the Real Reason for ROFR got out -- i.e., so that nobody but the timeshare company gets to buy resale timeshares cheap duuring times of high demand & high prices.

So the timeshare companies served up a little baloney in the form of a superficially plausible "Good Reason" for ROFR -- to make sure resale prices won't go "too low" -- & people swallowed it.

ROFR = ROFL.

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